Marriott Raises 2025 Profit Outlook Thanks to Strong Luxury Hotel Bookings

Marriott International (NASDAQ: MAR) surprised the market by lifting its profit forecast for 2025 following a stronger-than-expected third quarter. The driver? Robust demand in its luxury hotel portfolio despite softness at its budget and select-service properties.

Brands like Ritz-Carlton and St. Regis continue to attract well-heeled travelers, who seem less sensitive to broader economic uncertainties. In the U.S. and Canada, upscale room revenue grew 3.5% during the quarter, cushioning the blow from weaker performance elsewhere.

Meanwhile, budget and midscale properties faced headwinds, largely due to reduced travel among U.S. government employees. The company noted spending cuts initiated by President Donald Trump led to fewer booked nights and staff layoffs among government agencies - which accounted for roughly 4% of Marriott's room nights in North America last year.

Hilton (NYSE: HLT) also mentioned the prolonged U.S. government shutdown, now in its sixth week, as a drag on its outlook. Unlike Marriott, Hilton trimmed its 2025 revenue growth guidance, pointing directly to the shutdown's impact.

Consumer caution is another factor weighing on Marriott's lower-tier hotels. Households wary of inflation and tariff shifts have scaled back discretionary travel, hitting demand for budget accommodations.

Despite these challenges, Marriott raised its adjusted earnings per share forecast for 2025 to a range of $9.98 to $10.06, nudging up from an earlier projection between $9.85 and $10.08. The midpoint of this forecast now stands taller, hinting at confidence in the company's upscale business segment.

For Q3, Marriott posted adjusted earnings of $2.47 per share, topping Wall Street's $2.39 estimate. Revenue came in at $6.49 billion versus $6.46 billion expected, showing resilience amid mixed conditions across its brand portfolio.

While luxury travelers keep the lights on, budget travelers may be tightening purses and altering plans - a dynamic that could shape Marriott's strategy and broader hospitality trends as 2025 unfolds.