Shares of leading worldwide hospitality company, Marriott International Inc. (MAR Quick QuoteMAR - Free Report) hit an all-time high of $104.34 on May 15. However, the company ended the day’s trading a tad lower at $104.06.

In fact, the company’s shares have been climbing since it reported better-than-expected first-quarter 2017 results on May 8, with both the top and bottom line surpassing the Zacks Consensus Estimate. Since then, the stock has gained nearly 8%.

Also, the company raised its earnings guidance for 2017 and now expects earnings in the range of $3.92 to $4.09 per share, up from $3.79 to $3.97, projected previously.

In addition, Marriott increased its full-year 2017 revenue per available room (RevPAR) expectations on the back of stronger-than-expected RevPAR performance in North America in the first quarter and improving demand trends in the Europe as well as Asia-Pacific regions. It raised the previously issued guidance on its other heads too.

What’s Driving Growth?

After announcing the acquisition of Starwood Hotels & Resorts on Sep 23, 2016, Marriott has become the world’s largest hotel company. Currently, it has more than 6,000 properties across 124 countries and territories, under 30 brand names.

Notably, post-acquisition of Starwood, shares of the company have gained 49.7%, while the broader S&P 500 index grew 10.2% in the same time frame, depicting the positive effect of the acquisition. Thus, after sorting out its integration challenges, Marriott’s shares are well-poised to grow in the long-term, as and when positive synergies are realized.

Meanwhile, apart from focusing on the lucrative domestic market, Marriott is consistently striving to expand its international footprint, especially in Asia, Europe, Latin America, Middle East and Africa.

The acquisition of Starwood also bodes well in this regard as Marriott's distribution has more than doubled in Asia and the Middle East & Africa combined. Additionally, the merger is expected to result in a bigger brand with increased scale and a robust development pipeline in the long run.

We believe, given a strong transient demand along with improvements in business and leisure travel, Marriott is well poised to grow in the near as well as long term, in major North American and international locations. Further, the company is significantly investing in technology for hotel bookings, in order to improve guest experience, which in turn should boost occupancy.

Additionally, post 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. In fact, loyalty programs are considered the most powerful marketing platform by the company and it continues to invest in marketing partnerships and innovations designed to provide a more rewarding experience to the guests.

Moreover, frequent share buybacks and continuous increase in quarterly dividend payments further affirm the company’s optimistic outlook and growth prospects.

Concerns

However, macroeconomic concerns in several international markets might spell trouble for the company. Particularly, in Europe, economic/political conditions are expected to be challenging after the U.K.’s exit from the 28-member economic bloc. We note that this might limit Marriott’s business growth, given its considerable presence in Europe.

Furthermore, in the domestic market, the company is facing competition in New York due to a continuous increase in supply of hotels, which is limiting room rents, thereby hurting RevPAR in the region.

Given its significant international presence, Marriott also remains highly vulnerable to fluctuations in exchange rates, like other hoteliers, including Hyatt Hotels Corporation (H Quick QuoteH - Free Report) , Hilton Worldwide Holdings (HLT Quick QuoteHLT - Free Report) and Wyndham Worldwide Corporation .

Bottom Line

Notably, the Zacks Consensus Estimate for Marriott’s current year’s earnings has moved up 3.6%, reflecting eight upward revisions versus none downward, over the last 60 days. Also, next year’s earnings estimates have inched up 5%, on the back of eight upward revisions versus one downward revision. All these positive earnings estimate revisions adds to the optimism in the stock and also testifies the unwavering confidence that analysts have in the company.

Resultantly, on May 16, Zacks Investment Research upgraded Marriott by a notch to a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Thus, in spite of the headwinds Marriott seems to be well-poised to grow on the back of Starwood acquisition, arresting brand position, an increased demand for travel and significant international exposure.

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