Marriott Reports Major Increase in Second Quarter Profits

Marriott International reported second quarter 2010 net income totaled $119 million, a 42 percent increase compared to second quarter 2009 adjusted net income. Diluted EPS totaled $0.31, a 35 percent increase from adjusted diluted EPS in the year-ago quarter. On April 22, 2010, the company forecasted second quarter diluted EPS of $0.25 to $0.29.

Total fee revenue increased 13 percent to $287 million as a result of strong revenue per available room (revPAR) and unit growth. Incentive fees climbed 31 percent. Worldwide company-operated comparable revPAR rose 9.9 percent (an 8.2 percent increase using constant dollars). Average daily rate rose 1.6 percent (a 0.1 percent increase using constant dollars). North American company-operated comparable revPAR increased 7.9 percent (a 7.5 percent increase using constant dollars) with a 1.2 increase in average daily rate (a 0.8 percent increase using constant dollars).

The company’s worldwide pipeline of hotels under construction, awaiting conversion or approved for development totaled nearly 95,000 rooms, including over 36,000 rooms outside North America More than 6,500 rooms opened during the second quarter, including over 1,800 rooms in international markets and nearly 1,300 rooms converting from competitor brands. At the end of the second quarter, Marriott’s newest brand, The Autograph Collection, included 10 hotels with over 1,500 rooms.

Marriott said the company anticipates even more favorable pricing in the second half of 2010 and into 2011. Combined with productivity improvements achieved over the last year, strong unit growth and increasing demand, Marriott said he expects to look forward to growing cash flow and strong earnings in 2010 and beyond.

Marriott revenues totaled nearly $2.8 billion in the 2010 second quarter compared to approximately $2.6 billion for the second quarter of 2009. Base management and franchise fees rose 10 percent to $241 million reflecting higher revPAR and fees from new hotels. Second quarter incentive management fees increased 31 percent to $46 million. In the second quarter, 25 percent of company-managed hotels earned incentive management fees compared to 23 percent in the year-ago quarter.

Approximately 62 percent of incentive management fees came from hotels outside North America in the 2010 quarter compared to 61 percent in the 2009 quarter. Worldwide comparable company-operated house profit margins increased 90 basis points in the second quarter reflecting higher occupancy, slight rate increases and strong productivity.

For the full year 2010, the company assumes comparable systemwide revPAR on a constant dollar basis will increase 4 to 6 percent in North America, 6 to 8 percent outside North America and 4 to 6 percent worldwide. The company expects to open over 30,000 rooms in 2010 as most hotels expected to open are already under construction or undergoing conversion from other brands. Marriott continues to estimate that, on a full-year basis, one point of worldwide systemwide revPAR impacts total fees by approximately $10 million to $15 million pretax and impacts owned, leased, corporate housing and other revenue, net of direct expense, by approximately $3 million to $5 million pretax.