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Marriot International (MAR)
Marriott's Quarter Earnings Tumble
Marriott International (MAR: Charts, News, Offers) reported today that its second quarter earnings decreased 76%. The hotel chain watched its net income slide from $ 153 million a year ago to $37 million for the quarter. In addition, Marriott missed Wall Street analysts' quarterly revenue predictions of $2.63 billion. Despite its best efforts, Marriott International experienced a 20% decline in quarterly revenue as revenue fell to $2.52 billion. This quarter marks Marriott's second consecutive quarter with a loss. What are the factors behind Marriott International's recent struggles?
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| Stock Analysis |
Today's floundering economy is really putting a squeeze on travel spending both on a corporate and personal level. Similar to Marriott, many companies are facing difficult times, and have been forced to scale back on "business travel", which has hurt Marriott a great deal. In addition, personal traveling and vacationing is on the decline. The recent economic climate has made it difficult for consumers to make space in their budgets for leisure travel and/or vacations. Even the industry's most reliable profit generator, timeshares, has taken a hit. Marriott International has tried to lower room prices to entice more customers, but it has been tough. The combination of falling occupancy levels and lower room rates has been the major catalyst behind the hotel chain's recent quarterly woes.
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Marriott's primary objective at the moment is to cut costs. This is a strategy that the hotel chain used last earning season to help it beat out Wall Street's expectations. Marriott is hoping that it will have similar success this time around as it tries to mount a comeback from its recent quarterly performances. The Maryland-based hotelier has been making significant cut backs in almost every aspect of its business. Marriott has been forced to shut down entire hotel floors, close restaurants, and lay off employees. The hotel chain has even scaled back basic customer services like newspaper delivery. Marriott International is relying on these expense reductions to spark an upswing in future quarter performances.
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The recent recession has been rather cruel to Marriott these past few quarters. However, the hotel lodging giant is making massive cost cutting efforts in an attempt to battle this wounded economy. The company and its competitors have had success with this approach in the past, but there are growing concerns that Marriott's continued expense reduction plan will begin impacting the overall customer experience. In an industry where service is everything, will Marriott be able to cut enough expenses while still maintaining a competitive hotel experience? Only time will tell if Marriott International has the right room key for such a dilemma.
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Profile |
Click here to view a detailed profile of Marriot International.
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