WASHINGTON, April 18, 2002 - Marriott International, Inc. (NYSE: MAR
- news) today reported diluted earnings per share of 32 cents in its 2002
first quarter ended March 22, down 32 percent from the first quarter of
2001. Net income for the quarter was $82 million compared to $121 million
a year ago. Systemwide sales totaled $4.6 billion, a decrease of four percent
compared to the 2001 first quarter.
J.W. Marriott, Jr., chairman and chief executive officer of Marriott
International, said he was pleased that the company's 2002 first quarter
performance came in ahead of expectations. ``We are encouraged by the first
quarter trends in occupancy. While the company's overall occupancy at comparable
hotels in the U.S. declined nearly four percentage points, stronger than
expected leisure and group business, especially at our Marriott, Hotels,
Resorts and Suites hotels, helped offset the impact of continued soft business
transient demand. Our efforts to keep our guests satisfied have proven
successful as well. Even with discounting prevalent in the industry, our
brands' REVPAR (revenue per available room) premiums have increased over
our competitors during the past several months.
"Our results in controlling costs this quarter were truly outstanding.
With U.S. REVPAR down 12.7 percent during the first quarter, the house
profit margins at our hotels declined approximately 1 percent, reflecting
the strength of our management team and the dedication of our associates.
"Room openings for 2002 are on track, with 7,000 new rooms opened in
the first quarter. Interest in converting hotels to a Marriott brand has
increased, reflecting owners' and franchisees' desire to have the best
performing lodging brands in this challenging economic environment. For
the year, we continue to expect to add between 25,000 and 30,000 hotel
rooms to our worldwide lodging portfolio. At the end of the first
quarter, the company's pipeline of properties either under construction
or approved for development was approximately 55,000 rooms.''
MARRIOTT LODGING reported a 31 percent decrease in operating
profit and 7 percent sales decline in the 2002 first quarter. Results reflected
weaker lodging demand and lower profits in the vacation timeshare business,
partially offset by contributions from new properties worldwide.
Across Marriott's lodging brands, REVPAR for comparable U.S. properties
declined by an average of 12.7 percent in the 2002 first quarter. Average
room rates for these hotels decreased nearly 8 percent, while occupancy
declined to 67 percent. Marriott's full service brands (including Marriott
Hotels, Resorts and Suites, The Ritz-Carlton, and Renaissance Hotels, Resorts
and Suites) experienced a REVPAR decline of 13.2 percent in the quarter,
driven largely by an 8 percent decline in rate. Marriott's select service
and extended stay brands (including Courtyard, Fairfield Inn, Residence
Inn, TownePlace Suites, and SpringHill Suites) posted a REVPAR decline
of 12.0 percent in the first quarter of 2002, with declines in both rate
and occupancy.
Results for international lodging operations reflected slightly better
trends than in the United States in the 2002 first quarter, with REVPAR
in constant U.S. dollars down only 7 percent and improved margins. Demand
was particularly healthy in Hong Kong, China and Central Europe.
Marriott's timeshare business achieved an 11 percent increase in contract
sales in the quarter. Sales growth was especially robust at timeshare resorts
in Colorado, Hawaii, and California, but remained soft in Orlando. Profits
for the quarter in the timeshare
business declined 28 percent largely as a result of higher sales and
marketing expenses.
The company has added 281 hotels and timeshare resorts (44,751 rooms)
to its worldwide lodging portfolio over the past 12 months, while 16 properties
(3,456 rooms) exited the system. A net total of 30 hotels and resorts (6,784
rooms) were added in the 2002 first quarter, including four Marriott Hotels,
Resorts and Suites (1,208 rooms) and nine Courtyard hotels (1,752 rooms).
At quarter-end, the Marriott lodging group encompassed 2,428 hotels and
timeshare resorts (442,767 rooms).
MARRIOTT SENIOR LIVING SERVICES posted 9 percent sales growth
in the quarter. The division produced $6 million in operating profit, a
substantial improvement from $1 million a year ago, due to the continued
maturation of communities and a $2 million one-time payment relating to
the sale of the communities owned by Crestline Capital Corporation. Occupancy
for comparable communities was 83 percent in the quarter, stable with a
year ago. The company operates 156 facilities totaling 26,218 residential
units.
MARRIOTT DISTRIBUTION SERVICES reported a 4 percent increase
in sales in the 2002 first quarter. The division posted an operating loss
of $6 million, primarily resulting from lower margins on existing business
and reduced levels of Sodexho business. Results were also impacted by a
$2 million (pre-tax) write-off relating to an investment in a customer
contract. Marriott is continuing its strategic review of this business.
CORPORATE EXPENSES decreased 3 percent in the 2002 first quarter,
benefiting substantially from cost containment plans implemented in 2001.
Corporate expenses for the quarter also included a $5 million reserve related
to the pending sale of a land
parcel. Interest expense was down $3 million, reflecting lower average
borrowings and lower interest rates. Long-term debt at the end of the quarter,
net of cash reserves, was $2.2 billion, down slightly from $2.3 billion
at year end. Interest income totaled $19 million for the quarter, up $3
million from a year ago, largely due to income associated with higher average
loan balances and cash reserves.
The company's synthetic fuel investment began to produce results sooner
than anticipated and posted an operating deficit of $6 million, pre-tax,
for the first quarter of 2002. As a result of this investment, taxes declined
by $8 million, resulting in almost $0.01 per share of earnings in the quarter.
The company's effective income tax rate decreased to approximately 30.5
percent in the first quarter of 2002, compared to 36.5 percent in the 2001
first quarter.
During the 2002 first quarter, the company sold four hotels for approximately
$100 million. The company ended the first quarter owning just six open
hotels. Contingent liabilities at the end of the quarter remained essentially
flat compared to year end 2001 levels.
Outlook
Given the strong margin performance in our lodging business, lower than
anticipated average borrowings and corporate expenses, and higher than
expected volumes from synthetic fuel, the company believes that earnings
per share of $1.65 to $1.70 is achievable in 2002. This outlook assumes
an average REVPAR decline of 2 to 3 percent and a house profit margin decline
of approximately 1 to 2 percentage points. The following table provides
updated quarterly earnings guidance for the remainder of 2002.
2002
Fully Diluted Earnings Per Share
First Quarter Actual
$.32
Second Quarter Estimate
$.41 to $.43
Third Quarter Estimate
$.41 to $.43
Fourth Quarter Estimate
$.51 to $.53
Full Year 2002 Estimate
$1.65 to $1.70
The company expects investment spending in 2002 to include approximately
$50 million for maintenance spending and approximately $300 million for
new company-developed hotels. We anticipate timeshare spending to total
approximately $200 million. We expect to invest $300 million in equity
slivers, mezzanine financing and mortgage loans for hotels developed by
our partners.
MARRIOTT INTERNATIONAL, INC.
Financial Highlights
12 Weeks Ended March 22, 2002 (in millions, except
per share amounts)
Senior
Living Distribution Synthetic
Sales
Lodging Services Services Fuel
Total
Management and
franchise fees
$168 $8
$-- $-- $176
Other
373 82
376 5
836
---- ---- ----
---- ----
541 90
376 5 1,012
Other revenues from
managed and
franchised properties 1,262
90 --
-- 1,352
----- ----- -----
----- -----
1,803 180
376 5 2,364
----- ----- -----
----- -----
Operating costs and expenses
Operating costs
388 84
382 11
865
Other costs from
managed and
franchised properties 1,262
90 --
-- 1,352
----- ----- -----
----- -----
1,650 174
382 11 2,217
------ ----- -----
----- ------
Operating profit (loss)
before corporate
expenses and interest
$153 $6
$(6) $(6) 147
===== ===== =====
=====
Corporate expenses
(29)
Interest expense
(19)
Interest income
19
Income before income taxes
118
Provision for income taxes
(36)
Net income
$82
Basic Earnings Per Share
$0.34
Diluted Earnings Per Share
$0.32
Diluted Shares
254.3
12 Weeks Ended
March 23, 2001
(in millions, except per share amounts)
Senior
Living Distribution Synthetic Better/
Sales
Lodging Services Services Fuel
Total (Worse)
Management and
franchise fees
$196 $8
$-- $-- $204
Other
405 76
361 --
842
----- ----- -----
----- -----
601 84
361 -- 1,046
Other revenues from
managed and
franchised properties 1,334
81 --
-- 1,415
----- ----- -----
----- -----
1,935 165
361 -- 2,461
-4%
----- ----- -----
----- -----
Operating costs and expenses
Operating costs
378 83
359 --
820
Other costs from
managed and franchised
properties
1,334 81
-- -- 1,415
----- ----- -----
---- -----
1,712 164
359 -- 2,235
1%
----- ----- -----
---- -----
Operating profit (loss)
before corporate
expenses and interest
$223 $1
$2 $-- 226
-35%
===== ===== =====
====
Corporate expenses
(30)
Interest expense
(22)
Interest income
16
Income before income taxes
190 -38%
Provision for income taxes
(69)
Net income
$121 -32%
Basic Earnings Per Share
$0.50 -32%
Diluted Earnings Per Share
$0.47 -32%
Diluted Shares
257.6
MARRIOTT INTERNATIONAL, INC.
Business Segment Results
2002 First Quarter
Twelve weeks ended
($ in millions)
March 22, 2002 March 23, 2001
Sales
Full-Service
$1,221
$1,349
Select-Service
207
213
Timeshare
254
234
Extended-Stay
121
139
------- -------
Total Lodging
1,803
1,935
Senior Living Services
180
165
Distribution Services
376
361
Synthetic Fuel
5
--
------- -------
$2,364
$2,461
======= =======
Operating profit (loss) before
corporate expenses and interest
Full-Service
$86
$117
Select-Service
28
44
Timeshare
31
43
Extended-Stay
8
19
------
------
Total Lodging
153
223
Senior Living Services
6
1
Distribution Services
(6)
2
Synthetic Fuel
(6)
--
-------
------
$147
$226
=======
======
MARRIOTT INTERNATIONAL, INC.
Key
Lodging Statistics
First Quarter
REVPAR Occupancy Average
Daily Rate
Brand
vs.2001 2002 vs.2001 2002
vs.2001
Marriott Hotels,
Resorts and Suites
-12.7% 69.4% -3.5% pts. $142.25 -8.2%
The Ritz-Carlton
-14.0% 67.1% -1.9% pts. $248.86 -11.6%
Renaissance Hotels,
Resorts and Suites
-15.3% 64.5% -5.7% pts. $134.70 -7.8%
Domestic Composite -
Full-Service (1)
-13.2% 68.5% -3.8% pts. $147.39 -8.4%
Residence Inn
-15.6% 74.2% -5.0% pts. $99.38 -10.0%
Courtyard
-15.1% 65.8% -7.2% pts. $97.01 -5.8%
Fairfield Inn
-5.2% 60.9% -2.4% pts. $63.76 -1.4%
TownePlace Suites
-5.8% 69.9% +3.3% pts. $62.67 -10.2%
SpringHill Suites
-3.4% 67.7% +1.6% pts. $79.92 -5.7%
Domestic Composite - Select-
Service & Extended-Stay
(2) -12.0% 66.0% -3.9% pts. $83.49
-6.7%
Domestic Composite - All (3)
-12.7% 67.2% -3.8% pts. $113.43 -7.7%
Note: Statistics for above tables are
based on comparable company-operated
U.S. properties, except for Fairfield Inn, TownePlace Suites, and SpringHill
Suites, which data also include franchised units.
Number of Number of
Properties Rooms/Suites
March vs.March March vs. March
Brand
2002 2001 2002
2001
Full-Service Lodging
Marriott Hotels, Resorts
and Suites 428 +27 159,320
+7,038
The Ritz-Carlton
46 +7 15,365
+2,119
Renaissance Hotels, Resorts
and Suites 124 +11 45,130
+3,638
Ramada International
137 +75 19,890 +8,533
Select-Service Lodging
Courtyard
562 +33 80,537 +5,488
Fairfield Inn
487 +40 46,748 +4,388
SpringHill Suites
87 +22 9,975
+3,019
Extended-Stay Lodging
Residence Inn
395 +33 46,698 +4,392
TownePlace Suites
99 +10 10,260 +1,186
Marriott Executive Apartments
12 +3 2,068
+335
Timeshare
Marriott Vacation Club
International 44 +1
6,287 +886
Horizons
2 -- 146
--
The Ritz-Carlton Club
4 +2 144
+74
Marriott Grand Residence
Club
1 +1 199
+199
Total
2,428 +265 442,767 +41,295
===================================
(1) Full-service composite statistics
include domestic managed comparable
properties
for the Marriott Hotels, Resorts and Suites, Renaissance Hotels, Resorts
and Suites and The Ritz-Carlton brands. Statistics exclude non-U.S.
properties.
(2) Select-Service and Extended-Stay
composite statistics include domestic
managed comparable
properties for the Courtyard, and Residence Inn brands, and domestic managed
and franchised comparable properties for the TownePlace Suites, Fairfield
Inn and SpringHill Suites brands. Statistics exclude non-U.S. properties.
(3) Composite statistics include domestic
managed comparable properties
for the Marriott
Hotels, Resorts and Suites, Renaissance Hotels, Resorts and Suites, The
Ritz-Carlton, Courtyard, and Residence Inn brands, and domestic managed
and franchised comparable properties for the TownePlace Suites, Fairfield
Inn and SpringHill Suites brands. Statistics exclude non-U.S. properties.
|
This press release contains ``forward-looking statements'' within the
meaning of federal securities laws, including REVPAR, profit margin and
earning trends; statements concerning the number of lodging properties
expected to be added in future years; expected investment spending; anticipated
results from synthetic fuel operations; and similar statements concerning
anticipated future events and expectations that are not historical facts.
MARRIOTT INTERNATIONAL, INC. (NYSE: MAR - news), a leading worldwide
hospitality company celebrating its 75th Anniversary in 2002, has nearly
2,600 operating units in the United States and 64 other countries and territories. |