Marriott Beats Estimates as High-End Hotel Demand Climbs
Marriott International Inc. (MAR), the largest publicly traded U.S. hotel chain, reported earnings that beat estimates after demand for high-end brands increased and costs from a spun-off timeshare business went unrepeated.
Net income totaled $143 million, or 44 cents a share, compared with a loss of $179 million, or 52 cents, a year earlier, the Bethesda, Maryland-based company said today in a statement. The year-earlier results included $324 million of pretax impairment costs at Marriott’s timeshare business, which was spun off in November 2011. Earnings were higher than the 40- cent average estimate of 13 analysts in a Bloomberg survey.
The results were buoyed by demand for Marriott’s high-end hotels in the U.S., including its luxury Ritz-Carlton brand, Patrick Scholes, a hospitality-industry analyst at research firm Suntrust Robinson Humphrey Inc. in New York, said before results were announced. Revenue per available room at Marriott’s full- service and luxury hotels climbed 6.8 percent in North America, more than the 6.3 percent revpar increase for all hotels in the region.
“Pricing power continued to improve in the quarter as hotel occupancy levels approached prior peaks,” Arne Sorenson, Marriott’s president and chief executive officer, said in the statement.
Comparable revpar rose 5 percent outside North America. The hotelier in July cut its growth forecast for international revpar to 5 percent to 7 percent for this year, down from an April forecast of 6 percent to 8 percent. Worldwide, revpar grew 6 percent in the third quarter.
Marriott expects worldwide revpar next year “to increase at a mid-single-digit rate despite moderate economic growth in many markets around the world,” Sorenson said in today’s statement. He said he is “particularly bullish” about North America, where revpar probably will rise 5 percent to 7 percent in 2013.
For the fourth quarter, the company today forecast earnings of 52 cents to 56 cents a share. Marriott said it expects investment spending to total $850 million and $950 million this year, including about $100 million for maintenance capital spending.
Marriott’s third-quarter revenue climbed to $2.73 billion from an adjusted $2.52 billion, which excludes results from the timeshare business.
The company said it bought back 9.6 million shares of common stock in the third quarter for $353 million.
Marriott released its results after the close of regular U.S. trading. Its shares rose 1 percent to $39 today. They have gained 34 percent this year.
Starwood Hotels & Resorts Worldwide Inc. (HOT), owner of the luxury St. Regis and W brands, is scheduled to report its third- quarter earnings on Oct. 25.
To contact the editor responsible for this story: Kara Wetzel at email@example.com