New York and San Francisco drive Marriott’s fourth quarter growth
Marriott bucked a trend with its earnings growth, driven by strength in North America. For example, Starwood and Hyatt saw profits decline in the fourth quarter.
Marriott International Inc., the largest publicly traded U.S. hotel chain, said fourth-quarter earnings rose 28 percent as demand increased in cities such as New York and San Francisco.
Net income climbed to $181 million, or 56 cents a share, from $141 million, or 41 cents, a year earlier, the Bethesda, Maryland-based company said today in a statement. The hotelier was expected to have earnings of 55 cents, the average estimate of 15 analysts in a Bloomberg survey. Marriott in October forecast earnings of 52 cents to 56 cents a share.
Marriott Chief Executive Officer Arne Sorenson said in October that he was “particularly bullish” on North America. The company was helped by bookings in U.S. cities, particularly in the greater New York area, where local residents displaced by Hurricane Sandy stayed at hotels temporarily, Patrick Scholes, an analyst at SunTrust Robinson Humphrey Inc. in New York, said before results were announced.
Demand was “very strong” in California cities such as Los Angeles and San Francisco, which have benefited from an economic recovery, Scholes said. He has a buy rating on Marriott.
“Worldwide international travel increased to record levels in 2012 while hotel supply growth was low in most markets around the world, especially in the U.S,” Sorenson said in today’s statement.
Revenue per available room, an industry measure of occupancies and rates, climbed 5.9 percent at the company’s hotels in North America. Outside North America, revpar rose 3.2 percent, while worldwide the measure increased 5.2 percent in the fourth quarter.
The company expects North American and worldwide revpar to climb 4 percent to 7 percent this year. That compares with an October forecast of a 5 percent to 7 percent increase in North American revpar.
“While this year is off to a strong start, we are providing a somewhat broader and more conservative range for 2013 revpar growth due to the potential effect on the travel industry of the impending federal budget sequestration,” Sorenson said, referring to government spending cuts.
Marriott said it expects earnings to climb 10 percent to 19 percent this year, to $1.90 to $2.05 a share. Investment spending, including acquisitions and financing, probably will total $600 million to $800 million, the hotelier said.
Total revenue climbed to $3.76 billion in the fourth quarter from an adjusted $3.4 billion. The year-earlier figure excluded results from a timeshare business that was spun off.
Marriott, whose brands include Ritz-Carlton, released its results after the close of regular U.S. trading. The company’s shares fell 1 percent to $40.83 today in New York. They have gained 17 percent in the past year.
Starwood Hotels & Resorts Worldwide Inc., owner of the luxury St. Regis and W brands, on Feb. 7 said quarterly earnings declined as revenue growth slowed in Europe and costs rose. Hyatt Hotels Corp., the chain controlled by the Pritzker family, said fourth-quarter profit fell 69 percent as margins decreased at some of its properties.
(Marriott will hold a conference call tomorrow at 10 a.m. New York time. See MAR US EVT .)
–Editors: Daniel Taub, Christine Maurus
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