Marriott Reports 4Q Beat, Announces Timeshare Spinoff

Shares of Marriott International Inc. (NYSE:MAR) jumped nearly 5% in late trading Monday after the hotel and lodging chain reported better-than-expected fourth-quarter results and announced a plan to spin off its timeshare operations business.

For the first quarter, the international hotel operator forecast earnings in the range of 24 to 28 cents a share, below analyst forecasts for earnings of 30 cents a share.

Marriott gave full-year fiscal 2011 guidance for earnings between $1.35 and $1.45 a share, bracketing the Street’s expectations for earnings of $1.40 a share. The company forecast an increase between 6% and 8% in worldwide revenue per available room, citing revenue drivers like its plans to open about 35,000 rooms in 2011, along with a pickup in demand and pricing as the hotel industry rebounds from decreased room rates and occupancy levels as travel slowed during the recession.

For the fourth quarter, the company reported net income of $173 million, or 46 cents a share, compared with year-ago profit of $106 million, or 28 cents a share, in the fourth quarter of 2009. On an adjusted basis, earnings per share rose 22% to 39 cents.

Revenue rose to $3.6 billion in the fourth quarter, up from $3.4 billion in the year-ago quarter.The results beat expectations, as the Street had predicted earnings of 36 cents a share on revenue of $3.59 billion, according to a poll by Thomson Reuters.

Marriott also announced plans to split its business into two separate publicly-traded firms, by spinning off its timeshare operations and development business into an independent company.

"The transaction will permit both companies to tailor their business strategies to best address market opportunities in their respective industries,” said Marriott International chairman and chief executive officer, J.W. Marriott, Jr., in a statement. “The new timeshare company will be positioned to expand faster over time while Marriott International will further advance its longstanding strategy of separating real estate from management and franchise operations. With two public companies, shareholders will be able to pursue investment goals in either or both companies rather than one combined organization.”

The company’s timeshare division reported fiscal 2010 revenue of about $1.5 billion, and Marriott boasts the business operates “71 timeshare and fractional resorts with more than 400,000 owners and approximately 10,000 employees.”