Marriott Reports 40 Percent Boost in Third Quarter Net Income
By James Shillinglaw
October 04, 2012 10:43 PM
Marriott International reported third quarter 2012 net income totaled $143 million, a 40 percent increase compared to third quarter 2011 adjusted net income. Diluted EPS totaled $0.44, a 52 percent increase from adjusted diluted EPS in the year-ago quarter. On July 11, 2012, the company forecasted third quarter diluted EPS of $0.39 to $0.41.
For the third quarter of 2011, however, Marriott reported a net loss of $179 million and reported diluted losses per share of $0.52. Adjusted net income and adjusted diluted EPS for the year-ago quarter excluded $349 million pretax ($281 million after-tax and $0.81 per diluted share) of timeshare spin-off adjustments totaling $321 million pretax and other charges totaling $28 million pretax.
Timeshare spin-off adjustments included items such as the removal of timeshare business operating results and spin-off transaction costs, as well as the addition of license fees and other related items as if the spin-off had occurred on the first day of fiscal 2011. Other charges included an $18 million pretax impairment charge on an investment in equity securities and a $10 million pretax write-off related to one property whose owner filed for bankruptcy.
North America comparable company-operated revenue per available room (RevPAR) rose 7 percent in the third quarter. On a constant dollar basis, worldwide comparable systemwide revPAR rose 6 percent and average daily rate rose 4.7 percent using constant dollars.
At the end of the third quarter, the company's worldwide pipeline of hotels under construction, awaiting conversion or approved for development totaled over 120,000 rooms, not including the 8,100 rooms from the acquisition of the Gaylord brand and hotel management business. Nearly 5,000 rooms opened during the quarter, including over 1,400 rooms converted from competitor brands and over 1,600 rooms in international markets. The company signed nearly 13,000 rooms in the third quarter;
"We were pleased with our third quarter performance,” said Arne Sorenson, president and chief executive officer of Marriott. “Pricing power continued to improve in the quarter as hotel occupancy levels approached prior peaks. Group revenue at comparable Marriott Hotels and Resorts in North America rose 8 percent in the third quarter with room rates up 3 percent. Transient revPAR rose 6 percent with strong last-minute retail demand and reduced discounting.”
Sorenson said Marriott expects 2013 worldwide constant dollar revPAR to increase at a mid single-digit rate despite moderate economic growth in many markets around the world. “We are particularly bullish about our prospects in North America and expect North American systemwide revPAR to increase 5 to 7 percent in 2013,” he said. “In that market, negotiations for special corporate business are already underway and we are targeting room rates to increase at a high single-digit rate. Group revenue on the books for 2013 for the Marriott brand in North America is up over 7 percent with rates up nearly 4 percent.”