Marriott International said Thursday that it returned to profitability in the fourth quarter as it continued to combat the waning recession, with occupancy rising but room rates lagging.
The Bethesda-based hotel operator, known for brands such as Ritz-Carlton as well as its namesake, reported earnings of $106 million, or 28 cents a share, for the period ended Jan. 1. That compares with a loss of $10 million, or 3 cents a share, a year earlier.
Fourth-quarter revenue dropped to $3.38 billion from $3.78 billion, but the performance still managed to surpass Wall Street's $3.21 billion estimate. For the full year, Marriott posted a loss of $346 million, or 97 cents a share. Annual revenue declined to $10.91 billion from $12.88 billion.
Marriott executives said that business travel improved during the quarter while budget-conscious leisure travelers took advantage of promotions.
"Folks of all sorts are getting back to travel and getting back to work," said Chief Financial Officer Carl Berquist. He said that higher occupancy during the quarter shows that demand is strengthening, but he conceded that room rates remain weak. The first quarter's results are showing much of the same so far, he added.
Upscale hotels, about a quarter of the U.S. market, were hit hard during the recession as business travelers and affluent guests scaled back on travel. Although signs point toward rising business travel, it may take longer for leisure travel to pick up. Consumers have been wary, and high unemployment continues to push people to postpone travel or take shorter trips. Many hotel companies have tried to woo this segment with discounts, which have squeezed profits.
At Marriott, revenue per available room -- a key measure of performance for the lodging industry -- fell 13.1 percent for worldwide company-run hotels open at least a year. Revenue per available room for company-run North American full-service and luxury hotels open at least a year slipped 11.8 percent. With conditions starting to improve, Marriott offered first-quarter and full-year earnings outlooks in range of analysts' expectations and raised its guidance for a key 2010 revenue figure.
The company said it expects first-quarter earnings from continuing operations of 15 to 21 cents per share and 2010 earnings of 82 to 94 cents per share. Analysts predict a profit of 18 cents per share for the first quarter and 89 cents per share for the year.