Without that business, which clearly is unrelated to hotels and time-shares, the company's adjusted net income for the quarter of $219 million was up 7% from the same quarter a year earlier. Adjusted diluted per-share income for the quarter was $0.52, up 13% from the prior year.
Marriott's reported net income for the quarter, including the synthetic fuels business, was $220 million, or $0.52 per share, versus $237 million, or $0.54 per share, in the fourth quarter of 2005. Analysts apparently had been expecting reported per-share earnings to be about $0.49 per share. The company's revenues for the quarter were $3.9 billion, up 6% from the prior year.
In addition to its mainstream business, Marriott produces synthetic fuels at three facilities. This business contributed $1 million to after-tax earnings in the most recent quarter, versus $33 million after-tax a year ago. Management noted in its post-release conference call that it "has entered into hedge agreements to minimize operating losses that could occur if there is a sustained material increase in oil prices in 2007."
Looking at a key metric used to assess operating strength in the hotel industry, Marriott's revenue per available room (or RevPAR) for its worldwide properties was up 8.4% year over year in the quarter. At the same time, average daily rates for North American company-operated properties increased by 9.7%, but a "modest" occupancy decline resulted in a domestic RevPAR increase of 7.2%.
Marriott, which operates the Marriott, Ritz-Carlton, and Courtyard hotel chains, is also a major participant in the expanding time-share business. Indeed, revenue from time-share sales and services increased 27% in the latest quarter. Excluding time-share note sales gains, time-share sales and services revenue increased 18% in the quarter.
Marriott follows Hilton Hotels
Looking ahead, Marriott is forecasting the addition of 30,000 net rooms in 2007. Adjusted per-share revenues are expected to reach $1.82 to $1.92 (excluding synthetic fuels), up 10.3% to 16.4% from the adjusted $1.65 per share for the full year 2006. The reported 2006 figure was $1.41, including a $0.25 per-share after-tax charge related to a change in time-share accounting rules and a penny earnings from the synthetic fuels operation. The company's previous per-share earnings guidance for 2007 was in the $1.78 to $1.88 range.
Despite something of a roller coaster on Thursday and Friday, Marriott's share price has increased by more than 40% during the past year. On Thursday, the shares rose $1.08, or 2.2%, only to drop $2.12, or 4.1% on Friday.
Allowing for both the cork-in-a-storm performance following the earnings release and the somewhat imponderable nature of the company's synthetic fuels business -- to say nothing of its strange fit with the core business -- Marriott's shares probably deserve a look from Fools interested in potentially booking profits.
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Fool contributor David Lee Smith does not own shares of any of the companies mentioned. He welcomes your comments or questions.