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Earnings rise 17% at Marriott International


Marriott International Inc.'s profits rose 17 percent in the second quarter, as the improved economy paid off in the form of higher hotel occupancy rates and a 3 percent-plus gain in average room rates.

The Bethesda-based hotel management company said it earned million, or 36 cents a share, for the 1994 second quarter, which ended June 17. That figure compares with a pro forma 1993 second-quarter profit of $41 million and per-share earnings of 32 cents.

The bigger profit was achieved on a 4.8 percent sales gain, to $1.98 billion. Because Marriott International was spun off from the old Marriott Corp. last October, the pro forma numbers for early 1993 are based on what Marriott International would have earned if the spinoff had been complete by Jan. 1, 1993.

"I would characterize it as a strong quarter," said Camille Humphries, who follows the company for Alex. Brown Inc. "The lodging industry is experiencing a cyclical recovery and there are some positive [long-term] changes as well."

The long-term change, she said, is that the industry is finally absorbing the excess hotels that were built during the 1980s. In addition, the high number of hotel foreclosures means that many hotels were resold or refinanced at much lower values, helping owners bring room rates to more realistic levels and boost occupancy.

Alex. Brown had estimated Marriott International would earn 35 cents a share for the quarter.

J. W. Marriott Jr., chairman and president of Marriott International, said each of the company's operating divisions made more money in the 1994 second quarter. The company manages or franchises more than 174,000 hotel rooms, manages food service contracts such as university and hospital cafeterias, runs senior living communities and owns a food distribution business that serves Marriott hotels and other clients.

About 15 percent of the hotels the company manages are owned by Host Marriott Corp., which took over the other businesses of the old Marriott Corp. upon the 1993 split.

Marriott International's occupancy rates range from about 80 percent for the most expensive full-service Marriott hotels and resorts, to the middle and upper 80 percent range for lower-priced products such as Marriott Residence Inn, Courtyard Marriott and Fairfield Inn. The industry average is about 66 percent occupancy.

Room rates rose by 2 percent to 5 percent compared with the second quarter of 1993, and occupancy rates rose for all four chains. The company said it has begun to manage 42 more properties during the past 12 months, bringing the total to 804.

Profits were also aided by the company's decision to replace some of its debt with stock in late 1993 and early 1994.

Marriott ....... ...... Ticker ... Yesterday's

International Inc. .... Symbol ... Cls. Chg.

............. ......... MAR ....... 26 7/8 .. + 7/8

Period ended

6/17/94 ......... 2nd qtr. .... Year ago* .... Chg.

Revenue ....... $1,982,000 .... $1,892,000 .. +4.8%

Net Income ....... $48,000 ....... $41,000 .. +17.1%

EPS ...... ......... $0.36 ......... $0.32 .. +12.5%

.......... ........ 6 mos. ..... Year ago* ... Chg.

Revenue ....... $3,898,000 .... $3,757,000 .. +3.8%

Net Income ....... $91,000 ....... $76,000 .. 19.7%

EPS ...... ......... $0.68 ......... $0.61 .. +10.3%

Pro forma results

Figures in thousands (except per share data.)

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