Marriott Highlights - 2007 Third Quarter 2007
Revenues totaled $3.0 billion, a 12% increase from the same period in 2006. Adjusted diluted Earnings Per Share from continuing operations was $0.31. Combined base and franchise fees rose 15% to $246 million, as a result of solid RevPAR growth and unit expansion.
The following are highlights of the news release Marriott issued on October 4, 2007.
FINANCIAL PERFORMANCE
Revenues totaled $3.0 billion, a 12% increase from the same period in 2006.
Adjusted diluted Earnings Per Share from continuing operations was $0.31.
Combined base and franchise fees rose 15% to $246 million, as a result of solid RevPAR growth and unit expansion.
Timeshare sales and services revenue increased 4%, driven by higher services and financing revenue. Net of direct expenses, results declined $31 million, reflecting lower development profits and comparison to the 2006 third quarter $15 million reversal of a contingency reserve related to marketing incentives.
At the end of the quarter, total debt was $2,948 million and cash balances totaled $208 million, compared to $1,833 million in debt and $193 million of cash at the end of 2006.
We repurchased 10.7 million shares of common stock for $462 million. Year-to-date, through October 2, we repurchased 30.8 million shares for $1.4 billion.
REVENUE PER AVAILABLE ROOM
Worldwide systemwide comparable RevPAR rose 7.7% (6.6% using constant dollars), while house profit margins for company-operated properties advanced 180 basis points. House profit per available room climbed 12.2%.
For North American comparable company-operated properties, RevPAR increased 7.2%.
International company-operated comparable RevPAR increased 12.9% (7.5% using constant dollars), including a 10.8% increase in average daily rates and a 1.4 percentage point improvement in occupancy.
GROWTH/DISTRIBUTION
Marriott added 50 properties (7,163 rooms) to its worldwide lodging portfolio, including Renaissance hotels in Shanghai and Paris. Nearly 2,200 of those rooms were outside of the United States.
At quarter-end, the company’s lodging group encompassed 2,942 lodging properties (527,307 rooms).
The company’s worldwide pipeline of hotels under construction, awaiting conversion or approved for development totaled approximately 115,000 rooms. Of those, more than 36,000 are full-service hotel rooms, and over half of those are located outside the United States.
MARKET AND SEGMENT TRENDS
Transient business was very strong, including corporate and leisure, weekend and weekday. U.S. transient business benefited from the weak dollar; year-to-date, roomnights booked for non-U.S. guests at our U.S. hotels was up over 4%, including 6.5% more travelers from Great Britain, a trend we expect will continue to benefit New York and other gateway destinations.
Group RevPAR rose almost 4%. It was a bit softer in Chicago and Orlando, reflecting fewer citywides and more competition for near-term group meetings. Looking forward, group revenue on the books for the fourth quarter is up about almost 5%. In strong markets like Boston, San Diego, San Francisco and New York, hotels are already booked with groups in the fourth quarter. In many cases, they have chosen to turn groups away in favor of higher rated transient business.
Asia continues to offer great development opportunities. In China, where our “3,000th” hotel – the JW Marriott Beijing – opens later this fall, the company operates more than 30 properties, and we expect to open another 20 by 2010. We also anticipate increasing our distribution there to more than 100 hotels over the next six years. In India, we have six hotels and 18 more scheduled to open by 2010. We have 11 hotel projects in the pipeline in Thailand, five of which are conversions.
OUTLOOK
We expect:
Earnings per share for full year to total between $1.88 to $1.90 per share.
North American company-owned RevPAR will grow 6% to 8% in the fourth quarter. The company also expects property-level house profit margin growth of 150 to 200 basis points in the fourth quarter. We expect worldwide RevPAR for the fourth quarter to increase 6% to 8%, but the impact of foreign exchange is likely to take that number higher.
For 2008, North American RevPAR to increase 5% to 7% and house profit margins to improve another 50 to 100 basis points.
Assuming RevPAR growth of 3%, 5% or 7%, fee revenue to increase 9% to 14% compounded through 2010.
OTHER NEWS
Recognition. Marriott Hotels & Resorts placed first on TripAdvisor’s® survey of business travelers. Marriott received the “World Savers” award from Condé Nast Traveler for outstanding community engagement and social responsibility. In addition, Marriott was recognized by Black Enterprise as one of the “40 Best Companies for Diversity”; by LATINA Style as a “50 Best Companies for Latinas to Work For in the U.S.”; by Hispanic Business as a “Diversity Elite 60” company; by BusinessWeek as one of the “Best Places to Launch a Career”; and by Working Mother as one of the “100 Best Companies for Working Mothers.”
Free WiFi Hotel Hotspots. Five Marriott brands, including Courtyard, Residence Inn, Fairfield Inn, TownePlace Suites and SpringHill Suites, now offer guests free WiFi hotels in the U.S. and Canada. That’s more than 1,500 hotspots. The free WiFi is part of Marriott’s overall package of services offered in the new lobby and public spaces being introduced by most of these brands. The new spaces are being designed for guests to work, relax, socialize, and have greater access to technology, like free WiFi.
Residence Inn’s Out-of-the-Box Ad Campaign. A fire-breathing performer and three striking acrobats showcase the new space and amenities of the revitalized Residence Inn brand in a provocative new advertising campaign shot on location in Prague, Czech Republic. The ads showcase Residence Inn’s new “Innfusion” décor, which redefines the extended-stay experience with distinctive “zones” that meet the living needs of the extended-stay guest – cooking, dining, working, relaxing and sleeping.
David M. Sampson Memorial Scholarship Fund. The J. Willard and Alice S. Marriott Foundation approved a grant of $100,000 to create the David M. Sampson Memorial Graduate Fellowship Fund at the University of Maryland in College Park, Md., honoring 25-year veteran and senior vice president of diversity initiatives, Dave Sampson. The endowed scholarship will provide funding for graduate students pursuing a degree at the Robert H. Smith School of Business, which was recently ranked in the top 25 of “America’s Best Graduate Schools” by U.S. News & World Report.
Social Responsibility & Community Engagement Summary. This 14-page summary outlines Marriott’s global community initiatives to support our vibrant “spirit to serve” philosophy, which have been branded “SERVE”: Shelter & Food, Environment, Readiness for Hotel Careers, Vitality of Children, and Embracing Diversity & People with Disabilities.
New Supplier Diversity Goal. Marriott announced plans to increase spending among diverse suppliers to 15% by 2009. Additionally, the program will expand to include lesbian, gay, bi-sexual and transgender suppliers and international markets. Towne Place Suites Celebrates Its 10th Anniversary. Celebrating its 10th anniversary, TownePlace Suites says “hello” to Real Living with the launch of a fresh, contemporary design. The popular extended stay brand is reinventing itself to meet the needs of a growing segment of “do-it-yourselfers” – self-sufficient, value-conscious travelers.
3,000th Hotel. During a recent visit to China, Bill Marriott designated the luxurious 23-story, 588-room JW Marriott Hotel Beijing, due to open before the end of the year, as the company’s “3,000th” property.