Robert H. Smith School of Business
Capital Business
Posted at 06:12 PM ET, 05/01/2013

Marriott reports 31% increase in quarterly profits, but sequestration hitting some hotels

Hospitality giant Marriott International reported a 31 percent increase in first-quarter profits, even as the federal government continued to cut back on conferences and meetings.

The Bethesda-based company said Wednesday that its profits rose to $136 million, or 43 cents per share, up from $104 million, or 30 cents per share in the same quarter last year.

“Resorts in Florida and the Caribbean and ski resorts out West were very strong,” said Laura Paugh, senior vice president of investor relations for Marriott. “The only weak part of the business was group bookings.”

Group bookings in North America were up about 4 percent, but Paugh said suburban areas such as Crystal City and Pentagon City were particularly hard hit by sequestration and pullbacks in Defense Department spending.

Marriott’s revenue grew 23 percent to $3.1 billion from $2.6 billion a year earlier.

The amount of revenue generated per available hotel room, a key industry metric, grew 5.8 percent in North America to $179.53, exceeding peak 2007 levels, according to Arne M. Sorenson, Marriott’s president and chief executive

“Our business has seen dramatic recovery in the past few years,” Sorenson said in a statement.

In the Washington area, revenue-per-available-room inched up about 3 percent,in large part because of the presidential inauguration.

“But after that, we’ve seen a drop-off in government business,” Pauch said.

The company opened 32 new hotels in the first quarter, including The Ritz-Carlton Abu Dhabi.

Marriott also announced Wednesday that it was raising its projections for the full year. The company now expects annual profits between $1.93 cents per share and $2.08 per share, a 3 cent increase from previous estimates.

By  |  06:12 PM ET, 05/01/2013

 
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