- The Washington Times - Friday, October 5, 2007

ASSOCIATED PRESS

Marriott International Inc.’s third-quarter profit fell by about 7 percent and the hotel operator trimmed the upper end of its 2007 earnings forecast yesterday as the lodging industry continued to slow from its once-robust pace.

Bethesda-based Marriott said third-quarter net income slipped to $131 million (33 cents a share) on revenue of $3.04 billion.

That compared with a net income of $141 million (33 cents) on revenue of $2.70 billion in the same period last year. Per-share earnings for the latest quarter were based on about 31 million fewer shares outstanding.

Marriott attributed its shrinking income to a drop in timeshare profits and a higher tax rate.

Excluding the impact of the company’s synthetic fuel business, adjusted profit totaled $122 million (31 cents) down from $144 million (34 cents) a year ago.

The results beat consensus estimates of analysts surveyed by Thomson Financial, who had expected profit of 30 cents on revenue of $2.86 billion.

Even as quarterly results came in ahead of analysts’ predictions, Marriott lowered the high end of its 2007 outlook and warned its 2008 profit would miss Wall Street’s expectations.

Still, Arne Sorenson, Marriott’s chief financial officer, said the company does not forecast a significant downturn in lodging any time soon.

“There is still significant growth left in the current lodging cycle, albeit at a slower pace than in the past,” he said.

Analysts agreed there are no signs of a serious recession ahead for hotels. But the company’s 2008 outlook provides fodder for those who fear the cycle is heading down, wrote Jeffrey Donnelly of Wachovia Securities in a research note.

While the company’s forecast for growth remains solid, Mr. Donnelly said yesterday’s numbers would likely hurt Marriott stock “when the fear of a recession — at least as it pertains to the lodging industry — is so high.”

Marriott’s stock fell yesterday nearly 5 percent, or $2.04, to $42.28.

For all of 2007, the company saw earnings between $1.88 and $1.90 per share, lower than the $1.88 to $1.96 range it predicted in July. Analysts expected $1.95.

Marriott’s fourth-quarter forecast of 61 cents to 63 cents per share was also short of the 68-cent projection from analysts.

Looking ahead to 2008, Marriott predicted profits of $2.10 to $2.25 per share, also below Wall Street’s $2.30 estimate. And the company said it expected revenue per available room, a key lodging benchmark known as revPAR, to be 5 percent to 7 percent worldwide.

Marriott and the hotel industry enjoyed a boom in recent years, as a limited supply of rooms and growing demand from travelers pushed up room prices.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide