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Marriott International


, the world's biggest hotel operator, posted a strong fourth quarter Tuesday, citing a rebound in business travel.

The company also rolled out 2004 guidance that was mostly in line with expectations. In early trading, Marriott shares slipped 67 cents, to $44.89.

Marriott posted fourth-quarter earnings of $169 million, or 69 cents a share. That marked a major reversal from the year-ago loss of $37 million, or 15 cents a share, which included a hefty charge for discontinued operations.

Excluding all items, which is how Wall Street views the hotelier, Marriott posted a profit of $170 million, or 69 cents a share, which tops the 61-cent analyst estimate and the year-ago profit of $116 million, or 47 cents a share.

Revenue was up 6%, coming in at $2.87 billion, while revenue per available room, a key industry metric called revpar, rose just 0.4% systemwide, in the fourth quarter. Outside of North America, revpar was stronger, showing a 3.4% year-over-year gain.

In a sign that industry fundamentals may finally be turning, much of Marriott's strength came from its core hotel business. In the fourth quarter, income from its synthetic fuel operation came in at $30 million, or 12 cents a share, which is down from the $36 million, or 14 cents a share, it had a year ago.

"We are pleased with our current booking patterns in 2004 and believe the strengthening economy is beginning to impact favorably individual business travel," the company said in a statement. "Combined with already strong leisure business, we are optimistic about 2004 demand growth."

But while Marriott management is optimistic, so are expectations. Marriott provided 2004 earnings guidance that matched October guidance and was essentially flat with current projections, and that may come as a disappointment in the wake of



recent earnings release. Last week, Starwood boosted guidance well above the Wall Street consensus, sparking optimism that profit growth has returned to the sector.

Assuming flat profit margins and revpar gains between 2% and 4%, the company said that first-quarter earnings would come in between 38 cents and 42 cents a share, toward the low end of the 42-cent analyst estimate. For the full year, Marriott projects earnings will come in between $2.06 and $2.16 a share, at the midpoint of the current analyst estimate of $2.12.


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set 2004 revpar guidance at 3% to 4%. Starwood, by contrast, set it at 5% to 6%," said Marc Falcone, analyst at Deutsche Bank Securities, in a note. "Marriott reaffirmed its 2004 revpar guidance of 3% to 4%."