Published on August 6th, 2019 📆 | 2656 Views ⚑0
Marriott Take $126 Million Charge Related to Data Breach
said Monday it booked a $126 million charge in the latest quarter tied to a massive data breach disclosed last year and lowered financial projections for the year.
Second-quarter profit dropped 65% to $232 million, or 69 cents a share. Excluding the noncash accrual and other items, profit fell to $1.56 a share from $1.73 a share a year earlier.
Revenue fell 1.9% to $5.31 billion.
Analysts surveyed by FactSet expected $1.56 a share on $5.12 billion in revenue.
Marriott, the world’s largest hotel company with some 7,100 properties and 1.3 million rooms in its system, late last year disclosed a security breach in the Starwood reservations database that exposed some 383 million guest records, including passports and credit-card information, since 2014.
Bethesda, Md.-based Marriott, which acquired Starwood Hotels & Resorts Worldwide Inc. in 2016, has since phased out the Starwood reservations database, effective as of the end of 2018.
In the second quarter, Marriott reported $22 million of expenses and recognized $22 million of insurance recoveries related to the data breach.
Marriott faces a £99.2 million ($120.5 million) fine from the U.K.’s privacy watchdog over the data breach.
The Information Commissioner’s Office, U.K.’s privacy watchdog, said Marriott hadn’t done the proper due diligence when it bought Starwood in 2016 and that Marriott “should also have done more to secure its systems.”
Marriott said it would contest the ruling.
The parent of hotel brands including Ritz-Carlton and Westin on Monday said it added more than 16,000 rooms in the June quarter, including about 7,500 rooms in international markets.
Comparable systemwide revenue per available room, adjusted for currency fluctuations, rose 1.2% in the latest period, in line with the company’s forecast of 1% to 3% growth. Marriott said RevPAR, a key metric in the hospitality industry, again grew at a faster pace outside of North America.
This quarter, the company expects RevPAR, to increase 1% to 2% and adjusted profit to fall to $1.47 to $1.51 a share. Analysts expected $1.59 a share.
For the year, Marriott now expects RevPAR to increase 1% to 2% in North America and world-wide. It previously forecast 1% to 3% growth each in North America and world-wide.
The company expects $5.97 to $6.06 a share in adjusted profit for the year, compared with its earlier view of $5.97 to $6.19 a share.
Shares fall 2.6% in after-hours trading to $127.
Write to Maria Armental at [email protected]
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