By Danielle Douglas
Capital Business Staff Writer
Thursday, July 15, 2010; 3:37 PM

Marriott International said Thursday it plans to raise room rates in the coming months, as demand from travelers picks up.

The plan follows the release of quarterly results that surpassed analysts expectations. For the three months ending June 18, Marriott earned $119 million, or 31 cents per share, up 42 percent from the same period a year ago. Revenue totaled nearly $2.8 billion, compared with $2.6 billion for the second quarter of 2009.

"The resurgence of corporate booking will likely yield higher room rates by the end of 2010," Arne Sorenson, president and chief operating officer of the Bethesda-based hotel giant, said during a conference call with analysts. "Our optimism is not so much driven by this quarter's numbers, as it is by the prospects of the next few years."

Many analysts were anticipating that hotel companies, like Marriott, would lower earnings estimates in response to general economic uncertainty. That hasn't been the case. Instead, Marriott upped its full-year outlook, with expectations of a 4 percent to 6 percent increase in revenue per available room -- a key industry measure of profit.

Given that revenue per available room declined for many companies by 15 percent to 25 percent last year, "this is real a bounce off the bottom," said John Arabia, an analyst with Green Street Advisors. "Marriott is a bellwether for industry operator fundamentals because it has such wide geographic and brand distribution. . . . Their results show that the recovery is real."

Nevertheless, the industry-wide plummet in profits since 2008 -- roughly 50 percent on average for full-service hotels -- makes a full-throated recovery a far-off prospect. "If you compare absolute numbers of where we are now to 2007, we have a big hole that we have to climb out of," said Bobby Bower, senior vice president of operations of Smith Travel Research. He noted that further economic tribulation could make that hole even deeper.

"We're not oblivious about the recent concerns" about the broader economy, Sorenson said, "but we have not seen those concerns impact our business and we continue to be optimistic."

Considering the degree to which rates have fallen since the onslaught of the recession, any increase would simply bring the Bethesda company closer to normalcy.

While Marriott's corporate and premium room rates saw low double-digit growth in the previous quarter, they remain about 20 percent off from 2007 peak levels. What's more, roughly 15 percent of the company's rooms are listed at a discount.

C. Patrick Scholes, an analyst with FBR Capital Markets, said the company's results suggest a recovery may be underway.

"There is a lower supply of vacant hotel rooms than there was two years ago, and now hotels can demand higher prices from business travelers," said Scholes.