Updated from 3:41 p.m. EDT

Hotel operator

Marriott International

(MAR) - Get Report

beat Wall Street estimates when it reported second-quarter earnings Thursday.

The company reported earnings per share of 50 cents for the three-month period that ended June 16, up 2 cents from the Wall Street consensus of 48 cents, according to

First Call/Thomson Financial

, and up 19% from the 42 cents a share reported in the comparable period last year.

Marriott closed up 1, or 3%, at 37 3/4.

For the quarter, net income rose 11% over last year's second quarter, to $126 million from $113.5 million. Sales for the quarter totaled $2.4 billion, a 17% jump from the $2.05 billion in the second quarter of 1999. Systemwide sales -- which include sales of managed and franchised properties -- grew 13%, to $4.8 billion from $4.25 billion.

In a statement, the Washington, D.C.-based company highlighted strong demand in New York, Boston, San Francisco and Hong Kong. The gains reflect both increases in room rates and occupancy.

Marriott added 227 hotels and timeshare resorts to its lodging portfolio over the past 12 months. During the quarter, Marriott announced an agreement to sell 10 extended stay and select service hotels for $145 million while retaining long-term management agreements. Eight of the hotels were sold during the quarter for approximately $90 million. The remaining two hotels are expected to be sold by the end of the year.

Revenue per available room, a key statistic in the hotel business, increased 7.6% over last year's second quarter.

William Crow, an analyst at

Raymond James & Associates

who follows Marriott, expected revenue per available room to rise 4% to 5%. "What we are seeing is huge demand on the consumer side for hotel rooms," he said. He said the increase is a reflection of both the health of the economy and Marriott's strong portfolio of brands, which includes

Ritz Carlton

and

Marriott Renaissance

.

Crow did not raise his year-end earnings estimates, although he said the potential exists for Marriott to exceed expectations in the final two quarters of the fiscal year. He did, however, raise his rating to a strong buy to a buy Thursday and increased his 12-month target price for Marriott stock to 44 from 39.

Marriott's earnings bode well for other hotel operators set to release earnings in the coming weeks, especially those with strong assets in the Northeast and on the West Coast, he said. Specifically, he is looking for robust growth from

Starwood Hotels and Resorts

(HOT)

, which operates

Sheraton

and

Westin

, among others.

Crow similarly raised his rating on Starwood to a strong buy from a buy and his 12-month price target to 40 from 35. Starwood is scheduled to release quarterly earnings Aug. 7. Crowe's firm has not performed underwriting for either Marriott or Starwood.

Shares of Starwood finished up 7/16, or 1.31%, at 33 3/4.