Marriott revenue slides, but profit up in second quarter
By Danielle Douglas,
An uptick in room revenue boosted quarterly profits at Marriott International, but costs incurred from the spinoff of its timeshare business sent total revenue sliding.
The Bethesda-based hotel operator recorded net income of $104 million, or 30 cents per share, in the first quarter, compared to $101 million, or 26 cents per share, the same period a year ago. Total revenue penciled in at $2.5 billion through the three months ending March, down from $2.7 billion a year earlier.
Revenue per available room, a key industry metric, grew 6.8 percent, while average daily room rates climbed 3.5 percent worldwide.
“There is tremendous strength in global travel today; travelers are on the road, attending meetings, making sales calls and taking family vacations,” Marriott chief executive Arne Sorenson, who officially took the helm last month, said in a release.
“Group business strengthened in the first quarter with increasing occupancy, room rates and greater group spend on food, beverage and other services.”
Revenue from corporate guests, he said, grew over 9 percent in the quarter, helped by hikes in room rates. Group bookings for the reminder of 2012 were about 11 percent higher at the end of the first quarter than the same period a year ago.
Marriott, whose brands include Residence Inn and Ritz-Carlton, encountered $21 million in adjustments from spinning off its timeshare business at the end of 2011. Expenses included transaction costs and the addition of license fees.
The lodging giant has made several moves to shed its ancillary businesses. Just this Monday, Marriott announced the sale of its ExecuStay corporate and temporary housing business to Oakwood Worldwide for an undisclosed price.
The deal gives the Phoenix-based Oakwood a portfolio of furnished apartments in more than 700 locations across the country. Marriott acquired ExecuStay in 1999. The sale is scheduled to close at the end of this month.
“We’re focused on our core business,” said Laura Paugh, Marriott’s senior vice president of investor relations, in an interview. “When you combine the sale of ExecuStay with the spin-off of our timeshare business, it really keeps us far more focused on lodging management and franchise business.”
Management fees in the third quarter rose 3 percent to $124 million, while franchise fees climbed 8 percent to $126 million based on higher room revenue and fees from new hotels.
Marriott opened roughly 3,200 rooms during the quarter, including 950 rooms converted from competing brands. The company increased the number of rooms in its development pipeline from 110,000 to 115,000, of which 51,000 are located outside the United States.