Marriott International Reports Second Quarter 2012 Results
BETHESDA, Md.—Marriott International, Inc. reported second quarter 2012 results. READER COMMENTS
Second quarter 2012 net income totaled $143 million, a 13 percent increase compared to second quarter 2011 adjusted net income. Diluted EPS totaled $0.42, a 24 percent increase from adjusted diluted EPS in the year-ago quarter. On April 18, 2012, the company forecasted second quarter diluted EPS of $0.39 to $0.43.
In an announcement, Arne M. Sorenson, president and chief executive officer of Marriott International, said, "In the second quarter, our business performed well in most markets around the world. In North America, strengthening group business, more travel by our special corporate customers, especially in the technology and consulting industries, and the impact of modest supply growth, drove our occupancy and room rates higher. In Europe, more travelers from the United States, Russia and China helped move REVPAR higher. In the Asia Pacific region, solid REVPAR growth resulted from strong economic growth and maturing new hotels."
For the 2012 second quarter, REVPAR for worldwide comparable systemwide properties increased 6.7 percent (a 6.2 percent increase using actual dollars).
International comparable systemwide REVPAR rose 7.2 percent (a 4.9 percent increase using actual dollars), including a 3.0 percent increase in average daily rate (a 0.8 percent increase using actual dollars) in the second quarter of 2012.
In North America, comparable systemwide REVPAR increased 6.5 percent in the second quarter of 2012, including a 4.3 percent increase in average daily rate. REVPAR for comparable systemwide North American full-service and luxury hotels (including Marriott Hotels & Resorts, The Ritz-Carlton, Renaissance Hotels and Autograph Collection Hotels) increased 6.4 percent with a 3.9 percent increase in average daily rate. REVPAR for comparable systemwide North American limited-service hotels (including Courtyard, Residence Inn, SpringHill Suites, TownePlace Suites and Fairfield Inn & Suites) increased 6.7 percent in the second quarter with a 4.5 percent increase in average daily rate.
Marriott added 29 new properties (5,058 rooms) to its worldwide lodging portfolio in the 2012 second quarter, including the JW Marriott Hotel Absheron Baku in Azerbaijan, the Bulgari Hotel & Residences in London and the Turnberry Isle Miami, an Autograph Collection hotel. Thirteen properties (2,914 rooms) exited the system during the quarter. At quarter-end, the company's lodging group encompassed 3,748 properties and timeshare resorts for a total of over 646,000 rooms.
The company's worldwide pipeline of hotels under construction, awaiting conversion or approved for development totaled over 700 properties with approximately 115,000 rooms at quarter-end.
Marriott revenues totaled nearly $2.8 billion in the 2012 second quarter compared to adjusted revenues of $2.6 billion for the second quarter of 2011. Base management and franchise fees rose 6 percent over prior year adjusted levels to $286 million reflecting higher REVPAR at existing hotels and fees from new hotels. Second quarter worldwide incentive management fees increased 12 percent to $56 million. North American incentive management fees increased 15 percent in the quarter. In the second quarter, 30 percent of worldwide company-managed hotels earned incentive management fees compared to 25 percent in the year-ago quarter.
At the end of the second quarter 2012, total debt was $2,560 million and cash balances totaled $105 million, compared to $2,171 million in debt and $102 million of cash at year-end 2011.
THIRD QUARTER 2012 OUTLOOK
For the third quarter, the company expects comparable systemwide REVPAR on a constant dollar basis will increase 6 to 8 percent in North America, 5 to 7 percent outside North America and 6 to 8 percent worldwide.
The company expects full year 2012 comparable systemwide REVPAR will increase 6 to 8 percent in North America. Outside North America the company anticipates 5 to 7 percent comparable systemwide constant dollar REVPAR growth as markets in the Middle East and Asia experience softer demand growth, particularly in the Luxury segment. The company expects worldwide comparable systemwide constant dollar REVPAR will increase 6 to 8 percent.
The company expects to add 20,000 to 25,000 rooms in 2012, not including the pending Gaylord transaction. Some new unit openings in Mexico, Asia and the Middle East have been delayed to 2013. The company also expects approximately 9,000 rooms will leave the system during the year.
The company expects full year fee revenue could total $1,410 million to $1,440 million, growth of 8 to 10 percent over 2011 adjusted total fee revenue of $1,307 million. Compared to prior expectations, anticipated fee revenue is modestly lower due to the impact of foreign exchange rates, the sale of the corporate housing business, some delayed hotel openings and softer REVPAR growth in some markets.
The company expects full year gains and other income could total $50 million, which includes an approximately $40 million gain related to the sale of the Courtyard joint venture, which was completed in the third quarter.
Given these assumptions, 2012 diluted EPS could total $1.65 to $1.75. Full year 2012 guidance does not include the impact of the pending Gaylord transaction.