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Big Cities Deliver Big Results for Marriott

6 July 2000

(Press Release) With results boosted by strong demand in big cities, hotel operator Marriott International (NYSE: MAR - news) on Thursday reported earnings for the three months ended June 16 of 50 cents per share--2 cents better than the consensus estimate and up 19% from the year-earlier period.

In late 1999, the company had guided estimates lower for its 2000 results. Thus, today's better-than-expected earnings were well-received on Wall Street, where shares rose about 3% to $38, even though they were based on lowered expectations.

Marriott's revenue per room in its U.S. hotels rose 7.6% in the period, the best result since 1997, sparked by a 5.6% increase in room rates and a nearly 2-percentage-point rise in the occupancy rate to 81.6%.

Strong demand in supply-constrained urban areas such as New York, San Francisco, and Boston were the driving force behind the increase in rates. The buoyant financial industry in New York and the growing technology industry around San Francisco and Boston continued to help the lodging industry. Marriott management said it expects growth to remain strong through its fiscal third quarter, which ends in mid-September, but cautioned that rising interest rates and slowing economic growth could damp results.

Hilton (NYSE: HLT - news) and Starwood (NYSE: HOT - news) shareholders also have reason to smile, because both have hotels in the same constrained markets and should deliver strong results like Marriott. Both are expected to report results in the first week of August, and their shares were up at mid afternoon Thursday.

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