talked up its plans on Tuesday, saying earnings per share would grow by as much as 22% through 2006.
At an analyst meeting, Marriott said EPS growth would come in between 17% and 22% from 2003 to 2006, with revenue per available room, or revpar, gaining between 3% and 6%. The news comes five days after
Smith Barney upgraded Marriott and broke with the conventional line of thinking that the company would underperform rivals during the early stages of the industry recovery.
"Over the next 20 years, we expect to grow faster than the industry but with less risk. We will throw off considerable cash flow and generate tremendous shareholder value," said J.W. Marriott Jr., chairman and chief executive, in a statement. "Travel has always been a growth industry, and I believe it will continue to be."
According to Marriott, fiscal 2003 earnings will come in between $1.86 and $1.88 a share, which is on the high end of expectations of $1.86 a share, according to Thomson First Call. Marriott shares rallied on the news, gaining 86 cents, or 1.9%, to $46.17 on Tuesday. Since last Thursday's upgrade, shares have gained more than 7%, even though the overall market has fallen.
A big driver behind Marriott's earnings growth will be not only its expansion plan, which will add as many as 95,000 rooms by 2006, but also management fees and revenue. Assuming revpar comes in at 3% over the next three years, the low end of expectations, Marriott said that incentive management fee revenue could increase between 20% and 25% over 2003 forecasted levels.
Marriott also unveiled a new marketing campaign. "If a customer books through Marriott and then finds a lower publicly available rate within 24 hours for the same hotel, room type and dates anywhere on an Internet travel site, through a travel agency, travel management company or even Marriott, the hotel will match the lower rate and give an additional 25% off," said a Marriott press release.
Of course, this deal comes with a catch.
Opaque travel sellers such as Hotwire and Priceline, which resell hotel rooms at extreme discounts by serving as an outlet for rooms that would otherwise go unsold, are exempt from the guarantee.