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Marriott International Inc. (MAR) swung to fiscal-third quarter loss amid write-downs of its timeshare business. But the results beat Wall Street's targets and suggest that stabilization in the recession-battered hotel industry is finally gaining traction.

Amid sagging revenue at its core hotel business there were signs the hotelier has seen the worst of the declines. For the coming fiscal year Marriott expects worldwide revenue per available room may decline as much as 5%, excluding currency effects, with performance strengthening as the year progresses.

For the quarter ended Sept. 11, the company reported a loss of $466 million, or $1.31 a share, compared with a prior-year profit of $94 million, or 25 cents a share. Excluding items such as the write-downs, earnings fell to 15 cents from 34 cents and surpassed analysts targets of 13 cents a share.

Given that Marriott is the bellwether for the hotel earnings season, the company's better-than-expected results should bode well for other major lodging companies such as Starwood Hotels & Resorts (HOT) and Host Hotels & Resorts which report later this month.

Although hotel room rates and revenue projections continue on a downward spiral, lodging stocks have been on a torrid upswing as investors try to get ahead of any recovery. For example, Marriott's stock is up 40% this past year.

"We believe there is a strong chance MAR and most lodging companies will beat 3Q earnings expectations. However, we believe this is built into most expectations," wrote C. Patrick Scholes an analyst at FBR Capital Markets in a report Wednesday.

"We think that investor focus will shift squarely towards the outlook for group bookings and current state of corporate volume negotiations, which typically pick up steam in the second half of the year," he said.

Marriott said international markets are expected to show more strength than in North America.

However, due to the economy, the company again declined to provide its typical earnings guidance.

Major time-share companies such as Marriott, Starwood Hotels & Resorts Worldwide Inc. (HOT) and Wyndham Worldwide Corp. (WYN) have scaled back on development and sales the past year. Marriott recently said it would stop new time-share development and exit the luxury residential segment, which includes condominiums and penthouses atop or adjacent to its hotels.

The company in July had forecast 9 cents to 14 cents.

Revenue decreased 17% to $2.47 billion as revenue per available room, or revpar, slumped 22%. Analysts polled by Thomson Reuters most recently expected $2.39 billion.

For the fiscal fourth quarter, the company expects earnings of 20 cents to 23 cents on revpar declines of 13% to 16% in North America and 16% to 18% elsewhere in constant dollars. Analysts projected earnings of 22 cents.

-By A.D. Pruitt, Dow Jones Newswires; 212-416-2197; angela.pruitt@dowjones.com

(Tess Stynes contributed to this article.)