Weaker Outlook Muddies Marriott

Marriott International(MAR) kicked off hotel operators' earnings season with the message that lodging fundamentals remain strong but are slowing from the peak growth of last year.

Marriott's profit for the second quarter slightly beat expectations, but the hotel operator trimmed the top end of its full-year guidance for revpar, or revenue per available room -- a key hotel operating metric.

Shares were trading down $1.77, or 3.8%, to $44.58.

The Washington, D.C.-based company said its net income for the second quarter totaled $207 million, up 11% from a year earlier. On a per-share basis, excluding certain items, earnings were 57 cents, topping the 53 cents that analysts polled by Thomson Financial had expected.

The beat was mostly driven by higher-than-expected profits in Marriott's time-share business.

However, the earnings were overshadowed by slightly disappointing revpar results for the quarter, as well as a reduced revpar outlook for the year.

For the quarter, Marriott's revpar in North America rose 5.6%. That was below the estimate of 6.4% growth from Deutsche Bank analyst Bill Lerner. While full-service hotels showed strength, limited-service hotels disappointed.

International revpar growth, however, came in stronger than expected, at 15.5% growth.

Marriott said North American revpar is now expected to rise 6% to 7% this year, compared with its previous prediction of 6% to 8% growth.

The company expects full-year earnings of $1.88 to $1.96 a share, up from the prior guidance of $1.84 to $1.94.

The increased guidance, however, stems from the second-quarter earnings beat. The company's forecast for third-quarter EPS of 27 cents to 31 cents is below Wall Street's current estimate of 37 cents.

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