Marriott's second-quarter earnings up on group demand12 Jul, 2012 By: David Eisen
A return of group business and an upturn in corporate travel gave a boost to Marriott International's second-quarter earnings, which increased 5.9 percent over the same time last year.
Net income grew to $143 million from $135 million at the same time last year, a result which matched the average estimate of 11 analysts in a Bloomberg survey.
Earnings were aided by group bookings and demand for upscale hotel rooms in gateway cities. "Our business performed well in most markets around the world," said Arne Sorenson, Marriott’s president and CEO. "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."
However, it wasn't all peachy. Marriott says demand growth is slowing in the Middle East and in Asia, where economic growth is weakening, according to The Associated Press. Fears are that demand will slacken particularly for higher-end hotels. The AP cites warnings by luxury companies, including jeweler Tiffany & Co., that the wealthy could cut back on spending.
Marriott's revenue climbed to $2.78 billion, while, on a constant dollar basis, worldwide comparable systemwide revenue per available room rose 6.7 percent. Average daily rate rose 4.1 percent. "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.
According to Marriott, group revenue on the books is up 10 percent for the second half of this year and 8 percent for 2013. In response, Marriott is planning an increase of almost 10 percent in corporate rates for hotel stays scheduled for next year.
Marriott expects full-year 2012 comparable systemwide RevPAR will increase 6 to 8 percent in North America. Outside North America, the company anticipates 5- to 7-percent comparable systemwide constant dollar RevPAR growth as markets in the Middle East and Asia experience softer demand growth, particularly in the luxury segment. The company expects worldwide comparable systemwide constant dollar RevPAR will increase 6 to 8 percent.
Topic : Marriott International, Q2
External Source : Bloomberg, The Associated Press