Marriott profits rise 12% on higher rates, more rooms

Higher-priced chains help propel first quarter

Hotel industry

April 16, 1999|By BLOOMBERG NEWS

Marriott International Inc., the largest U.S. hotel company, said yesterday that its first-quarter profit rose 12 percent as it raised room prices, opened more hotels and boosted occupancy rates.

Net income rose to $100 million, or 38 cents a share, from $89 million, or 33 cents, in the year-earlier quarter. Per-share results beat expectations of 36 cents, the average estimate of analysts polled by First Call Corp.

The strong economy is allowing hoteliers such as Bethesda-based Marriott to raise room prices and to expand. The company said its highest-priced hotel chains, Marriott and Ritz-Carlton, posted their biggest gains in occupancy in almost three years.

"It looks like their upscale and luxury properties continue to perform well," said Credit Suisse First Boston Inc. analyst David Anders, who has a "buy" rating on Marriott shares. "It's the continuing strength of the overall economy."

Revenue rose 10 percent to $1.9 billion from $1.72 billion.

The better-than-expected profit comes as concern about overbuilding of hotels and a possible slowing of the economy hold down hotel-company stocks. Marriott shares had fallen 3.3 percent over the past year.

Yesterday, its shares rose $2.125, to $37.125.

Marriott's lower-priced hotels are not faring as well, however. The Renaissance, Courtyard, Residence Inn and Fairfield Inn chains posted smaller gains.

Across all of Marriott's hotel chains in the United States, revenue per available room -- an indicator of hotel profits -- rose 4 percent.

Marriott has previously said it expected revenue per room in all of 1999 to rise about 5 percent. The company is no longer sure it will rise that much after the slow first quarter, said Laura Paugh, a company spokeswoman. Analysts said that is not expected to hurt Marriott's profit, however, as the company said it has also reduced its operating expenses.

At Marriott's 36 Ritz-Carlton luxury hotels, occupancy rose 3.2 percentage points to 76.8 percent. Ritz-Carlton's average room price rose 6.4 percent to $235.56 a night.

The company's flagship Marriott chain saw occupancy rise 0.8 percentage point to 77.5 percent and its average room rate rise 3.1 percent to $143.18.

Profit at Marriott's international hotels declined slightly, the company said, because of weak travel markets in Asia.

Pub Date: 4/16/99

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