Marriott International Inc., Bethesda, Maryland, reported on July 13 that second-quarter profit climbed 13% as a result of strong results outside of the United States. Net income increased to US$135 million, or 37 cents a share, from US$119 million, or 31 cents, a year earlier. REVPAR for worldwide comparable systemwide properties increased 6.8% (a 7.7% increase using actual dollars).
International comparable systemwide RevPAR rose 7.3% (an 11.9% increase using actual dollars), including a 5.8% increase in average daily rate (a 10.4% increase using actual dollars) in the second quarter of 2011. Excluding the Middle East and Japan, international comparable systemwide constant dollar RevPAR rose 12.4% (a 17.5% increase using actual dollars).
In North America, comparable systemwide RevPAR increased 6.6% in the second quarter of 2011, including a 3.1% increase in average daily rate.
“Marriott reported earnings in line with our more aggressive 38 cents a share estimate, after adjusting for one-time items,” said David Loeb, managing director and senior real estate research analyst with Robert W. Baird & Co., Milwaukee, Wisconsin. “Excluding a miss in timeshare results, Marriott would have beat estimates by 3 cents. We think earnings will be more stable and predictable following the planned spinoff of the timeshare business later this year.”
The company’s worldwide pipeline of hotels under construction, awaiting conversion or approved for development grew to more than 100,000 rooms, including nearly 44,000 rooms outside North America. Marriott said it plans to add at least 21 hotels in China and double its rooms in Europe to 80,000 by 2015.
Again, timeshare sales weighed on earnings, as sales fell to US$163 million from US$167 million a year ago. The new Marriott Vacations Worldwide Corp., as it will be known when it is spun off later this year, is moving its headquarters to Orlando, Florida, and will be the first large, publicly traded company focused almost exclusively on selling timeshares.
For the third quarter, the company assumes North American comparable systemwide RevPAR will increase 5% to 7%, reflecting strong demand in most markets but continued weak demand in Washington, D.C.
Outside North America, the company assumes third quarter 2011 comparable systemwide RevPAR on a constant dollar basis will increase 6% to 8%, excluding the Middle East and Japan. Including the Middle East and Japan, comparable systemwide RevPAR outside North America could be approximately 200 basis points lower.
For the full year, Marriott has lowered its expectations due to expected continued weakness in Japan and the Middle East, higher-than-expected costs related to the timeshare spin-off and weaker-than-expected results from its timeshare business.