Marriott Earnings Provide Conflicting Signals

Marriott International today released second-quarter earnings that were mixed. While earnings per share rose 6 percent over the same quarter in 2002, net income was flat and revenue per available room for North American hotels, a key indicator of profitability, declined 5 percent.

As the first of the large multi-brand hotel companies to announce quarterly earnings, analysts view Marriott's results as a bell-weather for the lodging industry as a whole. For travel buyers, Marriott's RevPAR performance is of particular interest since it suggests that the present buyer's market industrywide is likely to continue into the fall, when discussions leading to 2004 negotiated rates get underway for most companies.

In announcing the results, chairman and CEO J.W. Marriott Jr. mentioned the Iraqi war and outbreak of severe acute respiratory syndrome as unexpected challenges the industry faced during the quarter. He also acknowledged the effects of the continuing global economic slowdown. Given these factors, JPMorgan lodging industry analyst Harry Curtis described the results as better than anticipated.