Marriott International has outlined plans to split into two separate companies, with one focused on hotel accommodation and another on timeshares.
The news came as the company reported fourth-quarter results, in which diluted earnings per share rose 22 per cent to $0.39 over the same period in the year before.
Total fee revenue increased 14 per cent from a year-ago, to $389 million, largely as a result of strong revenue per available room (RevPAR) and unit growth.
Fourth quarter worldwide comparable system wide RevPAR rose 8.1 per cent using constant dollars.
Average daily at Marriott rate rose 2.3 per cent using constant dollars.
However, it was the decision to split in two which attracted most attention.
“Marriott took a bold step when we introduced our Marriott brand to the timeshare industry in 1984,” the Marriott International chairman and chief executive, J.W. Marriott, Jr., said in a statement.
“In this transaction, we take another innovative step forward as we combine the power of the Marriott and Ritz-Carlton brands with the flexibility and focus of a new independent timeshare company.”
Under the plan, the new company will focus on the timeshare business as the exclusive developer and operator of timeshare, fractional and related products under the Marriott brand and the exclusive developer of fractional and related products under the Ritz-Carlton brand.
After the split, Marriott International will concentrate on the lodging management and franchise business. Marriott will also receive franchise fees from the timeshare company’s use of the Marriott and Ritz-Carlton brands.
Marriott International ill maintain its listing on the New York Stock Exchange, with the spin-off expected to be complete before the end of 2011.
“The transaction will permit both companies to tailor their business strategies to best address market opportunities in their respective industries,” Mr. Marriott said in a statement.
“The new timeshare company will be positioned to expand faster over time while Marriott International will further advance its longstanding strategy of separating real estate from management and franchise operations.”