Marriott Profit Rises, Stocks Drop

Marriott International Inc. says that its second-quarter profit rose 11 percent on higher demand for rooms. However, its stock dipped on signs that growth in the lodging industry may be cooling off.

Full statement Marriott International, Inc. reported second quarter 2007 adjusted net income of $229 million, an increase of 26 percent, and adjusted diluted earnings per share (EPS) of $0.57, an increase of 36 percent.

Adjusted results exclude the impact of the company’s synthetic fuel business and the impact of the previously announced leveraged Employee Stock Ownership Plan (ESOP) settlement agreement reached in June 2007 with the Internal Revenue Service (IRS) and the Department of Labor. The company’s EPS guidance for the 2007 second quarter, disclosed on April 19, 2007, totaled $0.51 to $0.55 and similarly excluded the company’s synthetic fuel business and the ESOP settlement.

Reported net income was $207 million in the second quarter of 2007 compared to $186 million in the year ago quarter. Reported EPS was $0.51 in the second quarter of 2007 and $0.43 in the second quarter of 2006.

The company’s synthetic fuel business contributed approximately $32 million after-tax ($0.08 per share) to 2007 second quarter earnings and $4 million after-tax ($0.01 per share) to 2006 second quarter earnings. The ESOP settlement resulted in an after-tax charge of $54 million ($0.13 per share) in the 2007 second quarter.

In the 2007 second quarter (12 week period from March 24, 2007 to June 15, 2007), REVPAR for the company’s worldwide system-wide comparable properties increased 7.5 percent (6.4 percent using constant dollars). Average daily rates rose 7.4 percent (6.3 percent using constant dollars) and occupancy increased slightly, to 76.0 percent.