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Marriott scales back expectations for '09

The hotel chain lowers its forecast for 2008 for the third time and says earnings fell 28% in the third quarter.

October 03, 2008|From Bloomberg News

Marriott International Inc., the biggest U.S. hotel chain, forecast a steeper drop in 2009 earnings than analysts estimated as withering economies around the globe erode travel budgets.

Earnings in 2009 may be $1.48 to $1.60 a share, a forecast it can't make "with certainty," Marriott said Thursday. Nineteen analysts estimated $1.83 on average. The company also reduced its 2008 forecast for the third time this year and said third-quarter profit fell 28%.

Marriott, which also has the Ritz-Carlton, Courtyard and Residence Inn brands, is the first major U.S. hotel chain to report third-quarter earnings. The drop may foreshadow declines at Starwood Hotels & Resorts Worldwide Inc., Wyndham Worldwide Corp. and InterContinental Hotels Group. Marriott has been freezing hiring, cutting back employee hours and shortening hours for restaurants at its U.S. hotels.

"This is different from other downturns; with Wall Street, unemployment, the airline capacity cuts, there's just so many extraordinary challenges right now," said Chris Woronka, an analyst with Deutsche Bank Securities Inc. in New York.

Marriott said profit this year would be $1.62 to $1.68 a share, compared with the $1.77 to $1.88 it forecast in July. Nineteen analysts estimated $1.78 on average.

This quarter, worldwide average revenue per room may fall 1% to 3%, led by North American declines of 3% to 5%, Marriott forecast.

Third-quarter net income dropped to $94 million, or 26 cents a share, in the three months ended Sept. 5, compared with $131 million, or 33 cents, a year earlier, Marriott said. Revenue rose 1% to $2.96 billion.

Marriott fell $1.34, or 5.3%, to $23.74. The stock has dropped 31% this year.

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