Marriott Expands in Asia Pacific

Marriott International Inc. (MAR - Analyst Report) recently said it signed 21 management contracts for hotels and resorts in the Asia-Pacific region. These hotels, scheduled to open through the end of 2013, will add approximately 7,000 rooms to the company’s portfolio. The projects are lined up in China, India, Thailand, Vietnam, Philippines and Cambodia.

As a result of the expansion, Marriott’s Asia-Pacific portfolio will have 154 hotels offering 51,500 rooms in 18 countries by the end of 2013.

Both business and leisure travel have decreased significantly in the past two quarters due to the economic turmoil. Corporations across the globe have adopted stringent methods to curtail expenses and restricted business trips and retreats. As a result, hotel operators like Marriott and Starwood Hotels & Resorts Worldwide Inc. (HOT - Analyst Report) were forced to depend on leisure travelers who are more vulnerable to price shifts. Thus, their balance sheets have been severely impacted.

Marriott’s second-quarter profit of 23 cents per share topped the Zacks Consensus Estimate by 2 cents. However, its revenue per available room (RevPAR) dropped substantially during the period.

The company cut its full-year guidance on expectations of a further decrease in RevPAR as the recession continues to hurt its business. The H1N1 flu pandemic has also affected Marriott.

However, with a substantial development pipeline of nearly 110,000 rooms, we expect the unit growth to partially offset the anticipated declines in RevPAR.

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