Marriott Meets Profit Target
While many investors were expecting
Marriott International
(MAR) - Get Report
to report an ugly quarter because of the weak economy, the hotel operator matched estimates and only slightly trimmed its full-year guidance before the market open Thursday.
Marriott continues to benefit from its global footprint, as revenue per available room (revpar) -- a key hotel operating metric -- outside North America rose 18.5% in the first quarter. The rise was 11.5% excluding currency benefits from the weak dollar. Worldwide revpar rose 6%, or 4.5% excluding currency benefits.
Earnings per share totaled 33 cents in the quarter, down 18% from a year earlier but matching analyst estimates.
"While performance at our U.S. hotels reflected slowing economic growth, few markets have witnessed discounting and full service room rates rose 4 percent during the quarter," CEO J.W. Marriott Jr. said in a statement. "With the U.S. on sale through a lower dollar, international guest arrivals are energizing demand in several key markets.
"Attendance at group meetings was on track during the quarter and group cancellations remained lower than 2007 levels," he said. "Group meeting bookings for the remainder of 2008 are strong. Given these trends, we remain cautiously optimistic about 2008 demand trends.
Marriott said it expects to earn $1.98 to $2.08 per share this year. Analysts expect $2.00 per share, according to Thomson Financial. Previously, Marriott guided to $2-$2.10 per share.
"We expect that the stock will react positively compared with its peers, given Street expectations that MAR will trim its 2008 outlook again," said FBR analyst Wilkes Graham in a research note.
In recent trading, Marriott shares rose 89 cents, or 2.7%, to $33.38.