• Marriott’s outstanding second quarter

Marriott reported \simply outstanding\ second quarter numbers, according to its CFO Arne Sorenson. Adjusted EBITDA was up 19% and EPS was up 48%.

Revpar came in above the guidance range of 8% to 10% at 10.4% worldwide and 10.7% in North America. The company raised its guidance for the full year from between 8% and 10% to between 9% and 11%.

\We have rarely been more bullish about our business,\ said Sorenson. The company is forecasting that it will hit its previous peak in terms of profit margins sometime next year and that this will be exceeded going forward from there.

At present, profit margins at hotels are about 80 basis points below the previous peak in the second quarter of 2000. Comparing like-with-like would make the gap slightly bigger, somewhere between 100 bps and 120 bps.

The quarter saw the company complete $555m of asset sales comprising seven hotels and four joint ventures. There remains just $100m to $200m of asset sales to come, which will bring the total disposals in the full year to $1bn.

\We've got to the point where we've sold everything that isn't bolted down,\ said Sorenson. Driving the performance at Marriott is revpar growth, margin improvement and unit expansion.

The pipeline of new hotels at the company is the biggest ever at 80,000, up from 60,000 a year ago. Outside of the US it is primarily full-service hotels and inside it is limited service. During the second quarter, nearly 5,000 rooms were opened of which 25% were outside the US.

Sorenson said the growth was coming despite tough competition and a refusal by Marriott to lower its terms. \A number of our principal competitors are buying management contracts,\ he said, arguing that the terms being struck by these competitors were not sustainable in the longer term.

Across the portfolio of managed hotels 56% reported incentive fees, compared with 42% a year ago.

Fees from management and franchise contracts are expected to be between 16% and 18% higher in the full year, in the range $1.19bn to $1.21bn.

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