Tuesday, February 8, 2011

Marriott International Inc. (NYSE: MAR): Q4 Earnings Preview 2010

Marriott International Inc. (NYSE: MAR) is scheduled to release its fourth-quarter financial results after the closing bell on Monday, February 14, 2011. Analysts, on average, expect the company to report earnings of 36 cent per share on revenue of $3.59 billion. In the year ago quarter, the company reported earnings of 32 cents per share on revenue of $3.38 billion.

Marriott International, Inc., a lodging company, operates and franchises hotels and related lodging facilities worldwide. The Company’s operations are grouped into the five business segments: North American Full-Service Lodging, North American Limited-Service Lodging, International Lodging, Luxury Lodging and Timeshare.

In the preceding third quarter, the Bethesda, Maryland-based company's net income was $83 million, or 22 cents a share, compared to a loss of $466 million, or $1.31 a share, in the year-ago quarter. Excluding the charges, adjusted net income would have been $53 million or 15 cents per share in third quarter of 2009. Revenue increased to $2.65 billion from $2.47 billion in the same quarter last year. 

At its last earnings call in October, the company expects fourth-quarter earnings to be in the range of 33 cents to 36 cents per share. Analysts currently expect earnings of $0.36 per share for the fourth quarter. For the full year, the company expects earnings to be in the range of $1.09 per share to $1.12 per share.

For the full year 2010, the company narrowed its earnings outlook to a range of $1.09 to $1.12 per share from its prior estimate of $1.05 to $1.13 per share. 

The company expects 2011 to be more promising than 2010, as strong demand and pricing continue. For the full year 2011, Marriott expects to open 25,000 to 30,000 rooms in 2011 as most hotels expected to open are already under construction or undergoing conversion from other brands. Between 2011 and 2013, the company expects to add 80,000 to 90,000 hotel rooms to its portfolio with additional opportunities to open for 22,000 rooms in Europe and Asia in the same period.

Companies in the Lldging industry, such as Marriott International Inc. and Wyndham Worldwide Corp. (NYSE: WYN), have been posting strong profits recently, with many well up over comparable periods last year. An improved economy and improved room rates have bolstered the industry.

Late in October, the hospitality company said that it could return a significant amount to investors by 2013 and expects earnings by then to exceed its peak growth in 2007. Marriott could return between $3.3 billion and $5.3 billion to shareholders from 2011 through 2013 through dividends and share repurchases, while still maintaining its investment grade bond rating. The company expects earnings per share to be $1.90 to $2.75 by 2013 on a Revenue Per Available Room, or RevPAR, growth of 5% to 9% compounded annually over the next three years. According to the company, this projection is well above the highest earnings per share achieved during Marriott's most recent peak earnings year of 2007. Based on the projected RevPAR growth, Marriott expects that total fee revenue could range from $1.57 billion to $1.87 billion and incentive management fees could nearly double through 2013 from 2010 estimated levels, ranging from $285 million to $440 million. The company has already reduced net debt by almost $1.5 billion since the end of 2008, thus reaching its targeted debt levels and will invest $2.3 billion to $2.7 billion over the next three years.

Further, Marriott has plans to adapt and expand current brands, such as Courtyard and Fairfield. The company will expand its new brands outside of the U.S., including the newly launched Edition and the Autograph Collection.

Full Disclosure: None.
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