Research Update: Marriott International Upgraded To 'BBB' On Leverage Likely Returning To Policy Range In 2022; Outlook Stable

We expect demand at Marriott International Inc.'s U.S. and Canadian hotels will continue to be strong and lead the hotel system's recovery due to pent-up leisure demand, strong average daily rates, and accelerating business transient and group bookings, and that the company's fees from international rooms will also likely recover over the coming quarters. Based on first-quarter 2022 results and the potential trajectory of RevPAR through the remainder of 2022, Marriott's credit measures are recovering faster than we anticipated, and we now expect its net leverage could improve to 3x-3.5x in 2022, which would indicate a cushion compared to our 3.75x upgrade threshold. As a result, we raised all ratings by one notch, including the issuer credit rating, to 'BBB'

...- We expect demand at Marriott International Inc.'s U.S. and Canadian hotels will continue to be strong and lead the hotel system's recovery due to pent-up leisure demand, strong average daily rates, and accelerating business transient and group bookings, and that the company's fees from international rooms will also likely recover over the coming quarters. - Based on first-quarter 2022 results and the potential trajectory of RevPAR through the remainder of 2022, Marriott's credit measures are recovering faster than we anticipated, and we now expect its net leverage could improve to 3x-3.5x in 2022, which would indicate a cushion compared to our 3.75x upgrade threshold. - As a result, we raised all ratings by one notch, including the issuer credit rating, to '###' from '###-' and the commercial paper rating to 'A-2' from 'A-3' based on our expectation that the company can restore credit measures to pre-pandemic levels this year. - The stable outlook reflects our view that the company will...

Research Update