Marriott Reports Operating Loss for First Quarter

Marriott International, Inc. reported first quarter 2009 adjusted income from continuing operations attributable to Marriott of $87 million, a 29 percent decline over the year-ago quarter, and adjusted diluted earnings per share (EPS) from continuing operations attributable to Marriott shareholders of $0.24, down 27 percent. The company’s EPS guidance for the 2009 first quarter, disclosed on February 12, 2009, totaled $0.13 to $0.15.

Adjusted results for the 2009 first quarter exclude $129 million pretax ($84 million after-tax and $0.23 per diluted share) of restructuring costs and other charges resulting from the continued soft lodging and timeshare demand environment. Restructuring costs reflecting additional severance costs totaled $2 million pretax.

Other charges totaled $127 million pretax and included charges against lodging and timeshare assets, and reserves for loan losses and security deposits. The reported loss from continuing operations attributable to Marriott was $23 million in the first quarter of 2009 compared to reported income from continuing operations attributable to Marriott of $122 million in the year-ago quarter.

Marriott added that despite the downturn, the company was moving ahead with a strong business model that earned the company $256 million in total hotel management and franchise fees in the first quarter and generating $215 million in adjusted earnings before interest expense, taxes, depreciation and amortization.

In the first quarter (the 12-week period from Jan. 3, 2009 to March 27, 2009), RevPAR (revenue per available room) for the company’s comparable worldwide company-operated properties declined 19.6 percent (17.8 percent using constant dollars) and RevPAR for the company’s worldwide comparable systemwide properties declined 17.3 percent (16.2 percent using constant dollars).

International comparable company-operated RevPAR declined 24.1 percent (17 percent using constant dollars), including a 13.4 percent decline in average daily rate (5.3 percent using constant dollars) in the first quarter. In North America comparable company-operated RevPAR declined 18 percent and comparable systemwide RevPAR declined 16.2 percent.

RevPAR at the company’s comparable company-operated North American full-service and luxury hotels (including Marriott Hotels & Resorts, The Ritz-Carlton and Renaissance Hotels & Resorts) was down 17 percent driven by an 8.2 percent decline in average daily rate.

Marriott added 53 new properties (8,814 rooms) to its worldwide lodging portfolio in the 2009 first quarter, including a JW Marriott and a Ritz-Carlton in Shenzhen, China. Five properties (805 rooms) were converted from competitor brands and four limited-service franchised properties (477 rooms) exited the system during the quarter.

At quarter-end, the company’s lodging group encompassed 3,227 properties and timeshare resorts for a total of nearly 570,000 rooms. The company’s worldwide pipeline of hotels under construction, awaiting conversion or approved for development totaled over 115,000 rooms.

Marriott revenues totaled approximately $2.5 billion in the 2009 first quarter compared to $2.9 billion for the first quarter of 2008. Base management and franchise fees declined 13 percent to $213 million reflecting worldwide declines in RevPAR offset in part by fees from new hotels. With continued soft lodging demand trends worldwide, first quarter incentive management fees declined 42 percent.

The percentage of company-operated hotels earning incentive management fees declined to 25 percent in the 2009 first quarter compared to 52 percent in the year-ago quarter. Approximately 55 percent of incentive management fees came from hotels outside of North America in the 2009 quarter compared to about 45 percent in the 2008 quarter.

For the full year 2009, Marriott expects the business environment to remain unpredictable and, therefore, is unable to give its typical annual guidance. Instead, the company is providing the following assumptions, which it is using internally for planning purposes.