Marriott International posts 16% rise in 3rd-quarter profit More hotels, higher rates as industry's growth slows

Lodging

October 02, 1998|By Shanon D. Murray | Shanon D. Murray,SUN STAFF

Marriott International Inc. reported yesterday net income of $86 million for its third quarter.

The results came at a time of slowing growth in the lodging industry and represented a 16 percent increase over the corresponding period last year.

However, the Bethesda-based company, the nation's largest hotel company, lowered its expectations for revenue and earnings growth to the mid-teens from 20 percent.

Marriott's stock fell $2 per share to close at $21.875 yesterday.

In the quarter that ended Sept. 11, Marriott's net income rose to 32 cents a diluted share, a penny less than analysts had expected but up from 27 cents a year earlier.

Third-quarter sales rose 9.2 percent, to $2.26 billion, from $2.07 billion in the 1997 quarter.

Marriott added 174 hotels to its chain during the past year, including 45 hotels and resorts in the third quarter. It increased its room rates by 6 percent.

"We feel very good about our results; while there are uncertainties in the market, we feel like the fundamentals of our business remain strong," said Arne Sorenson, executive vice president and chief financial officer.

For the lodging industry, general economic uncertainty has manifested itself in conservative business and leisure travel and lagging convention bookings, said John J. Rohs, an analyst with Schroder & Co. in New York. "But Marriott is performing in line with the balance of the industry," he said.

While some observers may be quick to brand the situation as a slump, it isn't, said Robert LaFleur, a Bear, Stearns & Co. lodging industry analyst.

"The industry is experiencing moderate growth after a period of rapid growth," LaFleur said. "In any environment, Marriott will usually do a little bit better than other hotel chains. It's the first brand people think of when they think of lodging."

In all, Marriott controls more than 315,000 rooms and 3,800 time-share villas.

Pub Date: 10/02/98

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