By Aishwarya Jain
(Reuters) -U.S. hotel operator Marriott International trimmed its full-year room revenue forecast on Tuesday, as tariff-induced uncertainties and federal spending cuts under President Donald Trump sap demand.
The company highlighted a hit from a 10% drop in nights booked by the U.S. government, as Trump’s funding cuts trigger staff layoffs and tighter travel budgets.
In March, United Airlines said government-related travel bookings slumped 50%, as the sweeping spending cuts reverberate across sectors of the U.S. economy.
United Airlines also warned that the reduced government spending was having a ripple effect on the domestic leisure market.
Marriott’s CFO Leeny Oberg echoed the comments during an earnings conference call, saying the company’s lower-priced tiers in the U.S. showed some signs of weaker demand.
The company said visibility into the second half of the year was low due to a short booking window, which signaled increased consumer uncertainty and caution in spending on travel.
Marriott expects 2025 room revenue growth of 1.5% to 3.5%, compared with 2% to 4% it forecast earlier.
However, the 50 basis points cut was lower compared to the 150 basis points reduction by rival Hilton.
Marriott’s shares were up 1.6% in morning trading after the company’s first-quarter adjusted profit of $2.32 per share beat estimates of $2.25.
The company, which owns brands including Sheraton and Courtyard, expects second-quarter adjusted profit of $2.57 to $2.62 per share, below analysts’ estimates of $2.68.
The Ritz-Carlton parent also said growth in revenue per available room (RevPAR) in the U.S. and Canada slowed in March, but was still up 3%.
Revenue rose 5% to $6.26 billion and beat estimates of $6.17 billion, according to data compiled by LSEG.
Marriott benefited from robust growth in its international markets, particularly in Asia-Pacific excluding China, where RevPAR jumped 10.9%, buoyed by strong demand in Southeast Asia from wealthy Chinese consumers.
(Reporting by Aishwarya Jain in Bengaluru; Editing by Sriraj Kalluvila)
