Marriott International Inc., the Bethesda-based hospitality giant, reported quarterly profits that surpassed analysts’ estimates as demand for high-end brands increased noticeably. Rising prices and strong occupancy rates helped boost Marriott International’s profits to $143 million, or 45 cents per share.
Marriott profits up
Marriott International Inc., the largest publicly traded U.S. hotel chain, posted a swing to profit in the third quarter from a loss last year. Both earnings and revenues of Marriot International Inc. for the third quarter were much higher than analysts’ estimates.
According to data, net income was approximately $143 million, or 45 cents per share, compared with a loss of about $179 million, or 52 cents per share, last year. However the last year’s financial results also included 324 million of pretax impairment costs at Marriott’s timeshare business. But excluding the hotel giant’s timeshare spin-off, profit for the third quarter in the year of 2011 totaled approximately $102 million, or 30 cents per share.
As it had been stated by Patrick Scholes, an analyst with Suntrust Robinson Humphrey Inc. in New York, the results were buoyed by demand for Marriott International’s high-end hotels in the U.S. Accordingly, revenue per available room at Marriott’s full- service and luxury hotels grew as much as 6.8 percent in North America, which is more than the 6.3 percent revPAR increase for hotels in that region.
Certainly a demand recovery in the region of North America and rising room rates have been helping Marriot International Inc. overcome problems in the region of Europe. It is North America region that accounts for approximately 75 percent of business at Marriot International Inc., while Europe accounts for nearly 9 percent of Marriot International’ fee. Laura Paugh, senior vice president of investor relations at Marriott International Inc., explained the poor performance of the hotel giant, whose brands include Ritz-Carlton, Residence Inn and Courtyard, by highlighting sluggish economy in Europe and the eurozone crisis, etc.
However at the same time she emphasized the strengthening position of Marriot International Inc. in general. She noted: “Occupancies are finally back up. We’re approaching levels that we last saw in 2007.”
Yet the revenue for the third quarter dropped approximately 5 percent to $2.73 billion from $2.87 billion a year earlier.
Marriott International’s forecast
The hotel chain giant expects earnings of 52 cent to 56 cent per share in the fourth quarter of the year. As for the next year’s results, Marriott International Inc. expects revenue per available room to increase 5 percent to 7 percent in the region of North America, while elsewhere to rise about 3 percent.
However Marriott International Inc. has become lately significantly dependent on international markets particularly China as new hotels in the U.S. have stalled construction. The hotel giant, however, noted slowing growth in some of its markets such as Europe, Asia as well as Latin America. Therefore, Marriott International Inc. has decided to extend some of its planned openings abroad in 2013. Yet the global economy has been slowing down and some analysts are asking whether the company will be able to keep its word and improve its earnings.