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Marriott profits slump 76%

revPAR down 23.6% worldwide

Marriott International reported a sharp fall in second quarter profits of 76% year-on-year.

The hotelier, which operates brands including Ritz-Carlton, Renaissance and Marriott, also saw reported income fall to $37m from $153m in the same period in 2008.

Marriott said global system-wide revenue per available room (revPAR) fell 23.6%.

International revPAR for markets outside the US declined by 31.5% year-on-year and daily rates dropped 22.3%.

Marriott blamed the "difficult economic climate" and concerns over the recent outbreak of swine flu which it said had "profoundly" hit demand.

"The current global economic and financial climate continues to make predictions very difficult," the chain said.

The company was unable to give guidance for the rest of the year, but did indicate that revPAR in the US market would drop 20-23% in the third quarter.

RevPAR for the rest of the world is expected to drop 22-24% in 2009.

Earnings per share (EPS) fell to $0.23 in Q2, down 55% year-on-year. Marriott said its shareholders should expect EPS drop to $0.14 in the coming quarter.

The news caused Marriott's share price to drop 8.1% yesterday (July 16) on the New York Stock Exchange, Reuters reported.

At midday Marriott's stock was down $1.77 at $20.03 from an earlier low of $19.76.

Demand for rooms has suffered in the current economic downturn, with many businesses scaling back on travel spend.

Marriott said it had been forced to cut rates in order to remain competitive and maintain demand.

Total revenues stood at $2.6bn in the second quarter, down from $3.2bn last year. Marriott said its adjusted profits included a $57m restructuring cost from redundancies payments and loan losses.

www.mariott.com

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