Marriott Tumbles on Soft Outlook

BETHESDA, Md. ( TheStreet) -- Marriott International ( MAR) shares tumbled Monday morning, dragging other hotel stocks with it, after the hotelier's CFO said North American demand was below expectations.

Marriott CFO Carl Berquist, speaking at the J.P. Morgan Gaming, Lodging, Restaurant & Leisure Management Access Forum in Las Vegas Monday, said demand in international markets has been strong but that North American revPAR -- or revenue per available room, a key metric in the hotel industry that multiplies a property's room rate by its occupancy rate -- 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 Marriott shares 7.1% lower to $35.00 in morning trading Monday. The rest of the hotel sector was also sharply lower.

Starwood Hotels & Resorts Worldwide ( HOT) lost 4.2% to $2.49, Wyndham Worldwide ( WYN) fell 3.1% to $30.82 and Hyatt ( H) shed 4.4% to $42.17.

The iShares Dow Jones U.S. Consumer Services ( IYC), an exchange-traded fund that counts all four stocks among its holdings, traded near the unchanged mark at $70.14. The Vanguard Consumer Discretionary ( VCR) ETF added less than 0.1% to $62.67.

Marriott's Berquist said he expects 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.

Berquist also reaffirmed Marriott's outlook for first-quarter earnings-per-share between 24 cents and 28 cents.

First-quarter financial results are due to be reported on April 20. Analysts' consensus is for Marriott to book a profit of $107.5 million, or 28 cents per share, on revenue of $2.88 billion.

When Marriott reported its fourth-quarter results earlier this year, investors were particularly impressed with word from Marriott that it would split itself into two separate, publicly traded companies.

"Marriott International expects to spin off its timeshare operations and development business as a new independent company through a special tax-free dividend to Marriott International shareholders in late 2011," the company said in February.

Analysts from Goldman Sachs ( GS) cut their rating and price target on Marriott, citing uncertainty about the company's planned timeshare spin-off.

Goldman downgraded Marriott to neutral, from buy, and cut its price target on the stock by $10 to $38.

-- Written by Miriam Marcus Reimer in New York.

>To contact the writer of this article, click here: Miriam Reimer.

>To follow the writer on Twitter, go to http://twitter.com/miriamsmarket.

>To submit a news tip, send an email to: tips@thestreet.com.

READERS ALSO LIKE:




>>See our new stock quote page.

Get more stock ideas and investing advice on our sister site, Stockpickr.com.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

More from Stocks

The Best Investment Advice? Stay Diversified

The Best Investment Advice? Stay Diversified

Attention 60 Minutes: Google Isn't the Only Big-Tech Monopoly

Attention 60 Minutes: Google Isn't the Only Big-Tech Monopoly

Listen: Should You Buy Cisco Now?

Listen: Should You Buy Cisco Now?

Amazon Could Devastate Walgreens and Rite Aid by Getting Into Pharmacy Business

Amazon Could Devastate Walgreens and Rite Aid by Getting Into Pharmacy Business

Amazon's Assault on Grocery Stores Will Have a Profound Impact on Many

Amazon's Assault on Grocery Stores Will Have a Profound Impact on Many