Marriott Reports 49 Percent Drop in Quarterly Income

Marriott International, Inc. reported fourth quarter 2008 adjusted income from continuing operations of $121 million, a 49 percent decline over the year-ago quarter, and adjusted diluted earnings per share (EPS) from continuing operations of $0.34, down 45 percent.

Adjusted results for the 2008 fourth quarter exclude $192 million pretax ($124 million after-tax and $0.35 per diluted share) of restructuring and other charges resulting from the significant economic decline affecting worldwide lodging and timeshare demand and the turmoil in the financial markets.

Restructuring charges totaled $55 million pretax and included severance costs, facilities exit costs and the write-off of capitalized costs associated with discontinued development projects.

Other charges totaled $137 million pretax and primarily included charges against timeshare and lodging assets, guarantee charges and reserves for loan losses and accounts receivable. Of the total $192 million of restructuring costs and other charges, $152 million were non-cash.

Adjusted results for the 2008 fourth quarter also exclude $7 million of charges ($0.02 per diluted share) in the provision for taxes largely due to state taxes related to a settlement reached in May 2008 with the IRS regarding a 1995 leasing transaction.

The reported loss from continuing operations was $10 million in the fourth quarter of 2008 compared to reported income from continuing operations of $236 million in the year-ago quarter. Reported diluted losses per share from continuing operations was $0.03 in the fourth quarter of 2008 compared to diluted EPS from continuing operations of $0.62 in the fourth quarter of 2007.

Marriott added 78 new properties (11,451 rooms) to its worldwide lodging portfolio in the 2008 fourth quarter, including 59 limited-service hotels. Five properties (1,194 rooms) exited the system during the quarter.

Rooms converted from competitor hotels accounted for 22 percent of gross room additions during the quarter. At year-end, the company’s lodging group encompassed 3,178 properties and timeshare resorts for a total of over 560,000 rooms.

The company’s worldwide pipeline of hotels under construction, awaiting conversion or approved for development totaled over 125,000 rooms. Nearly 30 percent of the development pipeline rooms are Marriott, Ritz-Carlton, Renaissance or Edition rooms, of which nearly 70 percent are located outside North America.

Marriott revenues totaled approximately $3.8 billion in the 2008 fourth quarter compared to $4.1 billion for the fourth quarter of 2007. Base management and franchise fees declined 6 percent to $320 million reflecting lower RevPAR and a stronger U.S. dollar, offset in part by fees from new hotels.