This is a summary of the fourth quarter fiscal 2008 earnings call as presented by Marriott International (MAR) on February 12, 2009
Management
Chief Financial Officer, Executive Vice President, President - Continental European Lodging: Arne M. Sorenson
Executive Vice President Financial Information & Enterprise Risk Management, Principal Accounting Officer: Carl T. Berquist
Senior Vice President Investor Relations: Laura E. Paugh
.
Senior Director of Investor Relations: Betsy Daum –
Key Investors Issues
- Adjusted diluted earnings per share from continuing operations of 34 cents, was down 45 % from 62 cents the previous year same quarter .
- Marriot International set to enhance cashflow by reducing investments in new projects.
- Marriott international opened 11,000 managed and franchise rooms.
Fourth Quarter Highlights
Adjusted diluted earnings per share declined 45% to 34 cents.
- Fourth quarter pre-tax restructuring and other charges totaled $192 million of which $152 million were non-cash.
- Excluding the 53rd week in 2008 fourth quarter system wide, worldwide RevPar declined 8% or 7% on a constant dollar basis.
- Outside North America system wide RevPar also declined 8% in the fiscal fourth quarter or 5% on a constant dollar basis.
Strength was seen in markets in South America and the Middle East but weakness in Europe and Asia.
- Month-to-month fourth quarter RevPar progressively weakened in most markets around the world.
- In North America, the year began very weak leisure business. In the spring business travel declined led by a weakening financial sector.
- By the fourth quarter the industrial sector was also showing large declines. Group business also eroded as the year went on.
In the fourth quarter corporate group revenue declined 13% at the Marriott brand as meeting planners deferred short-term training meetings, staff meetings and the like.
- Corporate cancellations impacted meetings that had been planned to occur either in the fourth quarter 2008 or some time in 2009.
- Association business at the Marriott brand showed some stability with RevPar flat year-over-year.
- All in all the current 2009 snapshot shows group revenue on the books for the Marriott brand down 12% due to expected attrition, cancellations and fewer new group bookings.
- With the firm''s broad brand portfolio it will be able to retain guest loyalty should that occur.
However, with less corporate business the mix of occupancy is changing.
- AAA and government business is up due to greater available inventory as well as aggressive marketing efforts.
- Special corporate rate negotiations are over 85% complete. While the special corporate rates for 2009 seem to be holding roughly flat to last year on a comparable account basis.
- Total special corporate rates are likely to end up about 5% lower than 2008 due to an unfavorable mix of special corporate customers.
Corporate customers from relatively higher rate paying financial services firms, for example, are being supplanted by lower rated corporate and government business.
- While the changing mix of business should impact the reported average daily rate the firm continues to monitor its rate structure and do not intend to lead the way down on corporate rates.
- Marriott International''s comparable company operated U.S. RevPar index increased about ½ point in 2008 largely due to the quality of its brands and efforts to drive the top line.
- With over 30 million members the Marriott Rewards program accounted for nearly half of its rooms sold last year producing the greatest number of room nights at the lowest cost in the industry.
The firm launched a No Blackout Date program in January opening considerably more inventory to its most valuable guests.
- Marriott Rewards has made significant investments over the past five years to better understand its guests and address what is most important to them.
- This allows it to create more relevant and targeted email and other marketing and to do so very quickly.
- The firm modified its marketing approach in 2008 to focus less on image advertising and more on short-term heads in beds and on speed to market.
In 19 days Marriott International launched an effective leisure travel promotion called Rejuvenation.
- The firm has seven different leisure travel promotions deployed focusing on customers who are most likely to respond to them.
- Marriott.com is an integral part of this marketing push generating over $6 billion in sales in 2008 but it is not just a booking engine.
- Marriott.com is selling vacation packages, small group meetings, last minute leisure deals, gift cards and special offers for Marriott Rewards members.
