| NEW YORK
NEW YORK Marriott International Inc MAR.N posted a higher-than-expected quarterly profit but said it would be difficult to predict the pace of recovery for the hotel industry, which has been hurt by tepid business travel.
Business travel is an important step to recovery for Marriott, which relies heavily on corporate demand to help set room rates. Although business travel has improved in recent months, it still remains below levels of 2008 and earlier.
"This has not been the average or typical recession," said Laura Paugh, senior vice president of investor relations for Marriott. "The room rates remain very weak in North America-- that's been part of the issue."
Although Marriott's fourth-quarter results beat Wall Street expectations, share reaction was muted following a run-up in the stock in the past year. The company's outlook was roughly in line with expectations.
"We are still quite a ways away from a significant re-acceleration of profitability. We still think the market has priced too big and too fast a recovery into MAR shares," said Robert LaFleur, Susquehanna analyst.
Marriott shares were down 2 cents at $26.38 on the New York Stock Exchange, after having more than doubled since last March.
"Marriott had a very nice run from $10 to nearly $30," said FBR Capital Markets analyst Patrick Scholes in an interview. "It's not a cheap stock right now -- that's one hang-up that some investors might have."
The largest U.S. hotel company by market value reported income from continuing operations of $106 million, or 28 cents per share, compared with a year-earlier loss of $10 million, or 3 cents per share.
Excluding one-time items, profit was 32 cents per share. Analysts on average had expected 26 cents, according to Thomson Reuters I/B/E/S.
A year ago, Marriott posted a profit of 34 cents, excluding one-time charges.
Revenue fell to $3.4 billion from $3.8 billion. Analysts had expected $3.2 billion.
RevPAR for the company's hotels worldwide was off 12.3 percent in the fourth quarter
During a conference call with analysts, Marriott President Arne Sorenson said special corporate rates for 2010 were running down "modestly" from 2009 levels.
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Marriott, which operates the Marriott, Courtyard and Residence Inn hotels, expects first-quarter earnings per share between 15 cents and 21 cents. Analysts on average expect 18 cents.
For the full year, Marriott expects earnings between 82 cents and 94 cents per year. Analysts expect 89 cents.
Marriott's competitors, Starwood Hotels & Resorts HOT.N and Wyndham Worldwide (WYN.N) , also reported results that beat Wall Street estimates, showing that bookings have strengthened in recent months.
"Certainly the financial services industry has bounced off some extraordinary low levels of a year ago," said Marriott's Paugh. "We saw a huge pick-up in association group bookings."
But she emphasized that this was off a very low base.
Marriott said it expected revenue per available room to be up 2 percent to down 2 percent in 2010. Its earlier range was flat to down 5 percent.
The company expects growth to come from its international markets, where it projects revPAR flat to up 5 percent for the year. Twenty percent of Marriott's rooms are currently outside the United States.
North American hotels could see revPAR flat to down 3 percent this year.
(Reporting by Deepa Seetharaman; Editing by Lisa Von Ahn, Gerald E. McCormick, Dave Zimmerman)