Marriott International Inc.
) posted fourth quarter 2012 earnings of 56 cents per share,
surpassing the Zacks Consensus Estimate by a penny and the
year-ago quarter's adjusted earnings of 46 cents per share. The
earnings were in line with the higher end of the company's
projected guidance of 52 cents to 56 cents per share. In the full
year of 2012, adjusted earnings were $1.64 versus the prior
year's adjusted earnings of $1.31 cents per share.
Total revenues in the fourth quarter were $3.8 billion, up
10.5% from the year earlier quarter's adjusted revenues and also
ahead of the Zacks Consensus Estimate of $3.6 billion. In 2012,
revenues were $11.8 billion versus the prior year's adjusted
revenues of nearly $11.0 billion.
Inside the Headline Numbers
In the fourth quarter, base management and franchise fees
increased 7% year over year to $369 million. The rise can be
attributed to higher revenue per available room (RevPAR) incurred
in the company's hotels and fees gained from the newly launched
hotels. Incentive management fees were $90 million, up 22% from
the year-ago quarter, benefiting from the previously deferred
fees. Owned, leased, corporate housing and other revenues dropped
13% to $308 million.
In the quarter, RevPAR for worldwide comparable system-wide
properties grew 5.2%. International comparable system-wide REVPAR
climbed up 3.2% annually with the rise in average daily rate of
Comparable system-wide RevPAR in North America rose 5.9%, with
the average daily rate up 4.0%. Comparable systemwide North
American full-service and luxury hotels' RevPAR escalated 5.7%,
driven by a 3.4% surge in average daily rate. RevPAR for
comparable systemwide North American limited service hotels grew
6.0%, driven by a 4.4% upside in average daily rate.
Adjusted operating margin in the quarter were 40% versus 33%
in the prior year quarter.
Update on Hotel Rooms
During the quarter, Marriott included 37 properties with
13,982 guestrooms and divested 6 properties. At the end of the
fourth quarter, lodging group and timeshare resorts at Marriott's
owned 3,801 and 660,000 properties, respectively. In 2012, the
company included 27,000 rooms in its system; 30% of which is
located in the international markets.
Nearly 800 properties with over 130,000 rooms are either under
development or already under construction or undergoing
conversion from other brands.
At the end of the fourth quarter, total debt was $2,935.0
million versus $2,509 million in the third quarter while cash
balances totaled $88 million compared with $105 million in the
In the reported quarter, the company repurchased 6.9 million
shares for $257 million. In 2012, the company bought back 31.2
million shares worth $1.2 billion. Recently, the company has
raised its share repurchase authorization to 34.2 million.
For the first quarter of 2013, total fee revenue will be
between $355 million and $370 million and earnings per share
between 37 cents and 42 cents.
The company estimates that North American comparable
system-wide REVPAR will witness an increase of 4% to 7% whereas
comparable system-wide REVPAR outside North America will be 2% to
4% and 3% to 6% worldwide in the first quarter.
The company projects operating income to be within the range
of $205 million to $230 million and operating profit in the
quarter to be within $205 million and $230 million, up $30
million to $55 million year over year.
For full year 2013, the company projects comparable
system-wide REVPAR will increase 4% to 7% in North America
whereas 3% to 5% and 4% to 7% outside North America and
worldwide, respectively, on a constant dollar basis.
The company forecasts fee revenues to be within $1,525 million
and $1,575 million, up nearly 7% to 11% year over year. Operating
income will be within the range of $985 million and $1,055
million. Earnings per share for 2013 are expected from $1.90 to
The company reported impressive results in the quarter on the
back of a strong pipeline, significant international exposure,
buyback strategy, lower operating cost structure and increased
market share. Marriott's deal to manage Gaylord also remains
strategically sound. The company's lodging business in domestic
market is constantly growing.
However, in the near term, we remain cautious on the stock owing
to the uncertain economic environment.
Marriott currently retains a Zacks Rank #3 (Hold). Another
Wyndham Worldwide Corporation
) recently declared its fourth quarter 2012 adjusted earnings of
63 cents per share, ahead of the Zacks Consensus Estimate of 60
cents per share and up 34% year over year. Wyndham currently
carries a Zacks Rank #2 (Buy).
There are various other hoteliers who are also trying to
expand their businesses further, including
The Marcus Corporation
Choice Hotels International Inc.
) which carry a Zacks Rank #1 (Strong Buy) and a Zacks Rank #2
CHOICE HTL INTL (CHH): Free Stock Analysis
MARRIOTT INTL-A (MAR): Free Stock Analysis
MARCUS CORP (MCS): Free Stock Analysis Report
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