Marriott Update
– from David Schankula
Just in case you missed this news which came out after yesterday’s letter to Mayor Newberry (see below)…
portfolio.com/news-markets/national-news/reuters/2008/12/09/marriott-cfo-warns-of-tough-2009
Marriott CFO warns of “tough 2009”
LOS ANGELES (Reuters) – Hotel operator Marriott International Inc expects “to have to navigate through a tough 2009,” the company’s chief financial officer said on Tuesday. Arne Sorenson said in a blog posting on the company’s website that Marriott’s debt levels and timeshare investment spending were expected to decline next year. The company said in October that it expected revenue per available room, or Revpar, one of the industry’s key performance measures, to be down at least 3 percent in North America next year, and Chief Executive Bill Marriott said last month that Marriott’s business outlook had deteriorated further.
*Consulting firm PKF Hospitality Research said earlier on Tuesday that it expects U.S. Revpar to drop 7.9 percent next year, citing “the initial stages of one of the deepest and longest recessions in the history of the domestic lodging industry.”* Sorenson said Marriott’s debt levels would decline next year through a combination of solid cash flow and more modest investment spending. He said Marriott was calibrating its timeshare investments to match weaker customer demand, with a goal of timeshare generating cash in 2009.
“We continue to offer financing for qualified purchasers and expect to be able to securitize these loans in 2009,” Sorenson said. He added that Marriott’s pipeline of new managed and franchised hotels stood at 130,000 rooms at the end of the third quarter. “One half of these are already under construction and another 10 percent, or so, are financed,” he said. Shares of Marriott closed down 52 cents at $16.86 on the New York Stock Exchange on Tuesday.
(Reporting by Deena Beasley)
