LONDON. The buoyant US economy and a rebound in corporate travel budgets helped
LONDON. The buoyant US economy and a rebound in corporate travel budgets helped
Marriott, the first of the large US lodging groups to report on the quarter, said it was optimistic about the future, but also cautious about raising earnings estimates.
Arne Sorensen, chief financial officer, said its caution was due to it being difficult to predict how long the economy will remain strong.
Bill Marriott, chairman and chief executive, said in a recent interview with the Financial Times that Marriott`s broad portfolio of brands should protect it during economic downturns.
Despite speculation about consolidation in the US lodging industry, where Bass of the UK is understood to be examining Starwood, Mr Marriott said he was looking only at small acquisitions.
I would not go out and buy a company that`s our size because I think the consolidation efforts are just humungous, he added.
An 11 per cent increase in net income to $126m, coupled with share buybacks, lifted earnings per share from 42 cents to 50 cents – above analysts` consensus estimate of 48 cents.
Mr Sorensen said the second quarter performance had been based on a very strong US economy, and advised analysts not to base their forecasts for the next two periods on similar assumptions.
If there`s upside, it`s probably in the third quarter and it`s probably no more than a penny, he told analysts on a conference call. Current billings did not indicate that fourth quarter growth in revenue per available room would match the outstanding 7.6 per cent increase seen in the second quarter, he added.
Shares in Marriott rose $15/8 by lunchtime to $383/8 – their highest levels for a year.
Mr Marriott said yesterday growth was spread across all the group`s brands, which include Courtyard, Renaissance and Ritz-Carlton.
Results from New York, Boston and San Francisco were particularly strong, he said, and summer travel trends continue to look quite favourable, Mr Marriott said.
Reported sales were $2.4bn, 17 per cent higher than in the slack second quarter of 1999, when travel budgets were still recovering from the Asian financial crisis.
Sales across the Marriott system, which include franchised and managed properties, rose 13 per cent to $4.8bn.
By the end of the quarter, Marriott had opened or was developing 70 per cent of the 175,000 new rooms it plans to add between 1999 and 2003.
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