Largest Hotel Companies Report Strong Q2 Earnings

Second-quarter performance among several major hotel companies reported in the past month underscored a healthy travel market marked by surging occupancy, higher revenue per available room and growing profits. Hilton Hotels Corp., Marriott International and Starwood Hotels & Resorts Worldwide Inc. all noted profits during the second quarter and highlighted optimistic forecasts for full-year 2005.

Marriott International during the second quarter gained in all financial areas, year over year, boasting higher revenue per available room, growing occupancy and average daily rate in all hotel tiers, the company said during its recent quarterly earnings call.

The multi-brand hotel company's quarterly revenue jumped 11 percent to $2.7 billion and is indicative of the general health of the hotel industry.

The company last month said systemwide RevPAR increased 11 percent from the same period in 2004, anchored by an 8.9 percent jump in ADR and a 1.5 percentage-point upswing in occupancy, which now stands at more than 75 percent.

"The economy continues to be strong and so does our business," Marriott International chairman and CEO J.W. Marriott Jr. said in a statement. "In the second quarter, surging U.S. travel demand drove occupancy and room rates higher in most markets, from New York and Seattle to New Orleans and San Francisco. Marriott's occupancy and room rates improved due to accelerating corporate demand, growing meeting attendance and increasing global travel."

Performance in North America fell slightly below systemwide averages, but Marriott still recorded strong growth for the region, with RevPAR jumping by 10 percent, occupancy up by 1 percentage point and ADR increasing by 8.5 percent.

"With robust industry demand, our increasing share of expected low industry supply growth and the strength of our brand preference, we expect continued pricing power and strong financial results for the remainder of 2005 and beyond," Marriott said.

Hilton recorded a quarterly record with a net income of $202 million, compared with $75 million in the 2004 quarter.

Citing increases in room nights and continued power in pricing for the company's owned hotels, Hilton said owned-hotel revenue per available room was up 9.4 percent, anchored by double-digit RevPAR gains in New York, Hawaii, Boston and Chicago.

"Many of the hotels in our most important markets are running essentially full, with occupancies well into the 80s and in the case of New York City in the 90s, bringing the pricing power that comes with increased travel demand and limited new supply. We are particularly encouraged by strong results in Chicago which, as we anticipated, improved significantly