This summary is based on the second quarter fiscal 2007 earnings call conducted by Marriott International, Inc. (MAR) on July 12, 2007.
Key Investors Issues
- Adjusted diluted earnings per share (EPS) increased 36% from a year ago to 57 cents.
- Adjusted net income increased 26% to $229 million.
- Revenue per available room (REVPAR) rose 7.5%.
- Stocks repurchased totaled 8.7 million shares for $402 million.
- RevPar are expected to increase 6% to 7% for the full year.
Second Quarter 2007 Highlights
Continued favorable pricing environment, combined with unit growth, helped increase property-level revenues by 11% to $3.2 billion.
- Base and franchise fees rose 10% from a year ago to $249 million as a result of unit growth and strong REVPAR improvement.
- Incentive fees soared 51% to $116 million, driven by higher property-level house profit margins.
- Time share revenue jumped 49% to $122 million.
General and administrative expenses totaled $207 million, including $35 million of expenses associated with the ESOP tax settlement.
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Interest expenses totaled $52 million versus $30 million over the 2006 second quarter.
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Net income rose 11.3% from a year ago to $207 million.
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Diluted earnings per share were up 36% to 57 cents.
- The company repurchased nearly 9 million shares of common stock for $402 million.
Contract Sales declined 24% from a year ago $359 million
Synthetic Fuel contributed approximately 8 cents per share of after-tax earnings during the 2007 second quarter, compared to one cent in the year-ago quarter.
Marriott added 52 new properties (6,976 rooms) to its worldwide lodging portfolio in the quarter, including the 206-room Courtyard and 250-room Ritz-Carlton hotels in Japan.
The management believes that the company is well poised to capitalize on 2008 Olympics in Beijing with six Marriott and Ritz-Carlton hotels. Five more full service hotels planned for Beijing in time for the summer games.
- In the Asia-Pacific market, REVPAR rose by 40% and plans in place to triple presence over the next three years to more than 20 hotels.
- Limited service brands reported slower growth, impacted by the tough comparisons related to Hurricane Katrina.
- Group REVPAR in the quarter was less strong during the second quarter but is expected to increase nearly 7% by the fourth quarter.
New Ritz-Carlton in Tokyo led the luxury market with 250 weddings booked in 2007.
- House profit per available room jumped 10.4% on a constant dollar basis through savings in energy management, workforce scheduling systems, and procurement practices.
- Globally, 52 properties and about 7,000 rooms were added to the system during the quarter. Almost a fifth were conversions from other brands.
- Hotels under construction, awaiting conversion or approved for development increased to more than 110,000 rooms, a quarter of them outside North America.
At least 40 active multi-unit growth partners own hotels already managed by Marriott with deals already signed.
These include active partners in India, China, Russia, Caribbean and Latin America, Europe and the Middle East.
The company adopted new brands and lodging concepts:
- Marriott plans to open 20 Nickelodeon by Marriott Resorts by 2020.
- The company adopted a pioneering lifestyle boutique concept, with Ian Schrager to create a new brand.
Marriott.com, now the eighth largest consumer retail website globally, generated 17% of booked room nights online.
