Marriott Reports 13 Percent Rise in Second Quarter Net Income
By Kerry Medina
July 12, 2012 1:21 PM
Marriott International, showing a surge in hotel business, reported second quarter net income of $143 million, a 13 percent increase compared to adjusted second quarter net income for the same period in 2011. Marriott revenues totaled nearly $2.8 billion in the second quarter compared to adjusted revenues of $2.6 billion for the second quarter of 2011. Diluted EPS for the second quarter totaled $0.42, a 24 percent increase from diluted EPS in the year-ago quarter.
“In the second quarter, our business performed well in most markets around the world,” said Arne Sorenson, Marriott’s president and CEO of Marriott International. “In North America, strengthening group business, more travel by our special corporate customers, especially in the technology and consulting industries, and the impact of modest supply growth, drove our occupancy and room rates higher.”
Sorenson said that in Europe, more travelers from the United States, Russia and China helped move revenue per available room (revPAR higher. In the Asia Pacific region, solid revPAR growth resulted from strong economic growth and maturing new hotels.
While second quarter REVPAR growth benefited from strong group and special corporate business, it also reflected some impact from weak results in Washington, D.C. and renovations at a few hotels. In other markets, such as Hawaii, hotel occupancy was very high and well ahead of the market, constraining revPAR growth in the quarter.
"With robust group bookings in North America, including Washington, D.C., we expect strong revPAR and room rate growth in the second half of the year,” Sorenson said. “In fact, group revenue on the books is up 10 percent for the second half of 2012 and up 8 percent for 2013. We are targeting high single-digit percentage increases in special corporate rates for 2013.”
Marriott’s development pipeline totaled 115,000 rooms at the end of the second quarter, excluding the pending acquisition of Gaylord Hotels. While Marriott added 8,000 rooms in its pipeline in the second quarter, new hotel construction delays in the Middle East, Asia and Mexico pushed some openings to 2013. The hotel company now expects to open 20,000 to 25,000 rooms worldwide in 2012, not including Gaylord branded rooms, and 90,000 to 105,000 rooms during the three-year period from 2012 to 2014.
For the 2012 second quarter, revPAR for worldwide comparable systemwide properties increased 6.7 percent (a 6.2 percent increase using actual dollars). International comparable systemwide revPAR rose 7.2 percent (a 4.9 percent increase using actual dollars), including a 3 percent increase in average daily rate (a 0.8 percent increase using actual dollars) in the second quarter of 2012.
In North America, comparable systemwide revPAR increased 6.5 percent in the second quarter of 2012, including a 4.3 percent increase in average daily rate. RevPAR for comparable systemwide North American full-service and luxury hotels (including Marriott Hotels & Resorts, The Ritz-Carlton, Renaissance Hotels and Autograph Collection Hotels) increased 6.4 percent with a 3.9 percent increase in average daily rate. RevPAR for comparable systemwide North American limited-service hotels (including Courtyard, Residence Inn, SpringHill Suites, TownePlaceSuites and Fairfield Inn & Suites) increased 6.7 percent in the second quarter with a 4.5 percent increase in average daily rate.
Marriott added 29 new properties (5,058 rooms) to its worldwide lodging portfolio in the 2012 second quarter, including the JW Marriott Hotel Absheron Baku in Azerbaijan, the Bulgari Hotel & Residences in London and the Turnberry Isle Miami, an Autograph Collection hotel. Thirteen properties (2,914 rooms) exited the system during the quarter. At quarter-end, the company's lodging group encompassed 3,748 properties and timeshare resorts for a total of over 646,000 rooms. The company's worldwide pipeline of hotels under construction, awaiting conversion or approved for development totaled over 700 properties with approximately 115,000 rooms at quarter-end.