Marriott Fourth-Quarter Earnings Increase on U.S. Demand
Marriott International Inc., the largest publicly traded U.S. hotel chain, said earnings gained 28 percent on rising travel demand across the country.
Net income climbed to $181 million, or 56 cents a share, in the fourth quarter from $141 million, or 41 cents, a year earlier, the Bethesda, Maryland-based company said yesterday in a statement. The hotelier was expected to have earnings of 55 cents, the average estimate of 15 analysts in a Bloomberg survey. Marriott in October forecast earnings of 52 cents to 56 cents a share.
Marriott’s results were helped by increased bookings by business travelers and vacationers at hotels in U.S. metropolitan areas, which allowed the company to raise room prices 4 percent, it said in the statement.
“Stronger demand in U.S. cities from individual business and leisure travelers was driving a lot of the rate increases,” Patrick Scholes, an analyst at SunTrust Robinson Humphrey Inc. in New York, said in a telephone interview yesterday after Marriott announced its results. “That helped offset lackluster group and convention business.”
Revenue per available room, an industry measure of occupancies and rates, climbed 5.9 percent at the company’s hotels in North America. Outside North America, revpar rose 3.2 percent, and worldwide the measure increased 5.2 percent in the fourth quarter.
The hotelier lowered its outlook for revpar growth this year, saying travel may be hampered by government budget cuts. Marriott said it expects North American and worldwide revpar to climb 4 percent to 7 percent this year. That compares with an October forecast of a 5 percent to 7 percent increase in North American revpar.
“While this year is off to a strong start, we are providing a somewhat broader and more conservative range for 2013 revpar growth due to the potential effect on the travel industry of the impending federal budget sequestration,” Chief Executive Officer Arne Sorenson said in yesterday’s statement.
The company also said it expects revenue from owned and leased hotels and corporate housing to fall 12 percent to 18 percent, to $135 million to $145 million, this year because of “tougher year-over-year comparisons” with the London Olympics last year and renovations planned for some international leased hotels in 2013.
“Combine that with their low guidance for their owned hotels, and that may not sit so well with investors,” Scholes said.
Marriott said it expects earnings to climb 10 percent to 19 percent this year, to $1.90 to $2.05 a share. Investment spending, including acquisitions and financing, probably will total $600 million to $800 million, the hotelier said.
Total revenue climbed to $3.76 billion in the fourth quarter from an adjusted $3.4 billion. The year-earlier figure excluded results from a timeshare business that was spun off.
Marriott, whose brands include Ritz-Carlton, released its results after the close of regular U.S. trading yesterday. The company’s shares fell 1 percent to $40.83 in New York yesterday. They have gained 17 percent in the past year.
Starwood Hotels & Resorts Worldwide Inc., owner of the luxury St. Regis and W brands, on Feb. 7 said quarterly earnings declined as revenue growth slowed in Europe and costs rose. Hyatt Hotels Corp., the chain controlled by the Pritzker family, said fourth-quarter profit fell 69 percent as margins decreased at some of its properties.
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