Marriott International 'on track' as quarterly earnings jump 21% Riding the momentum of hotel industry

April 12, 1996|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

Marriott International Inc. continued to take advantage of the hotel industry's positive momentum in the first quarter, posting a 21 percent gain in net earnings.

The Bethesda-based lodging, resort and senior living community operator generated net income of $63 million, or 47 cents per share, with increases in virtually every segment of its business.

The earnings increase came amid revenue growth of 7 percent to $2.2 billion in the period that ended March 22, as compared with the same period a year ago.

"Our lodging product lines continue to benefit from favorable industry conditions," said J. W. Marriott Jr., the company's chairman and president. "We're on track to achieve our ambitious growth targets for the year, both for earnings and new unit development."

Last year, Marriott International announced plans to add 120,000 rooms by the year 2000. More than 35,000 new hotel rooms have been approved, and 16,000 of those rooms are expected to open in 1996.

In the first quarter, the company augmented its portfolio by 32 properties containing 3,760 rooms, including the 612-room Ritz-Carlton Millenia in Singapore.

LTC Marriott International invested $200 million in March 1995 to acquire a 49 percent stake in the Ritz-Carlton chain, which contains 31 hotels and more than 10,300 rooms.

In all, Marriott International's lodging group now contains 1,069 properties containing in excess of 212,000 rooms and 2,500 time-share units.

At least a portion of the new rooms are expected to carry the Fairfield Suites brand name, one of two new Marriott International suites limited-service lines slated to debut later this year.

Marriott International's lodging group posted a 24 percent increase in operating profit vs. the prior year, and a more than 5 percent gain in revenue per available room (REVPAR), an industry gauge of growth.

"Their REVPAR growth is especially strong, considering the negative effects of the winter weather and the government shutdown," said Camille E. Humphries, an Alex. Brown & Sons Inc. lodging industry analyst. "Despite that, they still managed to report earnings of 47 cents per share, which was right in line with our expectations."

Marriott said the increases in lodging occurred because of higher incentive management fees, room rate gains which exceeded inflation and contributions from new properties. The company declined to provide specifics regarding incentive increases.

Despite the solid earnings report, Marriott International's stock dipped 87 1/2 cents in trading yesterday, closing at $47 a share.

Marriott's full-service hotels boosted occupancy to 75 percent, while the average room rate rose 5 percent to $118.

Courtyard hotels' occupancy maintained its 78 percent level, and average room rates rose 7 percent to $76; Fairfield Inn generated an 11 percent gain in average room rates to $46, but occupancy declined three percentage points to 75 percent; and Residence Inns' occupancy remained essentially flat at 84 percent, while room rates increased 5 percent to $86 against comparable units.

Ms. Humphries said Marriott also benefited from the performance of its vacation timeshare units, international properties and senior-living facilities.

Earlier this year, Marriott bought the Forum Group Inc. for $605 million, a transaction that added 69 facilities with 14,500 units and that ranked the company as the nation's largest senior-community operator.

Pub Date: 4/12/96

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