It's been a rough week for Bethesda-based Marriott Corp.
In seven days, its stock has slid 21 percent; Standard & Poor's Corp. announced it was thinking about downgrading the hotel giant's bonds; and the company said it would slash funding for new hotel construction next year.
Marriott's third-quarter earnings report, released yesterday, showed a 57 percent drop in net income compared with the same period a year ago.
Marriott's stock finished down 25 cents at $10.50 yesterday, bruised and battered since it stood at $18 at the beginning of the month on the New York Stock Exchange.
"We're looking at an industry that has some problems with oversupply, and the Middle East situation has exacerbated that," Marriott spokesman Robert T. Souers said yesterday in explaining the decline in earnings.
Cutbacks in business travel because of rising oil prices and an uncertain economy after the Iraqi invasion of Kuwait last month have hurt the occupancy rates of several hotel chains. As a result, analysts said yesterday, the plunge in Marriott's earnings was not a surprise to Wall Street.
"We thought the company was going to do worse than the rest of the market," Argus Research analyst Ed Eyring said.
"It's costing more to travel, and that's going to hurt Marriott-types of companies. The fact that Marriott is highly leveraged makes it worse."
The hotel company, which has more than 280 lodging and service businesses in Maryland alone, has taken measures in recent months to limit its capital expenditures and sell off assets.
The company already has sold more than $900 million in assets in 1990 and expects to sell an additional $700 million in property in the next few months, Mr. Souers said.
Marriott has laid off 110 people in architecture and construction recently, and Mr. Souers said further reductions may be on the agenda. Marriott has more than 200,000 employees, including more than 13,000 in Maryland.
"We need to market hard and watch expenditures" to post a better showing in the next quarter, Mr. Souers said.
But analysts say they are not expecting the lodging business to turn around that quickly and that numbers may not improve until well into next year.
"It sort of depends on the tilt of the ball field they're playing on. If it continues to slide, then they will too," Mr. Eyring said.