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KLMNO WASHINGTON BUSINESS Marriott, Spanish hotel group launch brand
Bethesda company pursuing strategy for global expansion
BY DANIELLE DOUGLAS
Capital Business Staff Writer Bethesda-based Marriott In-
ternational said Thursday that it has joined with the Spanish lodg- ing group AC Hotels to manage and franchise a newbrand, AC by Marriott, across Europe and Lat- in America. The deal dovetails with Mar-
riott’s ventures in China, where it expects to double the number of hotels it runs, and in India, where it plans to triple its roster. The global expansion strategy
follows the release of quarterly results that showed demand is picking up for corporate and lei- sure travel. For the three months that end-
ed Sept. 10, Marriott reported earnings of $83 million, or 22 cents a share. That’s up from a loss of $466 million, or $1.31 a share, a year ago, when the com- pany took a $502 million write- down on its time-share business. Although revenue increased
7.2 percent, to $2.6 billion, for the quarter, the overall results fell short of analysts’ expectations, as did the company's projections for the fourth quarter. That sent the hotel operator’s stock, which was up 39 percent for the year, on a slide of nearly 6 percent Thurs- day, closing at $35.67. Marriott,however, is bullishon
the recovery of the beleaguered hotel industry. Nearly 90 percent of its hotels raised corporate room rates an average of 9 per- cent during the previous quarter, spurred by greater demand. Revenue per available room —
a key performance measure — rose 7.5 percent worldwide dur- ing the quarter. International room revenue, in particular, rose 12 percent. The company sees it brightest
prospects for growth outside the United States. Of the full-service hotels in the company pipeline, 70 percent are scheduled to open on foreign soil. And that does not include the
more than 90 existing AC hotels in Spain, Italy and Portugal that
“There is still tremendous development opportunities outside the U.S.”
—Carl T. Berquist, Marriott executive
are slated to be rebranded once the deal closes at the end of the year. “There is still tremendous de- velopment opportunities outside the U.S., and we see that continu- ing in Asia Pacific, and somewhat in Europe,” Carl T. Berquist, exec- utive vice president and chief financial officer at Marriott, said during a conference call with analysts.
Marriott has been in China for
15 years, but most of its hotels are in major cities, leaving room for greater penetration in outlying markets. Marriott flags have flown in European markets for some time, but the company sees significant opportunities in brand conversions. Brazil, Russia, India and China
are primary targets of the hotel operator, Arne Sorenson, Mar- riott’s president and chief operat- ing officer, said during the call. “Some of those investments
may form something like the AC deal, where we partner with local companies,” he said. There has been a notable in-
crease in travel in emerging mar- kets, which, in some cases, are bereft of major lodging brands. “In some markets, it’s kind of
theWildWest for expansion,” said John Arabia, an analyst with Green Street, a real estate re- search firm. “That doesn’t mean that it is easy or anyone can do it, but companies that have very long reach, stable operating plat- forms and significant capital, such asMarriott, are racing over- sees.”
Rounding up development fi-
nancing, however, may have got- ten tougher for the hotel operator. Loan terms are more stringent these days, repayment periods are shorter and developers are more often being asked for per- sonal guarantees, Berquist said. “As we have done in the past,”
he said, “we will use the strength of our balance sheet to grow our business.”
douglasd@washpost.com BLOOMBERG NEWS VIA GETTY IMAGES
Frankfurt, Germany, is one of the European cities whereMarriott operates now. The company is focusing on opportunities overseas.
Tax wrangling in Congress creates uncertainty about next year’s paychecks BY PETERWHORISKEY With Congress in a muddle
over tax rates for next year, uncertainty over how much to withhold from workers’ pay has begun to worry the nation’s pay- roll administrators. Normally, the Treasury De-
partment issues information on how much to take out of next years paychecks by mid-Novem- ber, but this year the debate over how much to extend the George W. Bush tax cuts seems unlikely to be resolved by that time, and could drag into December or beyond. The longer it drags on, the
more likely it will complicate the processing of millions of pay- checks in January. It can take as long as five weeks for some companies to make the adjust- ments under the new tables, payroll administrators said. “Withholding is so personal to
people,” said Michael O’Toole, the American Payroll Associa- tion’s director of government relations and publications. “Peo- ple are apprehensive about whether Congress will act on time for them to produce accu- rate payrolls at the beginning of the year.” A Treasury representative de-
clined to say howthe department would handle the situation,
should it drag out. “We have a lot of flexibility on
the release of the withholding tables,” the representative said. “The president and [Treasury Secretary Timothy F.] Geithner are confident Congress will vote to approvemiddle-class tax relief before the end of the year.” One of the problems is that if
Treasury based the withholding tables on current law, under which the Bush tax cuts would expire, millions of low- and mid- dle-income taxpayers would see significant tax increases. For example, a familywith two
children and income of $40,000 could see the amount withheld rise by asmuch as $165monthly,
according to calculations by Ro- bertonWilliams of the Tax Policy Center. Many think that Congress will
act to prevent that kind of rise. “From the point of view of the
economy, I don’t think anyone thinks there should be a middle- class tax increase,” said Eric Toder of the Tax Policy Center. “There’s going to be a lot of confusion for taxpayers that re- sults because Congress did not act in a timely manner, even if they were to act in November.” So even as Congress and the
administration say they are con- fident that the tax legislation is forthcoming, people charged with calculating the size of the
6Monitor your investments
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12.5443
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Money market funds 6-Month CDs 1-Year CDs 5-Year CDs New car loan Home-equity loan
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17.4648
0.1 2.1
0.0 –0.1
US$Brazil R$ Canada$Mexico $ 1.3923
Japan ¥ 0.0121 0.0087
0.0076 0.0204 0.0123 0.1520
Britain £ 1.5875 1.1402
130.8200
2.6676 1.6148
19.9149
0.5950 0.4274
49.2350 0.3749
0.6054 7.4660
0.9832 0.7061
81.0100 0.6193 1.6520
12.3324
0.0797 0.0573 6.5690 0.0502 0.1339 0.0811
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262.31
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Natural Gas (NGAS.L) Silver (SLVR.L)
Gainers Adobe Systems
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Esterline Tech Corp RF Micro Devices
0.29% 0.25% 3.25%
Bank Prime Federal Funds LIBOR 3-Month
3.15% 3.73% 4.24%
10-year note Yield:
30-Year fixed mortgage 15-Year fixed mortgage 1-Year ARM
5-year note Yield:
2.38 1.12
4:30 p.m. New York time.
–1.5 –1.2 –0.9 –4.5 –1.2
Gainers and Losers from the S&P 1500 Index Daily
$28.69 $29.55 $31.64 $42.03 $24.66 $16.23 $21.11 $42.32 $75.00 $20.52 $14.38 $26.73 $18.64 $9.36 $18.01 $13.00 $15.59 $11.48 $59.43 $6.35
Close %Chg 11.5
10.7 9.1 8.9 8.2 8.1 7.7 6.7 6.6 6.2 6.2 5.7 5.3 5.3 4.8 4.7 4.5 4.3 4.2 4.1
Losers Immucor
Skyline
Corinthian Colleges Intl Speedway Marriott
Ruby Tuesday Headwaters Inc CommScope
Kite Realty Group
WilmingtonTrustCorp DSP Group Bel Fuse
Alaska Air Owens-IL
StifelFinancialCorp Regeneron Aeropostale
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Note:Bank prime is from 10 major banks. Federal Funds rate is the market rate,which can vary from the federal target rate.LIBOR is the London Interbank OfferedRate. Consumer rates are from Bankrate. All figures as of
Close %Chg $16.72 –18.2
Daily
$19.03 $6.46
$23.86 $35.67 $12.01 $3.56 $21.85 $4.53 $7.34 $7.03 $21.11
–9.1 –7.5 –5.9 –5.8 –5.4 –5.1 –4.9 –4.8 –4.8 –4.7 –4.7
$46.50 –4.6 $27.94 $45.21 $27.98 $23.34
$21.34 –4.0 $5.04 –4.0 $29.61
Treasury Performance Over Past Three Months –3.8
–4.5 –4.2 –4.1 –4.1
Value of $1000 invested for the past: Daily
$800
bite to take out of paychecks are increasingly nervous. “People are starting to say,
‘What are we going to do?’ ” said Dennis Danilewicz, who is in charge of payroll at the NYU Langone Medical Center and a former president of the Payroll Association. “Everyone is kind of at Congress’smercy.”
whoriskeyp@washpost.com
DIGEST MILITARY
McDonnell anxious to discuss closing VirginiaGov.RobertF.McDon-
nell (R) says Defense Secretary RobertM. Gates has assured him of a futuremeeting to discuss the planned closing of the Joint Forc- es Command inHamptonRoads. Pentagon officials assured Mc-
Donnell last week that the meet- ing would occur. A date is still beingworked out. Virginia leaders have been in-
censed by Gates’s refusal to ex- plain the reasons for his August announcement on the planned closing of the command,which is inNorfolk and Suffolk. The closing puts in jeopardy thousands of jobs and nearly $1 billion in defense spending in Virginia.
—Associated Press ECONOMY
Sailboat show interest is rising Organizers have seen a sharp
increase in exhibitor interest at this year’s United States Sailboat Show, which is running through Monday in Annapolis at City Dock. It will be followed by the Unit-
ed States Power Boat Show. For thefirst timeat the41-year-
oldsailboat show,planners added an island of 15 floating docks to accommodatemore exhibitors. Organizersalsotookadvantage
of a nearby commercial vacancy to housemore on-land vendors. “The showis filled up,which is
sort of unusual,” said Paul Jacobs, generalmanager ofUnited States Yacht Shows. “This is a time [in the economy] when we were a little uncertain of how things were going to shape up.” As for the Power Boat Show,
which runs Oct. 14 -17, organizers are still looking for exhibitors, with several dealer and vendor slots vacant.
—Associated Press
FRIDAY, OCTOBER 8, 2010
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Data and graphics by
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