MARRIOTT INTERNATIONAL REPORTS THIRD QUARTER EPS OF $0.43, UP 19% FROM $0.36 A YEAR AGO
Full-Service Domestic REVPAR Growth A Very Strong 9.8%
WASHINGTON, D.C. – September 28, 2000 – Marriott International, Inc. (NYSE:MAR) today reported diluted earnings per share of $0.43 for the third quarter ended September 8, 2000, up 19 percent from $0.36 in 1999. Net income increased 15 percent over the prior year’s third quarter to $110 million. Reported sales totaled $2.3 billion, up 15 percent compared to the 1999 third quarter.
J.W. Marriott, Jr., chairman and chief executive officer of Marriott International, said the company’s third quarter operating results were outstanding. “Revenues per available room growth for the quarter were the strongest we've seen in 3 years. The number of business and leisure travelers staying at Marriott brands reached record levels this summer, reflecting a continued strong economy in the U.S. and improving economic conditions in Asia.
“Equally impressive, our year-to-date growth rate in room openings is nearly triple the U.S. industry average, according to the latest Smith Travel Research data. In total, we expect to open 37,000 to 39,000 rooms in 2000,” he continued.
MARRIOTT LODGING reported a 20 percent increase in operating profit on 12 percent sales growth in the 2000 third quarter. Results reflect gains in both room rates and occupancy, as well as stronger house profit margins. Lodging profit also benefited from contributions from new properties worldwide and higher interval sales for vacation ownership resorts. International lodging profits also increased, reflecting strong demand in the Middle East, Asia, and Europe, offset by the lower value of the Euro.
Across all of Marriott’s lodging brands, REVPAR for comparable company-operated U.S. properties increased 8.5 percent in the 2000 third quarter, reflecting strength in both transient and group demand. Results in New York, Boston, Chicago and California were particularly strong. Among the company’s full-service lodging brands (Marriott, Renaissance and Ritz-Carlton), domestic REVPAR increased 9.8 percent. Average room rates for these hotels rose by 8.0 percent, while occupancy increased more than one full percentage point to 79.7 percent. REVPAR for select service and extended stay properties was up 5.9 percent, driven by an increase in average room rates of 4.9 percent and occupancy nearly one percentage point higher than last year.
Marriott Vacation Club International's contract sales surged 55 percent in the third quarter, benefiting from new brands and locations, as well as higher tour flow and prices at existing locations. Marriott Vacation Club resorts in Maui, Aruba, Newport Coast, and Ritz-Carlton Club’s new resort in Aspen, reported particularly strong results. At the end of the quarter, 20 resorts were in active sales, 25 resorts were sold-out, and an additional 4 resorts were under development.
Marriott International added 221 hotels and timeshare resorts (34,442 rooms) to its worldwide lodging portfolio over the past 12 months, while 23 properties (5,889 rooms) exited the system. A net total of 48 hotels and resorts (6,307 rooms) were added in the 2000 third quarter. Conversions from other brands represented over 20 percent of the gross room additions during the quarter, including nine former Swallow hotels converted to the Marriott brand in the U.K.
Last week, Marriott announced that, at the end of its third quarter, the company had more than 70,000 rooms under construction or approved for development. Approximately 20 percent of these rooms are outside the United States. Marriott plans to open at least 175,000 rooms across its lodging brands over a five-year period (1999-2003). At quarter-end, about 75% of the planned rooms had opened or were in the 70,000 rooms pipeline.
MARRIOTT DISTRIBUTION SERVICES reported a 36 percent increase in sales in the 2000 third quarter, benefiting from the addition of three large restaurant chains to its customer base since the beginning of the year. Profits were flat compared to the prior year, however, reflecting start-up inefficiencies of a new distribution facility and the added business.
MARRIOTT SENIOR LIVING SERVICES posted 20 percent sales growth and an operating loss of $5 million in the 2000 third quarter. Occupancy for comparable communities was 88 percent in the quarter. Marriott Senior Living Services opened two communities during the third quarter and now operates 151 facilities totaling 25,544 residential units.
CORPORATE EXPENSES decreased three percent in the 2000 third quarter due to 1999's higher systems development expenses to support Y2K efforts. Interest expense was up $10 million to $22 million as a result of borrowings to finance growth and share repurchases, as well as higher interest rates. Marriott International acquired 10.4 million shares of its common stock year-to-date and 700,000 shares during the 2000 third quarter. The company is authorized to repurchase an additional 20.1 million shares.
In 2000, the company expects total asset sales of roughly twice 1999 levels, or approximately $870 million (29 hotels and 15 senior living communities), of which $650 million (19 hotels and 15 senior living communities) have been completed through September 27, 2000. In each instance, the company has retained rights to manage the properties under long-term agreements.
The company’s effective income tax rate decreased to approximately 37.0 percent in the third quarter of 2000, compared to 37.5 percent in the 1999 third quarter.
Note: This press release contains “forward-looking statements” within the meaning of federal securities law, including statements concerning the number of lodging properties expected to be added in future years, asset sales during the remainder of the year, business strategies and their intended results, and similar statements concerning anticipated future events and expectations that are not historical facts. The forward-looking statements in this press release are subject to numerous risks and uncertainties, including the effects of economic conditions; supply and demand changes for hotel rooms, vacation ownership intervals, corporate housing and senior living accommodations; competitive conditions in the lodging, senior living and food service distribution industries; relationships with clients and property owners; the impact of government regulations, and the availability of capital to finance growth, which could cause actual results to differ materially from those expressed in or implied by the statements herein.
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