By Richard Wilson
July 6, 2000
Marriott shareholders' have a reason smile today, as the company beat consensus estimates by $0.02 a share, earning
$0.50 per share for the three-month period. The earnings number represents a 19% increase from the year-ago period,
and was boosted by strong demand in large cities.
After guiding estimates and expectations lower for 1999, Marriott International (NYSE: MAR) delivered strong second-quarter
results ending June 16 that have attracted investors' attention. Marriott is up about 5% Thursday to around $38.75.
Marriott's U.S. hotels delivered strong performance with revenue per room rising by 7.6%, the best result since
1997. Revenue per room increased because of a 5.6% increase in room rates and an almost 2% increase in the occupancy
rate to 81.6%.
Strong demand in supply-constrained large urban areas such as New York, San Francisco, and Boston were the driving
force behind the increased in rates. The buoyant financial industry in New York and the growing technology industry
around both San Francisco and Boston continued their positive impact on the lodging industry. Marriott management
expects growth to remain strong through its third quarter, which ends in the middle of September, but cautioned
that rising interest rates and slowing economic growth could put a damper on results.
Hilton (NYSE: HLT) and Starwood (NYSE: HOT) shareholders also have reason to smile today as both have hotels in
the same constrained markets and should deliver strong results like Marriott. Both are expected to report results
in the first week of August and are up about 1% Thursday.
Richard Wilson can be reached at rich_wilson@morningstar.com.
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