Marriott International Inc., which closed its acquisition of Starwood Hotels & Resorts Worldwide Inc. in September, said Monday that profit tumbled in the latest quarter, hurt by costs linked to the merger.
For the period, the company was hit by $228 million in merger-related costs and charges, which drove earnings down to $70 million from $210 million during the same period a year earlier.
Overall hotel revenue per available room, or revpar, inched up 0.8% to $123.23 for both the combined legacy business and Starwood. For the current quarter, the company expects revpar on a constant dollar basis, stripping away currency headwinds, to land between flat and up 1%.
Marriott also expects earnings per share between 80 cents and 85 cents, below the 87 cents projected by analysts surveyed by Thomson Reuters.
Shares fell 2.8% to $69.12 in after-hours trading.
The $13 billion merger creates the world's largest hotel company with more than 1.1 million rooms and about 5,700 hotels in more than 110 countries. The merger combines Marriott brands, including Ritz Carlton, Courtyard and Residence Inn, with W Hotels, Westin, Sheraton and other Starwood brands.
Marriott estimates the merger will yield annual cost savings of $250 million. The Bethesda, Md., lodging company is betting that its large size will allow it to negotiate better terms with online travel agents like Expedia Inc. and to convince more travelers to book directly on its website.
The company said Monday it was targeting more than $1.5 billion in asset sales over the next two years, and it also said it expects to resume buying back stock in the fourth quarter.
Over all, Marriott reported a profit of $70 million, or 26 cents a share, down from $210 million, or 78 cents a share, a year earlier. Excluding certain items, adjusted per-share earnings were 91 cents. Adjusted third quarter results strip out merger-related costs and the eight days of Starwood results in the quarter.
Revenue increased 10.2% to $3.94 billion.
Analysts cited by Thomson Reuters had foreseen adjusted earnings of 88 cents on revenue of $3.89 billion.
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(END) Dow Jones Newswires
November 07, 2016 17:45 ET (22:45 GMT)
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