Marriott profit grows
NEW YORK - MARRIOTT International Inc is betting that it can grow earnings this year through higher bookings and rates despite slowing growth overseas.
The Bethesda, Maryland, hotel company raised its profit expectation for the full year but reined in its prediction for fees for extras like Wi-Fi. It also says demand growth is slowing in the Middle East and in Asia, where economic growth is weakening. It's particularly concerned about demand for higher-end hotels.
Worries about the wealthy cutting back on spending have surfaced in the last several months following warnings by luxury companies including jeweller Tiffany & Co.
Marriott made its prediction as it reported second-quarter net income that rose six per cent from a year ago. Shares fell about four per cent after the results were released.
Marriott, which also operates Ritz-Carlton hotels, Fairfield Inn & Suites and other lodging brands, earned US$143 million ($12.6 billion), or 42 cents per share, in the 12 weeks that ended June 15, compared with US$135 million, or 37 cents per share, a year earlier.
Revenue slipped seven per cent to US$2.78 billion. Marriott had US$564 million in revenue from its timeshare business in the second quarter of 2011. That unit was spun off in November.
The company's profit matched Wall Street's estimate but revenue fell short of the expected US$2.83 billion, according to FactSet.
Marriott's results improved worldwide despite slowing economic growth. Revenue per available room rose 6.7 per cent. It expects that metric -- a key measure of performance for hotel companies -- to grow six to eight per cent this year.
The company now predicts profit of US$1.65 to US$1.75 per share for all of 2012. Analysts expect US$1.65. Three months ago, Marriott forecast earnings between US$1.58 and US$1.69 per share.
Marriott will offer more details on its financial performance and forecast for the year in a conference call with analysts yesterday morning.
The stock lost US$1.58, or 4.1 per cent, to US$37.12 in after-hours trading Wednesday. The stock closed down 14 cents at US$38.03 in regular trading.