Hotel chain Marriott International (MAR) beat Wall Street expectations, turning in a 31 cent earnings-per-share increase and a 42% rise in net income for the second quarter.
Analysts on average expected earnings of 28 cents per share and revenue of $2.74 billion. The Bethesda, Md.-based Marriott pointed to an increase in business and leisure travel for the strong second quarter.
In the same quarter last year, Marriott earned $37 million, or 10 cents per share, on revenues of $2.56 billion. Revenues this quarter were $2.8 billion, and net income was $119 million.
Rebound in Travel
Along with the rest of the tourism industry, Marriott has struggled with occupancy rates as business and leisure travelers cut back due to the recession. The company's second-quarter results reflect the resumption of vacations and business travel, said J.W. Marriott, Jr., chairman and chief executive officer of Marriott International.
"This is an exciting time for Marriott. Business and leisure stays at our hotels are trending up. Revenue per available room increased more than expected in the second quarter and room rates at company-operated hotels in North America rose for the first time in nearly two years" said Marriott.
In the quarter, revenues per room gained about 10%, and daily room rates climbed 1.6%.
PKF Hospitality Research said at the beginning of the summer that U.S. hotels would likely see a 1.7% growth in revenue per available room and a 3.4% rise in occupancy levels. At the same time, room rates were expected to drop by 1.6%.
Raising Rates Slowly
Marriott, with 3,400 properties in 70 countries, has slowly been raising its rates to coincide with increased occupancy. Rates are not quite where they stood before the recession, although they're getting close for the top vacation and business cities. Marriott's brands include The Ritz-Carlton Marriott Hotels & Resorts and Fairfield Inn.
Securities and Exchange Commission filings show Marriott Jr. has exercised about $22 million in stock options through April, and Forbes.com estimates his five-year compensation to be $125 million.
Marriott shares, which have been trading between $19.63 and $38.15 in the past 52 weeks, closed Wednesday at $32.16, up about 1% or 29 cents.
Starwood Hotels & Resorts Worldwide (HOT) is expected to report its second-quarter results on July 22. Analysts are looking for earnings of 25 cents per share on revenues of $1.24 billion for the quarter. Starwood expects second-quarter earnings before special items to be in the range of 21 to 25 cents per share.
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