- The Washington Times - Tuesday, April 21, 2009

NEW YORK (AP) - Hotel operator Marriott International Inc. reports earnings for its fiscal first quarter on Thursday. The following is a summary of key developments and analyst opinion related to the 12-week period that ended March 27.

OVERVIEW: The hotel industry faces a difficult environment as businesses and individuals cut back on travel during the recession.

Marriott has reduced its spending and is making changes in its properties such as limiting restaurant hours and room amenities and freezing hiring. It also made cuts in its time-share business. Marriott executives also have said they plan to reduce the company’s debt by $600 million to $700 million in 2009.

Management has said the recession makes it difficult to forecast the company’s performance. But Marriott reported it lost $10 million in its fiscal fourth quarter, and management said it was one of the most challenging quarters the company had ever faced.

BY THE NUMBERS: The company has predicted that quarterly earnings from continuing operations will range from 13 cents to 15 cents per share. Analysts surveyed by Thomson Reuters, who generally exclude discontinued operations, predict a first-quarter profit of 14 cents per share on revenue of $2.53 billion.

ANALYST TAKE: Deutsche Bank-North America analyst Chris Woronka anticipates most of the industry will see weaker results but the aggressive cost cuts will allow most hotel chains to meet expectations. He noted, however, that the results may weaken moving forward.

“We continue to believe that rising unemployment, incrementally tighter corporate travel budgets, and a bit more supply creep remain key threats that could serve to undermine what we expect to ultimately be a very slow and modest recovery,” he wrote in a note.

Woronka, who rates Marriott shares a hold, said the company has a relatively conservative balance sheet and management that has handled recessions before. He said the company may cut its corporate costs a bit more than anticipated to offset weaker operating results.

WHAT’S AHEAD: Analysts say March was a difficult month for the hotel industry, and investors will be looking for any signs of stabilization in the market. Analysts also anticipate the company may announce further cost reductions.

STOCK PERFORMANCE: Marriott shares lost 15 percent in the fiscal first quarter, closing at $17.05 on March 27. The stock has traded between $11.88 and $37.29 during the past 52 weeks.

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