Marriott International Inc MAR.N, which runs the Marriott and Ritz-Carlton hotels, cut its 2013 earnings outlook to reflect lower-than-expected conference revenue, sending its shares down 3 percent in trading after the bell.
Like other hotel chains, Marriott reported a strong second quarter, with profit up 25 percent as U.S. business travel recovers from bad times in the wake of the 2008 crash.
But Marriott's heavy reliance on conferences and other group bookings, with associated banquet services, undercut its outlook and sent its shares lower, along with those of rival Hyatt Hotels Corp (H.N).
"In North America, they have been hit by softer group segment performance, and also weakness in Washington D.C., which is 5 pct of their fee revenue," Friedman, Billings, Ramsey & Co analyst Nikhil Bhalla said.
Marriott's group business constitutes nearly 35 to 40 pct of room nights sold across their full service hotels in North America, Bhalla estimated.
"Washington D.C. has been hit by two things: the convention business here is soft and the government cutbacks in travel are hurting the industry," he said.
The company, whose brands also include Residence Inn and Courtyard by Marriott, forecast 2013 profit in a range of $1.92 to $2.03 per share, down from its prior view of $1.93 to $2.08 per share.
Marriott expects its systemwide revPAR, a key metric combining hotel revenue and room occupancy, to rise 4.5 to 6 percent in North America, 2 to 4 percent outside North America, and 4 to 6 percent worldwide.
This falls below its prior forecast of an increase of 4.5 to 7 percent in North America, 3 to 5 percent outside North America and 4 to 7 percent worldwide.
For the second quarter, net income rose to $179 million, or 57 cents per share, from $143 million, or 42 cents per share, a year earlier.
Revenue rose 18 percent to $3.3 billion.
The profit was in line with the average analyst forecast of earnings of 57 cents per share, on revenue of $3.21 billion, according to Thomson Reuters I/B/E/S.
Marriott's results follow those from Hyatt, which earlier in the day reported a quarterly profit that topped Wall Street estimates.
Hyatt did not give an outlook but Marriott's forecast also undercut its shares. Hyatt shares had closed up 6 percent after its stronger results but fell in after-hours trading after the bell.
Shares in rival Starwood Hotels & Resorts Worldwide Inc HOT.N, which operates Sheraton Hotels, edged up in after-hours trading. It has also enjoyed the business travel boom and is less exposed to group bookings.
(Editing by Saumyadeb Chakrabarty and Rodney Joyce)