Marriott's earnings hit record Part of turnaround in hotel industry

February 02, 1996|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

Marriott International Inc. yesterday reported that its earnings soared 24 percent to $247 million in 1995, the best performance in its nearly 70-year history.

The Bethesda-based lodging operator's record net income -- equal to $1.87 a share -- also represents the latest evidence of the hotel industry's dramatic rebound. The company said it posted healthy gains in its full-service, Courtyard, Fairfield and Residence lodging lines, along with its services businesses.

"We continue to benefit from the power of our brands, a strong business environment and improved operating efficiencies across all our product lines," said J. W. Marriott Jr., the company's chairman and chief executive.

Marriott's revenues for the year were $8.9 billion, a 6 percent climb from the previous year.

In the final quarter of 1995, Marriott generated net income of $90 million, or 68 cents per share, a 25 percent increase from the corresponding period a year ago. Total sales for the quarter rose 8 percent to $2.9 billion.

Marriott attributed the strong earnings to increases in industry fundamentals, such as occupancy and room rates; its ability to control corporate expenses, which were cut by 6 percent to $64 million; and increased efficiency.

At least a portion of Marriott's gains were the result of expansion. The company added 129 hotels containing 23,500 rooms in 1995, including 31 hotels in its $200 million acquisition of a 49 percent stake in the Ritz-Carlton Hotel Co.

The burgeoning portfolio came at a price, however: Marriott's interest expense in 1995 climbed 66 percent, to $53 million.

Marriott ended the year with 1,036 properties totaling 208,500 rooms. In 1996, Marriott expects to augment its portfolio by an additional 18,000 rooms. By the end of the decade, the company hopes to add 120,000 rooms.

"Over 35,000 of those rooms are already approved or under construction," Mr. Marriott said.

Marriott's lodging division's profit rose 19 percent to $360 million last year and its contract services reported a net income gain of 17 percent, to $130 million. Marriott also intends to expand its senior living and distribution services businesses in the coming year.

"Marriott is one of the best operators in the business," said Camille E. Humphries, a hotel industry analyst with Alex. Brown Inc. "Their occupancy rates are between 10 and 12 percent better than the industry average, and their room rates tend to be stronger, because they are sought out by customers. They are certainly participating in the hotel rebound, and doing as well or better than the industry."

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