Summary
Marriott International Inc. reported a significant year-over-year decline in financial performance for the second quarter and first half of 2009, reflecting the severe impact of the global economic recession and credit crisis. Total revenues decreased by 20% in the second quarter and 18% for the first half of the year, driven primarily by lower demand across all segments, particularly in Timeshare and Luxury Lodging. Net income attributable to Marriott plummeted to $37 million for the second quarter and $14 million for the first half, a stark contrast to the $157 million and $275 million reported in the prior year periods, respectively. This sharp decline was exacerbated by substantial restructuring costs and other charges totaling $186 million for the first half of 2009, including impairments, severance, and facility exit costs, largely concentrated in the Timeshare segment. Despite these headwinds, Marriott continued to expand its global presence, adding over 17,000 rooms in the first half of 2009, with a development pipeline of over 110,000 rooms.
Financial Highlights
49 data points| Revenue | $2.56B |
| Operating Expenses | $2.46B |
| Operating Income | $99.00M |
| Interest Expense | $28.00M |
| Net Income | $37.00M |
| EPS (Basic) | $0.10 |
| EPS (Diluted) | $0.10 |
| Shares Outstanding (Basic) | 356.20M |
| Shares Outstanding (Diluted) | 366.00M |
Key Highlights
- 1**Revenue Decline:** Total revenues fell 20% year-over-year to $2.56 billion in Q2 2009 and 18% to $5.06 billion in the first half, driven by weaker lodging demand and a significant drop in Timeshare sales and services.
- 2**Profitability Hit:** Net income attributable to Marriott dropped sharply to $37 million in Q2 2009 ($0.10/share diluted) from $157 million ($0.42/share diluted) in Q2 2008. First-half net income was $14 million ($0.04/share diluted) compared to $275 million ($0.75/share diluted) in the prior year.
- 3**Restructuring and Other Charges:** The company incurred $35 million in restructuring costs and $151 million in other charges (including impairments, reserves for loan losses, and timeshare residual interest valuation adjustments) in the first half of 2009, significantly impacting profitability.
- 4**Segment Performance:** All segments experienced revenue declines. The Timeshare segment reported a loss of $52 million in the first half of 2009, a significant reversal from a $74 million profit in the prior year. Luxury Lodging also saw segment results turn to a loss of $7 million in the first half from a $49 million profit.
- 5**RevPAR Declines:** Comparable company-operated RevPAR (Revenue Per Available Room) decreased significantly across all segments, with North American Full-Service down 21.8% and North American Limited-Service down 23.3% in Q2 2009.
- 6**Balance Sheet Strength:** Despite the challenging environment, Marriott maintained liquidity with $125 million in cash and equivalents at June 19, 2009, and $1.494 billion in available borrowing capacity under its credit facility. Long-term debt decreased to $2.85 billion.
- 7**Shareholder Returns:** The company declared a cash dividend of $0.0872 per share in Q2 2008 but declared no cash dividend in Q2 2009, reflecting the difficult economic conditions.