Marriott profits falls 34 percent in 1Q

Marriott International Inc. announced on April 17th that its first-quarter profits have dropped by 34 percent as the slow down of U.S. economy continued to take a toll hotels’ business. The results were as per Wall Street expectations. The Bethesda, Maryland-based company said that earned $121 million (33 cents a share) in the first 12 weeks of the year, down from $182 million (44 cents a share), for the same period last year. However Marriott’s revenue was up, grossing $2.95 billion as compared to $2.84 billion it earned last year. Analysts from Thomson Financial had expected Marriott to earn revenue of $2.83 billion amounting to 33 cents a share. Revenue per available room (revpar) rose to 4.4 % for the first quarter, across all Marriott hotels. However, in North America, revpar grew by only 2.3 percent, a sharp fall from almost a double-digit figure a year ago. Nevertheless, demand for rooms worldwide remained strong, as the company saw a growth of 18.5 percent in revpar at overseas hotels. This allowed the company to increase daily room charges by 16 percent on average. Business was going strong in countries like China and Russia. As the United States’ economy is weakening, Marriott has slowly kept lowering its forecast for 2008. Arne Sorenson, chief financial officer of Marriott, said that the company’s profits are heavily dependent on U.S. economy. Marriot has lowered its forecast by 2 cents per share. The new forecast expects an earning from $1.98 to $2.08 a share. However, its revpar is expected to grow by 3 to 5 percent.

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