Marriott Beats Expectations with $23 Mil. Loss

Amid a restructuring as its timeshare and hotel business weakened, Marriott International Inc. lost $23 million in its first quarter but the adjusted results surpassed analysts’ estimates, the company said Thursday.

Marriott’s shares jumped $2.10, or 10.7 percent, to $21.69 in morning trading. The stock has traded between $11.88 and $37.29 during the past 52 weeks.

Like many lodging companies, Bethesda, Md.-based Marriott also has struggled as budget-conscious travelers look for discounted rates, plan shorter trips or stay home during the recession.

“Not surprisingly, the lodging industry and Marriott International continue to feel the impact of the global economic downturn,” Chairman and Chief Executive J.W. Marriott Jr. said in a statement.

The hotel operator lost 6 cents per share for the period ended March 27, down from a profit of $121 million, or 33 cents per share, a year earlier.

Excluding 23 cents per share in restructuring costs and charges related to softening lodging and timeshare demand, earnings from continuing operations were 24 cents per share. Results also included 7 cents per share for an income tax provision.

Marriott previously forecast net income of 13 cents to 15 cents per share.

Revenue slipped 15 percent to $2.5 billion, from $2.95 billion in the prior year.

Analysts surveyed by Thomson Reuters, whose estimates generally exclude one-time items, predicted profit of 14 cents per share on revenue of $2.5 billion.

While its adjusted earnings managed to beat analysts’ expectations, revenue per available room — a key gauge of a hotel operator’s performance — declined. Marriott posted a 19.6 percent drop-off in revenue per available room, a gauge known as revpar, for its comparable worldwide company-operated properties. Revpar for comparable systemwide properties fell 17.3 percent.

Adjusted timeshare contract sales fell to $157 million, which excludes a $28 million allowance for anticipated residential and fractional contract cancellations recorded in the quarter, the company said. Adjusted timeshare sales and services revenue dropped 31 percent to $226 million on softer demand.

Marriott offered a tentative earnings outlook, cautioning that its results are still difficult to predict.

For the second quarter, it expects earnings from continuing operations to be 20 cents to 23 cents per share, compared with Wall Street’s consensus forecast of 26 cents per share.

For the full year, Marriott forecasts adjusted earnings of 88 cents to $1.02 per share. Analysts forecast a full-year profit of 88 cents per share.

Robert LaFleur of Susquehanna Financial Group said the company “did an exceptional job of wringing costs out of its operations in the quarter.” He noted, however, that the company’s forecast for the rest of the year does not seem to have improved.

“2009 is going to be a very difficult year for the lodging sector in general and (Marriott) in particular,” LaFleur said. “The domestic business continues to deteriorate and international is following closely behind. The outlook for the timeshare business is very challenging.”

Deutsche Bank analyst Chris Woronka also said the company’s outlook “confirms that fundamentals remain very weak and visibility low.”

4/23/2009 10:09 AM BETHESDA, Md. (AP)