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Marriott Earnings: Reservation for Profits?

Marriott said Wednesday that it expects revPAR to rise between 6% and 8% in North America, and between 5% and 7% outside North America, in the second quarter and in 2011.

Second-quarter earnings are expected to come in between 34 cents and 38 cents per share, lower than the 39 cents analysts had forecast.

Marriott CFO Carl Berquist, speaking at the J.P. Morgan Gaming, Lodging, Restaurant & Leisure Management Access Forum in Las Vegas last month, said demand in international markets has been strong but that North American revPAR has been less robust than expected, especially in large group hotels in key cities like New York, Atlanta, Orlando and Washington, D.C.

Those cautionary words led investors to bid shares of Marriott , Starwood Hotels & Resorts Worldwide (HOT - Get Report), Wyndham Worldwide (WYN - Get Report) and Hyatt (H - Get Report) much lower.

Marriott shares remain 7.4% lower since the March 28 announcement, and Hyatt remains 4.8% lower as well. Starwood and Wyndham are 0.9% and 2.4% lower, respectively.

The iShares Dow Jones US Consumer Services (IYC), an exchange-traded fund that counts all four hotel stocks among its holdings, traded 0.1% higher Thursday morning at $72.08. The Vanguard Consumer Discretionary (VCR) ETF was unchanged at $64.29.

Marriott's Berquist said he expected current quarter North American systemwide revPAR growth of 5% to 6%. Worldwide revPAR this quarter should increase by around 7%, at the bottom end of its guidance for growth of 7% to 9%.

International revPAR this quarter should grow around 11% year-over-year. In 2010 Marriott's international properties accounted for 65% of all incentive fees.

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MAR $69.72 0.69%
WYN $70.38 -1.70%
VCR $123.61 -0.03%
IYC $143.85 -0.26%
H $47.58 -0.73%


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