Marriott’s First-Quarter Earnings Miss Estimates as Travel Demand Slows

Marriott International Inc.’s
first-quarter earnings missed analysts’ estimates as travel
demand
slowed in North America, with hotels in the Washington
area being hurt by cuts in lodging and conference spending.

Net income rose to $101 million, or 26 cents a share, from
$83 million, or 22 cents, a year earlier, the Bethesda,
Maryland-based company said today in a statement. Marriott, the
largest publicly traded U.S. hotel chain, was expected to earn
28 cents, the average estimate of 10 analysts in a Bloomberg
survey.

The hotelier said worldwide revenue per available room, or
revpar, rose 6.5 percent, before adjustments for currency-
exchange rates. That is below the 7 percent increase that
Marriott forecast last month, when it said weak North American
demand is holding back growth.

First-quarter earnings were affected by a decline in group
bookings in the Washington region, where Marriott has about 5
percent of its rooms, Laura Paugh, senior vice president of
investor relations, said during a conference call with reporters
today.

Demand in the U.S. capital was hampered by cuts in travel
spending, the threat of a federal-government shutdown and
“weakness of short-term group meetings,” she said.

The hotelier — whose Marriott and Renaissance brands fall
into the upper-upscale category, a notch below luxury — is also
facing increased competition from other companies’ refreshed
properties, said Patrick Scholes, a New York-based analyst with
FBR Capital Markets.

Pulling Business Away

“The domestic upper-upscale segment seems to be under-
performing other segments like luxury and midscale,” Scholes
said before earnings were announced. “Marriott also seems to be
under-performing their peer group. You have some competitors
like Sheraton and Holiday Inn, which have done significant
renovations lately. That may have driven some business away.”

Revpar in the first quarter rose 5.8 percent for company-
operated properties in North America. Outside North America, it
increased 11.2 percent.

Marriott expects revpar before currency adjustments to rise
6 percent to 8 percent in North America, and 5 percent to 7
percent outside North America, in both the second quarter and
for the full year, the company said in today’s statement.

Marriott’s revenue rose 5.6 percent to $2.78 billion in the
first quarter.

Earnings were announced after the close of regular U.S.
trading. Marriott rose 36 cents, or 1 percent, to $35.28 as of
4:15 p.m. in New York Stock Exchange composite trading.

Second-Quarter Forecast

The company forecast second-quarter earnings of 34 cents to
38 cents a share, less than the 39-cent average estimate of 24
analysts surveyed by Bloomberg.

Marriott is the first of the major U.S. hotel chains to
report quarterly earnings. Wyndham Worldwide Corp. (WYN) is scheduled
to release its results on April 27, and Starwood Hotels
Resorts Worldwide Inc. (HOT)
, the owner of the St. Regis and W hotel
brands, will announce earnings April 28. Hyatt Hotels Corp. (H) is
scheduled to report on May 3.

To contact the reporter on this story:
Nadja Brandt in Los Angeles at
nbrandt@bloomberg.net

To contact the editor responsible for this story:
Kara Wetzel at
kwetzel@bloomberg.net

Apr 20th, 2011 | Posted in Travel
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