Marriott Rides on Starwood Buyout and Technology Investments

Marriott International, Inc. MAR is currently benefiting from strong revenue per available room (RevPAR) gains, room growth and property-level margin improvement. Additionally, with its owners and franchisees, the company opened more than 76,000 rooms in 2017 to cross the 1.25 million total room mark.

In the fourth quarter of 2017, adjusted earnings per share came in at  $1.12 surpassing the Zacks Consensus Estimate by 12 cents and improved 31.8% year over year. Also, total revenues of $5.9 billion outpaced the consensus mark by $248 million and increased 7.7% from the year-ago quarter.

Notably, the company has outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering a positive average earnings surprise of 11.8%. Over the past 30 days, the consensus mark for the current quarter has moved up 5.9% to $1.25.

In a year’s time, shares of Marriott have rallied 60.6% compared with the industry’s gain of 43.3%.

 

Strong Brand Portfolio & Starwood Acquisition to Drive Growth

Marriott’s extensive portfolio and a strong brand position allow it to charge a premium room rate in the highly competitive lodging industry. Given its property locations, we believe that the company is well poised to benefit from the increasing market demand backed by stepped up business as well as leisure traveling in major North American and international locations.

Meanwhile, with the completion of the Starwood acquisition, Marriott's distribution has more than doubled in Asia and the Middle East & Africa combined. In fact, the buyout is likely to result in a bigger brand with increased scales and a robust development pipeline in the long run.

Interestingly, even with 30 brands under portfolio, the company has not ruled out further M&A activities. Currently, it holds about 14-15% market share in the United States and therefore has further room to grow.

Marriott International Revenue (TTM)

 

Marriott International Revenue (TTM) | Marriott International Quote

Technology Investments Bode Well

Digital innovations and social media are starting to play an increasingly important role in hotel bookings. Marriott too continues to improve the functionality of its website — Marriott.com — associated mobile smartphone applications and a mobile website that connects to the same.

Additionally, post the Starwood acquisition, Marriott has linked industry-leading guest loyalty programs – Marriott Rewards, Ritz-Carlton Rewards and Starwood Preferred Guest – and announced the matching of member status between the programs, thereby leading to an even larger loyalty community. These investments in technology for hotel bookings are likely to improve guest experience and thus boost occupancy.

Zacks Rank and Key Picks

Marriott carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space are Hilton Grand Vacations HGV sporting a Zacks #1 (Strong Buy), and Marriot Vacations Worldwide VAC and Choice Hotels CHH, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Hilton Grand Vacations, Marriot Vacations and Choice Hotel’s earnings for 2018 are projected to increase 43.7%, 20.1% and 26.4%, respectively.

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Marriott International (MAR) : Free Stock Analysis Report
 
Choice Hotels International, Inc. (CHH) : Free Stock Analysis Report
 
Marriot Vacations Worldwide Corporation (VAC) : Free Stock Analysis Report
 
Hilton Grand Vacations Inc. (HGV) : Free Stock Analysis Report
 
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