Marriott International Inc., the largest U.S. hotel operator, Thursday said first-quarter profit rose 27 percent as an upswing in travel drove room rates and occupancy higher.
The company also raised its full-year earnings outlook, and its shares jumped nearly 5 percent in early trading.
First-quarter net income rose to $145 million, or 61 cents a share, from $114 million, or 47 cents a share, a year earlier. The profit surpassed the average analyst estimate of 55 cents a share, as compiled by Reuters Estimates.
The results “support our conviction in the strength of the lodging recovery,” said Marc Falcone, an analyst at Deutsche Bank. He noted that Marriott reported a 52 percent increase in incentive management fees -- an income line that virtually disappeared during the slump driven by the attacks of Sept. 11, 2001 and the U.S. recession.
Marriott’s overall revenue rose 13 percent to $2.53 billion, also beating analysts’ estimates of $2.47 billion.
Revenue per available room, a key measure of health in the lodging industry, rose 8.4 percent at North American hotels open at least a year.
For the full year, Marriott raised its earnings forecast to between $2.80 and $2.90 a share, including an 11-cent-per-share charge for installing new bedding in its hotel rooms. In February, the company had said it expected to earn $2.73 to $2.83 a share, excluding the bedding costs.
Wall Street’s average estimate for 2005 is $2.82.
The company said it expects to earn 74 cents to 76 cents a share in the second quarter, compared with analysts’ estimates of 73 cents.
The Bethesda, Maryland-based company expects revenue per room at its North American properties to grow 8 to 10 percent for the full year, driven mainly by higher room rates.
As the industry recovered from the three-year slump following the Sept. 11 attacks on the World Trade Center, initial revenue-per-room increases were driven mostly by higher occupancy. Marriott began raising room rates only last year.
Its shares rose $3.04 to $65.24 in early trading on the New York Stock Exchange.
