Thursday, hospitality company Marriott International Inc. (MAR) reported a 24% decline in second-quarter profit on higher expenses amid deteriorating business conditions in the U.S. However, the company recorded lower charges and a 2% marginal rise in revenues. Excluding items, adjusted earnings per share from continuing operations fell 11%, yet beat the market projections by two cents. Further, the company provided third quarter and fiscal 2008 earnings per share forecast, both below analysts' consensus.
The company's second-quarter net income fell to $157 million from $207 million last year. Earnings, on a per share basis, declined 18% to $0.42 from prior year's $0.51. On a continuing operations basis, quarterly income dropped 13% to $153 million from $175 million in the previous year, while earnings per share from continuing operations declined 5% to $0.41 from $0.43 in 2007.
Marriott's recent quarter results included impact of $36 million or $0.10 per share of non-cash items, while prior year results included impact of $54 million charge or $0.14 per share of the Employee Stock Ownership Plan settlement agreement reached with the IRS and the Department of Labor.
Excluding the items, adjusted income from continuing operations for the quarter declined 17% to $189 million from $229 million last year. Adjusted earnings per share fell 11% to $0.51 from $0.57 per share in the earlier year period.
On average, 17 analysts polled by First Call/Thomson Financial expected earnings of $0.49 per share for the quarter.
Total revenues for the period rose 2% to $3.19 billion from $3.12 billion in the year ago period, and beat analysts' revenue consensus estimate of $3.15 billion.
Marriott, Jr., Marriott's chairman and chief executive officer, said, "Our second quarter saw higher year-over-year REVPAR for our global lodging business, despite weaker economic conditions in the U.S. International demand for our products remains high. Our hotels outside the U.S. had strong revenue growth in the quarter. But while our hotels outside the U.S. continue to benefit from solid global demand, business conditions have deteriorated in the U.S."
Worldwide company-operated comparable revenue per available room, or REVPAR rose 5.6%. Outside North America, company-operated comparable REVPAR increased 15.5%. REVPAR at comparable worldwide systemwide properties rose 4.2% over the year-ago quarter.
Looking ahead, Marriott said it expects third-quarter earnings per share to be in the range of $0.30 - $0.35, excluding $0.10 per share impact of non-cash items. Analysts expect earnings of $0.41 per share for the third quarter, with estimates ranging between $0.34 and $0.46 per share. Total quarterly fee revenues are expected to be between $300 million and $310 million.
For the quarter, the company expects worldwide systemwide comparable REVPAR to be flat to up 2% and North American company-operated comparable REVPAR to be flat to down 2%. Comparable North American house profit margins are expected to decline 50 to 150 basis points in the third quarter.
For the full year 2008, Marriott estimates earnings per share in the range of $1.77 - $1.88, excluding the $0.10 per share impact of non-cash items, and total fee revenues are expected to be between $1.45 billion and $1.475 billion. Analysts project earnings of $1.91 per share for the year.
"While there is much uncertainty, we expect weak economic growth and soft U.S. lodging demand to persist into 2009," the company said.
MAR closed Wednesday's regular trading session at $25.94, down $0.99, on a volume of 6.3 million shares.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.