Hotel operator Marriott International MAR.N reported a 31 percent jump in quarterly profit and raised its full-year profit outlook due to a business-led recovery that boosted occupancy rates and higher room rates in North America.
Marriott results follow those of rival Hyatt Hotels Corp (H.N), which on Wednesday reported quarterly sales below Wall Street estimates due to its higher exposure to a weak group bookings business in the United States.
Marriott also saw weakness in its group business, which is mainly large conventions, due to the Easter holiday shift into March from April last year, but said that every other part of its business was growing.
"Business is a little bit stronger than we would have thought a quarter ago," Laura Paugh, senior vice president of investor relations at Marriott, told Reuters.
"The hotel business is still climbing back from the 2009 recession. This will be the quarter that we can honestly say that we are now back in terms of revenue per available room (RevPAR) with where we were at the prior peak," Paugh said.
Rival Starwood Hotels and Resorts Inc HOT.N, the operator of Sheraton and Westin hotels, earlier this week reported a quarterly profit that beat analysts' expectations as more people checked into its hotels at higher room rates, particularly in North America.
In the first quarter, Marriott exceeded peak 2007 levels for fee revenue and North American systemwide revPAR, the company said in a statement.
"It's a function of very limited supply growth and combined with good economic growth," Paugh said.
North American systemwide revPAR increased nearly 5 percent. RevPAR for global comparable systemwide properties rose 4.6 percent in the first quarter.
Net income increased to $136 million, or 43 cents per share, in the first quarter, from $104 million, or 30 cents per share, a year earlier. Revenue jumped 23 percent to $3.14 billion.
Analysts had expected earnings of 40 cents per share on revenue of $2.8 billion, according to Thomson Reuters I/B/E/S.
The company, which owns brands such as Ritz-Carlton, Residence Inn and Courtyard by Marriott, now expects 2013 profit to be between $1.93 and $2.08 per share. It had earlier forecast $1.90 to $2.05 per share.
WEAKNESS IN GROUP BOOKINGS
Hyatt's first-quarter revenue of $975 million missed analysts' estimates of $1.01 billion.
Hyatt, which owns and operates hotels under brands such as Park Hyatt, Grand Hyatt and Hyatt Regency, attributed the miss to weakness in group bookings due to ongoing renovations at its hotels and the Easter holiday.
Group business usually includes a block of room accommodations as well as services such as catering and banquet services. Hyatt's group guests travel for group events that reserve a minimum of 10 rooms for meetings or social functions.
Hyatt's comparable systemwide revenue per available room (revPAR), a key metric for the hotel industry, increased 2.4 percent.
"This is overall a bit of a disappointment in terms of its core business," ISI Group analyst Ian Weissman said.
Shares of Hyatt closed down 6 percent at $40.32 on the New York Stock Exchange.
Marriott's Paugh said the company's group business was up 1 percent in the first quarter but that it would have seen more growth if not for the shift in Easter holiday.
Group booking for the rest of 2013 is up about 4 percent and up 5 percent for 2014, the company said.
Bethesda, Maryland-based Marriott's stock, which has gained about 15 percent this year, closed down 1 percent at $42.48 on Wednesday.
(Reporting by Ritika Rai in Bangalore; Editing by Saumyadeb Chakrabarty, Maju Samuel)