Marriott earnings up 13% in 2nd quarter

Revenue increases 6%, to $2 billion, though growth rate slows

July 09, 1999|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

Marriott International Inc., helped by new hotels and cost controls, reported yesterday a 13 percent increase in its second-quarter earnings.

The Bethesda company reported net income of $114 million, or 42 cents per share, in the three-month period that ended June 18. Earnings were pushed down slightly by the cost of year 2000 computer adjustments and in opening communities for the elderly.

Without those expenses, Marriott's net income per share would have risen 18 percent.

The company's revenue in the quarter rose to $2 billion, a 6 percent gain from the comparable quarter last year.

"Although [revenue per available room] growth in the U.S. has slowed somewhat in 1999, we have continued to meet our earnings growth goals," said J. W. Marriott Jr., chairman and chief executive.

"We remain very optimistic about the company's prospects for the balance of the year," he said. "Our brands are gaining market share and are extending their lead over competitors in terms of customer and owner preference, revenue per available room and profitability."

For the first half of the year, Marriott generated net income of $214 million, or 80 cents per share, up 13 percent and 14 percent respectively over the first half of last year. Revenue increased 8 percent, to $3.9 billion.

Revenue per available room increased 3 percent in the second quarter of this year. At the same time, average room rates increased 2 percent and occupancy rates rose slightly to 81 percent.

Ritz-Carlton led the company's brands, with a 10 percent increase in room revenue, a 3.6 percent gain in occupancy (for an average occupancy of 79.8 percent) and a 5.1 percent rise in average room rate, to $230.71.

Marriott's earnings were in line with expectations, analysts said.

"Their revenue growth was a little softer than it had been, but that wasn't a big surprise because of the number of rooms nationwide that have come on line and have affected their ability to raise room rates and maintain occupancy levels," said Thomas Graves, a Standard & Poor's Equity Group analyst. "Despite the slower revenue growth, they did a nice job controlling costs and their international profit was up. So that's good news."

In the past 12 months, Marriott has opened 215 hotels and time-share resorts with 31,400 rooms. The company maintains 1,764 hotels and time-share resorts with more than 339,000 rooms.

Shares of Marriott closed yesterday at $34.50, down 81.25 cents.

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