Marriott International posted a lower quarterly profit on Thursday and said pricing pressures would continue to erode margins next year, sending its shares down as much as 5.9 percent.

The forecast overshadowed news that Marriott's third-quarter profit beat analysts' average forecast.

The hotel industry has suffered from falling business demand since last fall. Hotels have pared their costs and their rates to attract price-sensitive vacationers, which in turn has hurt revenue per available room, or RevPAR, a gauge of profitability.

Marriott said North American RevPAR would fall by 13 percent to 16 percent in the fourth quarter. It expects worldwide RevPAR to be flat to down 5 percent in 2010.

We expect investors will focus more on the company's RevPAR outlook, which appears light versus general Street expectations, although in line with our current estimates, Barclays Capital analyst Felicia Hendrix said in a note.

Marriott shares could also be pressured due to their current valuation levels -- 12.5 times projected 2010 earnings, Hendrix added.

Marriott shares were down 43 cents to $26.52 in morning trading on the New York Stock Exchange after falling as low as $25.36 in early dealings..

The hotelier said it expects fourth-quarter earnings from continuing operations of 20 cents to 23 cents a share. Analysts on average expect 22 cents, according to Thomson Reuters I/B/E/S.


Marriott's third-quarter earnings beat was widely expected after the company said in September that domestic revenue per available room in the period was better than it had forecast.

Excluding one-time items, Bethesda, Maryland-based Marriott reported a third-quarter profit of 15 cents per share, helped by summer demand, cost cuts and higher-than-expected revenue. Analysts on average had expected 13 cents, according to Thomson Reuters I/B/E/S.

Marriott posted a net loss of $466 million, or $1.31 per share, hurt by a charge linked to its timeshare segment and restructuring costs.

In late September, the hotelier said it would shrink its luxury timeshare unit, resulting in a $752 million pretax charge.

Marriott's systemwide RevPAR slumped 21.4 percent in the third quarter. Adjusted general, administrative and other expenses fell 14 percent from a year earlier.

Revenue fell 17 percent to $2.5 billion. Analysts had expected nearly $2.4 billion, according to Thomson Reuters


(Reporting by Deepa Seetharaman; Editing by Derek Caney and John Wallace)