Marriott Earnings Increase as Corporate Bookings Improve
Marriott International Inc. (MAR), the largest publicly traded U.S. hotel chain, said second-quarter earnings increased 5.9 percent as demand from groups and corporate travelers rose for high-end hotels.
Net income climbed to $143 million, or 42 cents a share, from $135 million, or 37 cents, a year earlier, the Bethesda, Maryland-based company said today in a statement. Results matched the average estimate of 11 analysts in a Bloomberg survey.
Earnings are being helped by group bookings and demand for upscale hotel rooms in major cities in North America and Asia, Nikhil Bhalla, a senior lodging analyst at FBR & Co. in Arlington, Virginia, said before results were announced. In Washington, demand rose “slightly” from the first quarter, he said. Marriott, whose brands include Ritz-Carlton, has about 5 percent of its rooms in the U.S. capital.
“Our business performed well in most markets around the world,” Arne Sorenson, Marriott’s president and chief executive officer, said in the statement. “In North America, strengthening group business, more travel by our special corporate customers, especially in the technology and consulting industries, and the impact of modest supply growth, drove our occupancy and room rates higher.”
Earnings met the company’s own forecast from April. Marriott had projected earnings of 39 cents to 43 cents a share for the quarter.
Revenue climbed to $2.78 billion from an adjusted $2.61 billion, which excludes results from the timeshare business that Marriott spun off in November. Without the adjustment, revenue fell 6.6 percent.
Marriott said comparable revenue per available room rose 6.5 percent at hotels systemwide in North America, and 7.2 percent internationally. That was within its April forecast that revpar, an industry measure of occupancies and rates, would gain 6 percent to 8 percent in all regions before currency adjustments.
“With robust group bookings in North America, including Washington, D.C., we expect strong revpar and room-rate growth in the second half of the year,” Sorenson said.
Group revenue on the books is up 10 percent for the second half of this year and 8 percent for 2013, according to Sorenson. Marriott’s planning an increase of almost 10 percent in corporate rates for hotel stays scheduled for next year, he said.
Marriott expects third-quarter earnings of 39 cents to 41 cents a share and 2012 earnings of $1.65 to $1.75. That’s higher than its April forecast of $1.58 to $1.69. Marriott’s full-year estimate doesn’t include the impact of its planned $210 million acquisition of Gaylord Entertainment Co. (GET)’s hotel brand and management company, announced in May.
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