Bloomberg.com (by Hui-yong Yu and Oshrat Carmiel) reports that Marriott International Inc., the biggest U.S. hotel chain, fell 6.2 percent in New York trading as second-quarter profit declined and the company lowered its profit forecast.
“Pricing has become a greater challenge,” Marriott President Arne Sorenson said during the conference call. “Pricing power will only return as occupancy recovers.”
Second quarter revenue dropped 20 percent to $2.6 billion from a year earlier. Costs declined 14 percent to $2.5 billion. The company said it had restructuring expenses of about $57 million to pay for loan loss reserve, exit timeshare facilities and pay severance.
Revenue per available room in North America on a same-store basis may fall 20 percent to 23 percent in the third quarter, the company said. Debt may drop by $600 million to $650 million during 2009, the company said. Total fee revenue for the third quarter is expected to be $210 million to $220 million and for the full year between $1.03 billion and $1.06 billion, Marriott said during the conference call.
In the second quarter revenue per available room fell 26 percent. Timeshare sales fell 37 percent, the company said.
The company may continue its timeshare discount plan, which may result in non-cash expenses in the next quarter, Sorenson said. Marriott expects positive cash flow for the timeshare business this year.