Wednesday, July 14, 2010

“UPDATE: Marriott's Robust Results Add To Bullishness On Lodging” plus 2 more

“UPDATE: Marriott's Robust Results Add To Bullishness On Lodging” plus 2 more

UPDATE: Marriott's Robust Results Add To Bullishness On Lodging

Posted: 14 Jul 2010 05:41 PM PDT

(Adds analyst comments and background.)

NEW YORK -(Dow Jones)- Marriott International Inc.'s (MAR) second-quarter earnings more than tripled, fueling optimism that the lodging industry is finally turning the corner from a brutal downturn.

An industry bellwether, Marriott's results also bode well for Starwood Hotels & Resorts (HOT) and Host Hotels & Resorts (HST) quarterly earnings expected next week. Wall Street had anticipated a strong second quarter for hoteliers as they continue to benefit from cost-cutting measures and increased corporate and leisure travel despite lingering concerns about the national economy.

"We've seen improvement in all segments of customer demand," said Andrew Wittman, an analyst at Robert W. Baird & Co.. However, he said the market is still looking for group bookings to significantly pick up.

His firm expects national revenue per available room rates to increase 6% during the second quarter compared to the same period last year and anticipates that increases in revenue will boost profitability for the first time since 2007.

The hotel industry had been severely hobbled by the national recession as companies significantly curtailed travel and cash-strapped consumers cut back on vacation spending. In a sign of improving demand, revenue per available room, or revpar, in the first five months of the year rose 1% to $52.99, according to Smith Travel Research Inc. In comparison, it averaged $64.57 in the first five months of 2008.

Although part Marriott's earnings surge reflected restructuring charges the year earlier; the hotel company nonetheless beat guidance and boosted its forecast for the full year.

Marriott raised its 2010 earnings forecast to a range of $1.05 to $1.13 a share, compared with 95 cents to $1.05 predicted in April. It also raised the bottom end of its revpar projection 1 percentage point, now predicting 4% to 6% growth.

Looking ahead to the current quarter's results, Marriott predicted 18 cents to 22 cents a share. That's mostly below the average analyst estimate for 22 cents, according to a survey by Thomson Reuters. Marriott sees growth in revpar of 6% to 8%.

In the most recent period, revpar jumped 9.9%--or 8.2% in constant dollars--beating April's prediction for 5% to 7% growth. The recovery in the travel-lodging industry has been building after a period of patchwork improvements. In the previous quarter, Marriott's business-travel demand and occupancy levels both improved, but room rates were generally lower.

This time, Chairman and Chief Executive J.W. Marriott said business and leisure stays at Marriott hotels were trending up and room rates at North American locations rose for the first time in two years. At the end of the quarter, 39% of Marriott's development pipeline was outside North America, as were two-thirds of its rooms under construction.

The company--which operates Courtyard, Residence Inn, Ritz-Carlton and its namesake hotels, among others--has also unveiled plans to double its presence in China over the next five years.

Marriott posted a profit of $119 million, or 31 cents a share, up from $37 million, or 10 cents a share, a year earlier. The previous year's results were hurt by restructuring charges, without which earnings rose to 31 cents from 23 cents.

In April, Marriott predicted upbeat earnings of 25 cents to 29 cents a share.

Revenue increased 8.2% to $2.77 billion. Analysts polled by Thomson Reuters recently expected $2.75 billion.

Marriott shares were down 0.4% at $32.02 after hours. The stock has risen 18% so far this year, while the broader market remains negative.

Copyright © 2009 Dow Jones Newswires

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Hotel Union Square Mezz 1 Files Chapter 11 Bankruptcy Liquidation Plan

Posted: 14 Jul 2010 02:39 PM PDT

Hotels Union Square Mezz 1 LLC and Hotels Union Square Mezz 2 filed a joint liquidation plan today that would wind up the bankruptcy cases relating to the W New York Union Square hotel.

The New York hotel, which features Rande Gerber's Underbar, is operated by a unit of White Plains, New York-based Starwood Hotels & Resorts Worldwide Inc., the third-largest U.S. lodging company. Under the terms of the plan, W Hotel Management Inc. will continue to manage the hotel under its existing agreement.

Hotels Union Square Mezz 1 was put into bankruptcy in March by junior mezzanine lender LEM that took over ownership of the Manhattan luxury property in December from Dubai World.

LEM, an affiliate of Lubert-Adler Real Estate Funds, paid $2 million at a foreclosure auction on Dec. 8 to assume the debt on two mezzanine notes as well as the mortgage payments on the hotel after Dubai World defaulted.

The case is Hotels Union Square Mezz 1 LLC, 10-10971, U.S. Bankruptcy Court, District of Delaware (Wilmington).

To contact the reporters on this story: Dawn McCarty in Wilmington, Delaware, at dmccarty@bloomberg.net; Michael Bathon in Wilmington, Delaware, at mbathon@bloomberg.net.

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AZ resorts, hotels call boycott effects hidden but costly

Posted: 13 Jul 2010 11:53 PM PDT

The boycott over SB 1070 is costing Arizona hotels and resorts out-of-state visitors, most agreed Tuesday at the Governor's Conference on Tourism, but participants also said that getting many details about cancellations is a problem.

Organizations that cancel meetings or choose not to book future meetings because of the controversy over the new state immigration law don't want their names used, members of a panel on the problem said.

"People want to know who canceled. They want to put a name to these," said Brian Johnson, managing director of Loews Ventana Canyon, the resort where the annual tourism conference is being held this week.

But the panelists said disclosing names is not something that can be done in the corporate resort and hotel world. The implication: Resorts' and hotels' parent companies might lose their business at properties in other states.

Johnson said it's "scary" to see what's happening to tourism statewide. Leads on new businesses are starting to dry up, he said, even as the overall economy starts to recover.

"As we look into the rest of the year, and into 2011, (tourism) seems to be slowing," said Johnson, who also is a past president of the Southern Arizona Lodging and Resort Association.

"That's the scary part now. Now no one is talking to us. Avoidance. It's easier to go to another state. My fear right now is what's going to be facing us in 2011."

A consensus at the conference agreed that tourism industry members and elected officials must push a positive message to reverse the downward trend in tourism - and to alleviate concern that the impact might worsen as the overall economy improves.

"Arizona is the same wonderful place it was six months ago," said Debbie Johnson, president and CEO of the Arizona Hotel & Lodging Association. "We're telling people to communicate the facts - that Arizona is a safe and welcoming destination."

The other part of the message has been that the boycott is hurting the estimated 200,000 Arizona workers and their families who depend on tourism for a living. But that's the message the association and other tourism groups have been pushing since the boycott began.

Some conference participants placed their hopes in the $250,000 in state funds allocated to start an official national campaign to counter negative publicity.

One of the plans presented would have industry association officials and resort and hotel management people making media appearances throughout the country to push Arizona tourism.

And with nationally distributed accounts of beheadings along the border and kidnapping epidemics in Phoenix, conference members said there is a lot to counteract.

Debbie Johnson said that every time Arizona illegal immigration receives any national media attention, things get worse.

As an example, the CEO cited a story she said she heard from a tourism industry source:

Visitors planning to come to a Sedona resort, Johnson recounted, called to ask if it was safe to drive up Interstate 17 from Phoenix Sky Harbor International Airport in light of recent violence.

Contact reporter Dan Sorenson at dsorenson@azstarnet.com or 573-4185.

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