Marriott International Inc., the largest U.S. hotel chain, plans to take a third-quarter pretax charge of $760 million in its timeshare business as the economic slowdown cuts leisure travel.
The company plans to cut prices, halt development at some luxury fractional-ownership and residential resorts, and sell some undeveloped land, Bethesda, Maryland-based Marriott said today in a statement. It also plans to sell its inventory of rooms as part of a new program with Ritz-Carlton Destination Club.
Recommended Stories
“Today’s announcement reflects the significant decline in demand for luxury residential real estate over the last year,” Arne Sorenson, Marriott’s president and chief operating officer, said in the statement. “We expect the timeshare segment to produce positive cash flow in 2009, higher levels of cash flow in 2010 and improving profitability.”
Marriott will take a charge of about $295 million at five luxury residential projects, $300 million at nine fractional- ownership projects in North America, $95 million at one North American timeshare project, $55 million at four European projects and $15 million associated with two Asia-Pacific timeshare resorts. The company didn’t disclose the names of the properties.
Marriott also said it expects third-quarter revenue per available room will decline 19 percent from a year earlier. In July, the company forecast a decline of 20 percent to 23 percent.
The company plans to release earnings for the quarter ended Sept. 11 on Oct. 8.
