MARRIOTT Q309 QUICK REVIEW

The quarter was very messy and riddled with charges as expected. However, it looks like clean EPS came in at $0.15, beating the street and company guidance as well as our $0.14 estimate.   Stronger leisure demand and solid cost controls contributed to the better than expected results. 

  • Base management & franchise fee income of $216MM was $5MM above our estimate and incentive fees of $17MM were $7MM better than our estimate
  • Owned, leased & other gross margin was $12MM compared to our estimate of $7MM.  However, the $12MM included a $6MM transaction cancellation fee which we had not contemplated
  • Net timeshare results of $13MM were in line with our estimate

4Q09 Guidance

Guidance of $0.20 to $0.23 is in line with the Street ($0.215) and at the higher end of our $0.20 number.  New guidance for $0.20-$0.23 compares to last quarter’s guidance for 4Q09 of $0.18 to $0.28 for the year or $0.20-$0.32 if you use MAR’s expected earnings range for 3Q09.

  • Guidance for fee income of $310-$320 is in line with our $316MM estimate
  • Owned, leased & other guidance of $15-20MM compares to our prior estimate of $15MM
  • Timeshare guidance of $15MM includes $10-$15MM of note sale gains, this compares to our clean estimate of $4MM and no note gains.
  • The total capital expenditure budget stayed constant from last quarter’s guidance with a small reallocation away from timeshare

2010 Guidance

  • RevPAR guidance of flat to -5% is in line with our estimate of -2%. Keep in mind that if FX rates stay constant, MAR will have a tailwind from FX benefits reflected in its top line
  • Guidance for fee income of $1,050-$1,110MM is a little stronger than our $1,046MM estimate
  • Timeshare guidance of flat contract sales vs. our estimate of down 5%

Stayed tuned for a more detailed review later this morning.