10-QPeriod: Q3 FY2004

MARRIOTT INTERNATIONAL INC /MD/ Quarterly Report for Q3 Ended Sep 10, 2004

Filed October 18, 2004For Securities:MAR

Summary

Marriott International, Inc. reported solid financial results for the period ending September 10, 2004. The company saw a significant increase in revenue, driven by strong performance across its lodging segments, particularly Full-Service, Select-Service, and Timeshare. Diluted earnings per share from continuing operations saw a substantial rise, reflecting improved profitability and operational efficiencies. The company's strategic focus on expanding its property base and capitalizing on increased demand for hotel rooms and timeshare offerings appears to be paying off. Despite some headwinds like rising administrative costs and an ongoing synthetic fuel tax credit challenge with the IRS, Marriott demonstrated robust revenue and income growth, underscoring its resilience and effective management in a recovering economic environment.

Key Highlights

  • 1Total revenues increased by 9% to $2,304 million for the twelve weeks ended September 10, 2004, compared to the prior year period.
  • 2Income from continuing operations rose by 42% to $132 million for the twelve weeks ended September 10, 2004, and diluted EPS from continuing operations increased 45% to $0.55.
  • 3Lodging revenues increased 10% to $2,217 million for the twelve weeks ended September 10, 2004, driven by strong RevPAR growth across various brands.
  • 4Systemwide RevPAR for comparable North American properties increased 7.7%, and international RevPAR saw a significant 15.6% increase.
  • 5Timeshare contract sales increased 25% due to strong demand, contributing to a 6% revenue increase in the segment.
  • 6The company repurchased all outstanding Liquid Yield Option Notes for approximately $62 million.
  • 7Marriott recorded a pre-tax gain of approximately $13 million from the redemption of its interest in the Two Flags joint venture with Cendant.

Frequently Asked Questions

Marriott International demonstrated strong financial performance. Revenues increased significantly due to robust demand in lodging and timeshare segments. Income from continuing operations and diluted earnings per share saw substantial year-over-year growth, indicating improved profitability.

The lodging segments, including Full-Service, Select-Service, and Extended-Stay, all showed revenue growth driven by increases in RevPAR and property expansion. The Timeshare segment also performed well, with a notable increase in contract sales and revenues. The Synthetic Fuel segment continued to generate income, largely due to tax credits, despite operating losses.

Marriott faces several risks including competition, fluctuations in the supply and demand for hotel rooms, owner relations, rising operating costs (wages, energy, insurance), global economic conditions, Internet reservation services, changes in laws, and potential issues with its synthetic fuel operations and IRS tax credit challenges.

The company has access to significant borrowing capacity under its credit facilities, totaling $2 billion, and had no loans outstanding at the period end. Cash balances, combined with available credit, provide ample liquidity. Debt has decreased due to strategic debt repayments, including the repurchase of its Liquid Yield Option Notes.