Marriott profit up 10.5% in 2nd quarter

Earnings

July 07, 2000|By Gus G. Sentementes | Gus G. Sentementes,SUN STAFF

Marriott International Inc., one of the world's largest hotel operators, said yesterday that its earnings rose 10.5 percent in the second quarter as the booming economy spurred consumers to spend more on travel.

Bethesda-based Marriott reported earnings of $126 million, or 50 cents a share, up from $114 million, or 42 cents a share, a year earlier. In the quarter ending June 16, Marriott's sales in lodging, distribution and senior living services rose 17 percent, to $2.39 billion from $2.04 billion.

"In terms of the bottom line, they delivered almost 19 percent earnings growth [per share] ... and they also beat the consensus estimate for earnings this year," said Mike Happel, equity research analyst for Morgan Stanley Dean Witter.

The company's profit exceeded the 48-cent average estimate of analysts polled by First Call/Thomson Financial.

"I suspect this is an indication of more good news to come from some of the other lodging companies over the next few weeks," Happel said.

Marriott's lodging segment, which generates about 80 percent of the company's revenue, posted a 14 percent increase in profit for the quarter and an 11 percent increase in sales.

Marriott's average occupancy across its six major hotel brands remained at 80 percent of capacity, while its average daily room rate rose 5.3 percent.

"We saw substantial improvement in demand during the second quarter across all of our brands, resulting in outstanding growth in revenue per available room over last year," J. W. Marriott, Jr., chairman and chief executive officer, said in a statement.

"Internet bookings year-to-date have already surpassed 1999 full-year levels. In addition, we are on track to open over 38,000 hotel rooms and time-sharing villas in our worldwide lodging portfolio in 2000," he said.

But the effect of Internet bookings on the hotel industry - and on consumers' wallets - is still unfolding. "My view is that the Internet is not creating a lot of incremental demand," Happel said, "but I do think the Internet is a lower-costing booking system for the hotel company."

In 1999, less than 2 percent of all room reservations in the United States were booked through the Internet, said Happel. He estimated that figure may grow to about 10 percent within five years.

Marriott's holdings include Marriott, Fairfield Inn, Ramada, Renaissance, Courtyard and TownePlace Suites brand names.

Shares of Marriott International rose $1 to $37.75 yesterday on the New York Stock Exchange.

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