Earnings Preview: Marriott International
NEW YORK -- Marriott International Inc. should shed some light on the health of the hotel sector when it reports earnings for the third quarter after the market closes on Wednesday.
WHAT TO WATCH FOR: Signs of slowing growth. Three months ago, Marriott said it could boost earnings this year through higher bookings and rates despite slowing growth overseas. It raised its profit forecast for the year but cut its prediction for fees for extras like in-room wireless Internet. It said demand growth was slowing in once booming markets like the Middle East and Asia.
The global economy has slowed further since then. But most observers think Marriott will keep its promise for improved earnings, because the economy still hasn't dampened its ability to raise prices. Marriott expects revenue per available room _ a key measure of performance for hotel companies _ to grow by 6 to 8 percent this year. That metric rose 6.7 percent in the second quarter. And reservations are holding up well despite many people becoming more skittish about spending freely on vacation.
Still, don't expect Marriott shares to jump, even if its results are stronger than expected. The stock is up 42 percent so far this year, better than its peers, and nearly three times the rate of growth in the Standard & Poor's 500 index. Several analysts in recent weeks have suggested investors move to the sidelines for now.
WHY IT MATTERS: Marriott, based in Bethesda, Md., also operates Ritz-Carlton hotels, Fairfield Inn & Suites and other brands. It is the first major hotel company to report third-quarter earnings, which means it will be closely watched as an indicator of how the entire sector is performing amid a slowing global economy.
WHAT'S EXPECTED: Analysts polled by FactSet expect a profit of 40 cents per share on revenue of $2.65 billion.
LAST YEAR'S QUARTER: Marriott lost $179 million, or 52 cents per share, in the third-quarter last year because of charges it booked from the spin-off of its timeshare business.
Without those charges, the company earned $104 million, or 29 cents per share. Revenue was $2.87 billion.