Marriott profits up in first half

July 07, 1995|By Kevin L. McQuaid | Kevin L. McQuaid,Sun Staff Writer

Marriott International Inc. yesterday reported net income rose 22 percent to $111 million in the first half of 1995, backed by strong increases in both occupancy and room rates among its various product lines.

The Bethesda-based lodging company, which operates more than 920 hotels containing more than 180,000 rooms, generated $4.1 billion in sales in the first six months of 1995 as compared with a year ago, an increase of 6 percent.

Marriott International's second quarter performance also produced double-digit increases. The company reported net income of $59 million for the three-month period ended June 16, a gain of 23 percent against its 1994 results. Sales in the second quarter were $2.1 billion, a 7 percent gain.

"I'd characterize it as a very strong quarter for them," said Camille E. Humphries, an Alex. Brown & Sons Inc. lodging industry analyst who follows Marriott International. "They exceeded my earnings per share estimate by one cent by reporting 45 cents, and in particular, they realized solid increases in room rates."

Marriott International attributed the gains to increased incentive management and franchise fees.

Ms. Humphries also noted that Marriott International's revenue per available room, an industry gauge of a hotel company's financial viability, rose nearly 7 percent. That figure is expected to outpace the industry average of 5 percent in the quarter.

Room rates increased an average 8 percent throughout the chain in all of the company's product lines, ranging from full-service, luxury hotels to its Fairfield Inn economy lodging line. The biggest gains came from Fairfield, however, where the hotels' average room rate grew by 10 percent.

Average occupancy in Marriott hotels also maintained their historically high figures of roughly 80 percent, well above the industry average of 69.6 percent.

Marriott International's increased earnings come as the lodging industry as a whole is benefiting from rising leisure travel, reduced summer airfares, the U.S. dollar's decline against some foreign currencies, and a lack of new hotels.

A recent study by accounting firm Coopers & Lybrand predicted that occupancy rates will jump to 74.7 percent by the end of the third quarter of 1995, while room rates are projected to increase nearly 4 percent by Sept. 30. Even at their present level, occupancy rates are at their highest point since 1980.

J. W. Marriott Jr., the company's chairman and chief executive, said in a statement that Marriott International is pursuing ambitious development, service and marketing programs to enhance its competitive leadership and long-term growth.

As part of the development program, Marriott International continues to add hotels overseas to meet its goal of 100,000 new rooms by the end of the decade. Thus far, some 37,000 rooms have either been acquired, are in the process of being converted to the Marriott brand or are under construction. In 1994, for

instance, Marriott opened properties in Buenos Aires, Argentina, and Bangkok, Thailand.

In this country, Marriott International in April completed its acquisition of a 49 percent stake in the 31-hotel Ritz-Carlton Hotel Co. LLC, for $200 million in cash.

Marriott International's stock price closed yesterday at at $35.37 per share, down 87 cents.

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