Marriott Reports Drop in Second Quarter Income

Marriott International, Inc. reported second quarter 2008 adjusted income from continuing operations of $189 million, a decline of 17 percent, and adjusted diluted earnings per share (EPS) from continuing operations of $0.51, down 11 percent.

The company’s EPS guidance for the second quarter, disclosed on April 17, 2008, totaled $0.48 to $0.52. Adjusted results exclude the $36 million ($0.10 per diluted share) impact of non-cash items included in the tax provision in the 2008 quarter.

Reported income from continuing operations was $153 million in the second quarter of 2008 compared to $175 million in the year-ago quarter. Reported diluted EPS from continuing operations was $0.41 in the second quarter of 2008 compared to $0.43 in the second quarter of 2007.

In the 2008 second quarter (12-week period from March 22, 2008 to June 13, 2008), RevPAR for the company’s comparable worldwide company-operated properties increased 5.6 percent (3.2 percent using constant dollars) and average daily rates increased 6.3 percent (3.9 percent using constant dollars).

RevPAR at comparable worldwide system-wide properties rose 4.2 percent (2.6 percent using constant dollars) over the year-ago quarter. Second quarter international company-operated comparable RevPAR increased 15.5 percent (7.2 percent using constant dollars), including a 15.4 percent increase in average daily rate (7.1 percent using constant dollars). RevPAR growth was particularly strong in the Middle East, Central and Southeast Asia, and Latin America.

In North America, comparable company-operated RevPAR rose 1.4 percent in the second quarter of 2008. RevPAR at the company’s comparable company- operated North American full-service and luxury hotels (including Marriott Hotels & Resorts, The Ritz-Carlton and Renaissance Hotels & Resorts) increased 2.3 percent driven by a 2.5 percent increase in average daily rates. Manhattan, Houston, Los Angeles and Orlando were particularly strong markets.

In the second quarter, Marriott added 61 new properties (9,482 rooms) to its worldwide lodging portfolio. Eleven hotels (23 percent of new rooms) were converted from competitor brands and 11 properties (2,392 rooms) exited the system during the quarter. At quarter-end, the company’s lodging group encompassed 3,069 properties and timeshare resorts for a total of nearly 545,000 rooms.

Worldwide company-operated comparable house profit margins were flat. House profit margins for comparable company-operated properties outside North America grew 120 basis points and house profit per available room (HP-PAR) increased over 9 percent. North American comparable company-operated house profit margins declined 70 basis points from the year-ago quarter and HP-PAR increased nearly 1 percent.

The company expects worldwide system-wide comparable RevPAR to be flat to up 2 percent (in constant dollars) in 2008 reflecting a continued challenging demand environment in North America.