Marriott profit falls, sees U.S. weakness into 2009
NEW YORK (Reuters) - Marriott International Inc (MAR.N), the world No. 3 hotel operator, reported lower quarterly profit on Thursday and expects weak economic growth and soft U.S. lodging demand to persist into next year.
The company, whose shares fell about 4 percent, said net income declined to $157 million, or 42 cents per share, in the second quarter ended on June 13, from $207 million, or 51 cents per share, a year earlier.
Income from continuing operations before special items fell 17 percent to $189 million, or 51 cents a share. On that basis, analysts on average had expected 49 cents a share, according to Reuters Estimates.
"While our hotels outside the United States continue to benefit from solid global demand, business conditions have deteriorated in the United States," Chief Executive J.W. Marriott said in a statement.
"While there is much uncertainty," Marriott said, "we expect weak economic growth and soft U.S. lodging demand to persist into 2009."
Marriott, which typically manages hotels rather than owning them, cut its full-year earnings forecast to a range of $1.77 to $1.88 per share, down from a previous forecast of $1.98 to $2.08 per share.
"They made the best of a bad quarter -- on the strength of overseas results," said Susquehanna Financial analyst Robert LaFleur.
"The domestic market was soft as expected. ... We are pretty pessimistic about the domestic market for the balance of the year," added LaFleur.
"They did take pretty big hacksaw to earnings estimates (for the year) -- folks are going to be wondering if this is enough of a cut to reflect the downturn," LaFleur said.
FLAT
Hotel executives have said they expect soaring fuel prices and a broad economic slowdown to hurt U.S. leisure travel through the rest of 2008 and that they hope business travel can help shore up the industry.
A major concern for the hotel sector is its reliance on the U.S. airlines, which are cutting routes and fighting for their survival amid unprecedented fuel prices. Oil prices have roughly doubled in the past year.
Marriott, which runs the Marriott, Courtyard, Ritz-Carlton and Fairfield Inn hotel brands, said that worldwide, company-operated comparable revenue per available room rose 5.6 percent overall in the second quarter, but increased just 1.4 percent in North America.
Marriott expects worldwide comparable revenue per available room "to be flat to up 2 percent" for 2008.
Second-quarter revenue at Marriott, which is behind only Intercontinental Hotels Group (IHG.L) and Wyndham Worldwide Corp (WYN.N) in terms of hotel rooms worldwide, increased 2 percent to $3.2 billion. Continued...
