Higher Occupancy, Room Rates Raise Marriott’s Earnings

Marriott International Inc. said fiscal second-quarter earnings rose 11 percent on higher hotel occupancy and room rates and an increase in the number of hotels it operates and franchises.

The Washington, D.C.-based company’s net income, for the quarter ended June 20, rose to $83 million, or 61 cents per share, compared with $75 million, or 55 cents per share, in the same quarter last year. Revenue rose 22 percent to $2.9 billion from $2.4 billion.

Wall Street was expecting the company to earn 60 cents a share, according to the average estimate of 10 analysts surveyed by Zacks Investment Research.

Those expectations apparently were already built into the price of the stock as Marriott shares on Friday closed down $1-1/8 to $64-7/8.

“Marriott Lodging is benefiting from expansion of our portfolio of powerful brands, contributions from new properties throughout the world, and very favorable conditions in most segments of the U.S. hotel industry,” J.W. Marriott Jr., the company’s chairman and chief executive, said in a statement.

Marriott franchises and manages hotels under the Marriott, Fairfield, Courtyard, Residence Inn and Ritz-Carlton brands. In March, it bought the Renaissance Hotel Group NV for $1 billion in cash and assumed debt.

As expected, the Renaissance purchase cut second quarter net income by $6 million, or 4 cents a share, the company said.

Marriott franchises and operates 1,400 properties, with more than 283,000 rooms and 3,200 timeshare villas. The company has a goal of having more than 400,000 rooms by 2001. During the past 12 months, it has added 304 properties representing 66,000 rooms.

Occupancy in the second quarter for the company’s flagship Marriott Hotels, Resorts and Suites properties rose to 81 percent from 80.9 percent, the smallest gain of any of its brands. The average daily room rate climbed 9.5 percent to $130.66, the biggest gain.

Occupancy for its luxury style Ritz Carlton brand rose to 82 percent from 76.4 percent, while the average daily room rate increased 6.5 percent to $191.73.

Marriott’s economy hotel product, Fairfield Inns and Suites, saw occupancy rates fall to 78.5 percent from 80.7 percent.

For the first half of fiscal 1997, net income rose 16 percent to $160 million, or $1.18 per share, from $138 million, or $1.02 per share, in the same period a year earlier. Revenue increased 22 percent to $5.5 billion from $4.5 billion.

Some stocks that moved substantially or traded heavily Friday:

NYSE

Crown Cork & Seal, down $6-7/16 at $49-15/16.

The Philadelphia-based packaging company reported second-quarter earnings that fell below Wall Street expectations.

Reading & Bates, up $2-1/2 at 33-1/2.

Falcon Drilling, up 5/8 at 58-1/2

The two companies announced late Thursday that they plan to merge in a $5 billion stock-swap, forming the world’s largest off-shore driller.

British Telecommunications, down 5-1/4 at 76-5/16.

BT said it wants to take a closer look at the financial outlook of intended merger partner MCI Communications, which on Thursday warned of steep losses. The news raised the possibility that BT might seek to pay less for MCI than the $20.8 billion agreed to late last year.

NASDAQ

MCI Communications, down 7-3/8 at 35.

The nation’s second largest long-distance company Thursday warned of unexpectedly steep losses from its effort to expand into local phone service, blaming what it called anti-competitive practices by the Baby Bells.

Upper Peninsula Energy, up 3-1/4 at 21-1/2.

Green Bay, Wis.-based WPS Resources agreed Thursday to acquire Upper Peninsula Energy in a stock swap valued at $71.5 million. Upper Peninsula Energy is a Houghton, Mich., electric utility.

Cognex, up 5-1/4 at 32.

The Dow Jones News Service reported that the Natick, Mass.-based maker of computer vision products will report second-quarter earnings well above Wall Street estimates.