- The Washington Times - Monday, February 13, 2006

Marriott International Inc. is riding a rising tide of travel that is filling its hotel rooms, boosting earnings and lifting its stock price.

The Bethesda hotel operator reported last week that its fourth-quarter net income rose 25 percent to $237 million ($1.07 per share) from $189 million (79 cents) a year ago. For the fiscal year ended Dec. 30, Marriott reported that its net income rose 12 percent to $669 million ($2.89) from $596 million ($2.48) the previous year. Marriott also upgraded its 2006 earnings forecast from the $2.87 to $2.97 per share range to $2.95 to $3.05.

Shares of Marriott gained $3.33 Thursday and Friday but retreated 48 cents yesterday to close at $68.96 on the New York Stock Exchange.

Chairman and Chief Executive Officer J.W. Marriott Jr. attributed the strong quarter to an increase in travel and a spike in management fees.

“Across all travel segments, group, business transient and leisure, revenues remained strong in the quarter. Meeting attendance was solid and group spending was robust,” he said.

Marriott also benefited from a 19 percent increase in revenues from management and franchise fees. More customers reserved rooms online, giving the company’s bottom line another boost, the company stated.

Earnings at the world’s largest hotel company beat Wall Street’s estimate of 98 cents per share by 9 cents.

Jeff Randall, a hotel and resort industry analyst with A.G. Edwards & Sons Inc. in St. Louis, said the Marriott company’s bottom line was boosted by a $17 million sale of some Courtyard hotels and $15 million in proceeds from other real estate ventures — one-time gains that analysts weren’t counting on.

But that does not diminish Marriott’s strong quarter, he said.

Marriott’s revenue per available room, known as “RevPAR” in industry parlance, rose 10.4 percent in 2005. RevPAR divides total revenue by the number of available rooms, not just occupied rooms, making it a good indicator of overall strength and how well a hotel fills its rooms in the off-season.

“What’s really driving this is the pricing power they’re getting at the hotels, with real gains making up a greater portion of [RevPAR] growth,” he said.

“Marriott is a good bellwether stock for the lodging industry,” Mr. Randall said. “The fact that the outlook for ‘06 looks so favorable speaks well for Marriott and the lodging industry in general.”

Mr. Randall does not own stock in Marriott, but A.G. Edwards has a business relationship with the company.

Banc of America upgraded Marriott’s stock from “neutral” to “buy” following last week’s earnings report.

“We remain constructive on the hotel cycle, in general; we believe [Marriotts earnings per share] growth could accelerate to a 20 percent-plus clip by 2007,” analyst J Cogan said in a Banc of America research report.

Marriott Chief Financial Officer Arne Sorenson told investors in a conference call last week that the chain is preparing to reopen at least four hotels — three in Cancun, Mexico, and one Ritz-Carlton in New Orleans — that were damaged by Hurricanes Katrina and Rita.

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