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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 atwashingtonpost.com/markets


Daily Stock Market Performance Index


Dow Jones Industrial Average


11,400 10,800 10,200 9600


Nasdaq Composite Index


2600 2400 2200 2000


S&P 500 Index 1220


1170 1120 1070 1020


1158.06 –0.2 +3.9 2383.67 +0.1 +5.0 10,948.58


Close %Chg –0.2


Daily


%Chg +5.0


YTD THEMARKETS


Industry Group Multiline Retail Software


S&P 500 Industry Group Snapshot Daily


Health Care Providers


Power Prodct & Enrgy Trdr Gas Utilities


Wireless Telecomm Svcs Beverages


Paper & Forest Products Metals & Mining


Construction Materials


%Chg 1.09 0.94 0.93 0.74 0.66


–1.34 –1.53 –1.62 –1.99 –2.34


International Stock Markets Daily


Americas


Brazil (Bovespa) Canada (S&P/TSX Comp.) Mexico (Bolsa) Europe


Eurozone (DJ Stoxx 600) France (CAC 40) Germany (DAX) U.K. (FTSE 100)


Asia Pacific O N D J F M A M J


Company 3M


Alcoa


AmExp AT&T BoA


Boeing


Caterpillar Chevron


Exxon Mobil GE


Home Depot HP


Dow Jones 30 Industrials Daily


Close 88.90


12.20 37.82 28.25 13.31


68.46 78.74 83.52


Cisco Systems 22.39 Coca-Cola DuPont


59.44 46.23 63.85 17.05 31.74 40.81


%Chg %Chg –1.1


YTD 7.5


–1.4 –0.5 –1.3 –0.6 –0.2 –0.4 –0.4 0.4


–0.6 0.8


–0.1 0.9 0.0 0.2


Other Measures Index


DJ Total Stock Market Index Russell 2000


–24.3 –6.7 0.8


–11.6 26.5 38.2 8.5


–6.5 4.3


37.3 –6.4 12.7 9.7


–20.8 Close


12,107.74 684.23


Post-Bloomberg DC Area Index 198.65 CBOE Volatility (VIX)


21.56 J A S


Company IBM


Intel J&J


JPMorgCh Kraft Foods McDonald's Merck


Microsoft P&G Co Pfizer


Travelers


United Tech Verizon


Wal-Mart Walt Disney


Close 138.72


19.40 63.22 39.52 31.19 75.86 36.71 24.53 60.80 17.38 52.61 72.78 32.93 54.36 33.91


Daily%Chg –0.1 –0.2 –0.8 0.3


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Daily


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YTD 6.0


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YTD%Chg 5.3 9.4 6.0


–0.6


Australia (ASX 200) China (CSI 300) Hong Kong (Hang Seng) Japan (Nikkei)


4691.30 2935.57


22,884.32 9684.81


Cross Currency Rates EU €


US $ per EU € per


Japan ¥ per Britain £ per Brazil R$ per


Canada $ per Mexico $ per


0.7182


82.4000 114.7300 0.6299 1.6803 1.0171


0.8770 2.3394 1.4162


12.5443


Interest Rates Consumer Rates


Money market funds 6-Month CDs 1-Year CDs 5-Year CDs New car loan Home-equity loan


0.75 0.80 1.08 2.22 5.79 7.19


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


Close


69,918.40 12,445.93 34,257.81


262.31


3770.47 6276.25 5662.13


%Chg –0.9 –0.4 –0.3


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YTD%Chg –20%


–2.5% 0 +2.5%


Commodities Futures


Copper Corn


Crude Oil Gold


Natural Gas


$3.6735 $4.9825 $81.67


$1333.90 $3.62


Close %Chg –1.9 +2.0 –1.9 –0.9 –6.4


Daily


Orange Juice Silver


Soybeans Sugar Wheat


0% +20%


Exchange-Traded (Ticker) %Chg Coffee (COFF.L) Copper (COPA.L) Corn (CORN.L) Cotton (COTN.L) Crude Oil (CRUD.L) Gasoline (UGAS.L) Gold (BULL.L)


–1.5 –2.1 1.5 3.2


Natural Gas (NGAS.L) Silver (SLVR.L)


Gainers Adobe Systems


Buckle Inc JC Penney


Abercrombie & Fitch Zumiez Inc


American Eagle AAR Corp


BMC Software Equinix


Volcom Inc CROCS


Robbins & Myers Radiant Systems Epicor Software Websense ProLogis


Genoptix Inc Sonic Solutions


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


JDA Software Group Bank Mutual Corp RTI Intl Metals


2-year note Yield:


6-month bill Yield:


0.35 0.16


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


$1.5120 $22.58


$10.6500 $0.2516 $6.5925


day $1000


Close %Chg +0.5 –2.0 +0.3 +6.9 +0.2


Daily


month $1200


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