Marriott International Q1 net income 20 percent better
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Diluted earnings per share (EPS) in the first quarter totaled $0.73, a 28 percent increase from diluted EPS in the year-ago quarter. First quarter 2015 results reflect impairment charges totaling $12 million pretax while the prior year quarter included both a $10 million pretax impairment charge and a net $16 million tax benefit.
On February 18, 2015, the company forecasted first quarter diluted EPS of $0.68 to $0.72.
For the 2015 first quarter, RevPAR for worldwide comparable systemwide properties increased 6.8 percent (a 5.2 percent increase using actual dollars).
In North America, comparable systemwide RevPAR increased 6.9 percent (a 6.6 percent increase using actual dollars) in the first quarter of 2015, including a 4.9 percent increase (a 4.7 percent increase in actual dollars) in average daily rate.
RevPAR for comparable systemwide North American full-service hotels (including Marriott Hotels, The Ritz-Carlton, Renaissance Hotels, Gaylord Hotels and Autograph Collection Hotels) increased 5.3 percent (a 5.0 percent increase in actual dollars) with a 4.6 percent increase (a 4.3 percent increase in actual dollars) in average daily rate.
RevPAR for comparable systemwide North American limited-service hotels (including Courtyard, Residence Inn, SpringHill Suites, TownePlace Suites and Fairfield Inn & Suites) increased 8.3 percent (an 8.0 percent increase in actual dollars) in the first quarter with a 5.6 percent increase (a 5.3 percent increase in actual dollars) in average daily rate.
International comparable systemwide RevPAR rose 6.7 percent (a 0.2 percent decline using actual dollars) in the first quarter.
Marriott added 60 new properties (10,148 rooms) to its worldwide lodging portfolio in the 2015 first quarter, including the 1,012-room JW Marriott Austin in Texas, the Marriott Port-au-Prince Hotel in Haiti and the JW Marriott Venice Resort & Spa in Italy.
Seven properties (1,420 rooms) exited the system during the quarter. At quarter-end, the company's lodging system encompassed 4,228 properties and timeshare resorts for a total of over 723,000 rooms.
The company's worldwide development pipeline totaled over 1,450 properties with over 240,000 rooms at quarter-end, including approximately 500 properties with 88,000 rooms under construction and 162 properties with nearly 27,000 rooms approved for development, but not yet subject to signed contracts.
The company's pipeline at the end of the first quarter did not include the approximately 10,000 rooms associated with the Delta transaction which closed on April 1, 2015.
Marriott revenues totaled over $3.5 billion in the 2015 first quarter compared to revenues of nearly $3.3 billion for the first quarter of 2014. Base management and franchise fees totaled $369 million compared to $318 million in the year-ago quarter, an increase of 16 percent.
The increase largely reflected higher RevPAR, higher property-level food and beverage revenue, new unit growth and $19 million of higher relicensing fees.
First quarter worldwide incentive management fees increased 25 percent to $89 million primarily due to higher RevPAR and house profit margins, particularly at in-season Florida and Caribbean resorts, as well as favorable timing of fee recognition and incentive fees from the Protea brand portfolio, which was acquired in the second quarter of 2014.
In the first quarter, 48 percent of worldwide company-managed hotels earned incentive management fees compared to 35 percent in the year-ago quarter.
On February 18, the company estimated total fee revenue for the first quarter would total $440 million to $450 million. Actual total fee revenue of $458 million in the quarter was higher than estimated due to better than expected RevPAR growth and house profit margins driving incentive fees higher.
Worldwide comparable company-operated house profit margins increased 120 basis points in the first quarter with higher room rates, improved productivity, and lower utility costs. House profit margins for North American comparable company-operated properties increased 120 basis points from the year-ago quarter.
Owned, leased, and other revenue, net of direct expenses, totaled $63 million, compared to $49 million in the year-ago quarter. The year-over-year increase largely reflected the $5 million favorable impact of the Protea acquisition, the $3 million favorable impact of several expired leases in Europe and improved results at a few hotels.
On February 18, the company estimated owned, leased, and other revenue, net of direct expenses for the first quarter would total approximately $60 million. Actual results in the quarter were above the estimate largely due to stronger results at one international leased hotel and the favorable timing of pre-opening expenses.
Depreciation, amortization, and other expenses totaled $44 million in the first quarter of 2015 compared to $36 million in the year-ago quarter. Expenses in the 2015 first quarter include $12 million of impairment charges related to The New York Edition hotel and The Miami Beach Edition residences.
Over the last 12 months, the company generated proceeds of nearly $1 billion from the sale of Edition assets including the sale of The New York Edition at the beginning of the 2015 second quarter.
Expenses in the quarter also included $3 million of accelerated amortization of contract acquisition costs primarily related to contract terminations and $2 million of higher amortization of contract acquisition costs related to the Protea transaction.
The 2014 first quarter expenses included a $10 million impairment charge.
On February 18, the company estimated depreciation, amortization, and other expenses for the first quarter would total $30 million. Actual expenses in the quarter were higher than expected largely due to the $12 million of impairment charges discussed above, as well as $3 million of accelerated amortization of contract acquisition costs primarily related to contract terminations.
General, administrative, and other expenses for the 2015 first quarter totaled $145 million compared to $148 million in the year-ago quarter.
The decline in expenses year-over-year was largely due to the $14 million net favorable impact to legal expenses associated with a few litigation resolutions, partially offset by $7 million of higher guarantee reserves and $2 million of expenses related to the Protea brand portfolio.
On February 18, the company estimated general, administrative, and other expenses for the first quarter would total $150 million to $155 million. Actual expenses in the quarter were lower than expected largely due to favorable timing and higher deferred development costs. ■