03/27/2009 3:59PM ET
The hotel industry has been hit hard by the decline in travel, and MarriottInternational is no exception. Due to the downturn, businesses have been pressured to cut travel spending and cancel conferences that would have once been held at hotels. Consumers are also taking fewer trips, despite the deep discounts being offered by Marriott International and others. High gas prices in 2008 and the rising cost of food have shifted consumers' spending habits, causing them to spend more on necessities and less on discretionary items such as lavish vacations and lengthy hotel stays. The high cost of airfare in 2008 has also kept people at home.
"Results in the fourth quarter of 2008 demonstrated the impact of economic disruption to our business," said Chairman J.W. Marriott, Jr.. The company has been trying to maximize value by adding rooms to existing hotels, cutting back on new projects and cutting costs. It added 26,000 rooms overall and expects to add as many in 2009. The company closed less-productive sales offices and reduced general and administrative spending by $100.0 million.
Despite the cost-cutting measures, Marriott's revenue per available room, a key indicator of a hotel's health, declined by 8.4%. The hotel manager reported a loss of $10.0 million, or 3 cents a share, compared with year-earlier profit of $176.0 million, or 46 cents a share. Excluding one-time items, Marriott's earnings from continuing operations were 34 cents a share, missing estimates. Revenues dropped 7.3% to $3.8 billion. Analysts surveyed by Thomson Reuters predicted, on average, a profit of 40 cents per share on revenues of $3.9 billion.
For the first quarter of 2009, the company expects North American comparable company-operated revenue per available room to decline roughly 17.0% and total fee revenue to decline 20.0% to 25.0%, while owned, leased, corporate housing, net of direct expenses, could total $5.0 million to $10.0 million.
The company owns Marriott Hotels & Resorts, The Ritz-Carlton and Renaissance Hotels & Resorts, and the Courtyard brands.