Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

In order to further ramp up its presence in Mexico, JW Marriott Hotels & Resorts brand, one of the world class luxury brands of Marriott International, Inc. (MAR - Analyst Report), recently struck a deal with Operadora Punta Peninsula, S.A. de C.V., and ownership group Grupo Diestra to unveil a ‘JW Marriott Los Cabos’ hotel in Los Cabos, Mexico in 2015. This property highlights the fourth hotel of the JW Marriott brand in Mexico.

Situated within the Puerto Los Cabos master-planned development and in close proximity with the Los Cabos International Airport, which is Mexico’s seventh busiest airport, the new hotel will offer 300 guest rooms and suites along with several other amenities and will enjoy a prime location. Moreover, the site of the hotel is also attractive with 14 acres overlooking the Sea of Cortez and exposure to 820 feet of beach front, which will further drive tourists.

Marriott’s expansion plan in Mexico is mainly driven by strong economic growth and a large tourism industry. In Mexico, the brand is present in an upscale Polanco neighborhood and in Santa Fe and Cancun city.

The country is the number one destination for foreign tourists in Latin America. As per World Travel & Tourism Council, the total contribution of travel & tourism to gross domestic product (GDP) was 12.4% of GDP in 2011, and is forecast to rise by 3.3% in 2012, and to rise by 4.5% in 2022.

Moreover, the middle income population in Mexico is growing. This fraction of the population also has an inclination to spend on travel and leisure. Apart from tourism, the region is successfully emerging as a business hub. Additionally, a long-standing presence in this country allows Marriott to have a stable relationship with owners and developers across the country.

According to renowned consulting firm specializing in real estate, Jones Lang LaSalle (JLL - Analyst Report), the hotel market in Mexico is showing strong growth, following a steep decline in 2009 and lackluster performance for a part of 2010. Strong demand with limited supply provides robust growth opportunities to hoteliers over the next several years. Mexico City’s average daily rate (ADR) is expected to accelerate further in 2012 and beyond.

Marriott currently operates 52 JW Marriott hotels in 21 countries and remains on track to open 77 JW Marriott properties in 28 countries by 2014. The JW Marriott brand consists of luxurious properties and distinctive resort locations across the world. The brand, which mainly has hotels in international locations, also has properties in major U.S. states like California, Texas and Arizona.

However, the market is not free from competition. Many of Marriott’s peers like Starwood Hotels & Resorts Worldwide Inc. (HOT - Analyst Report), InterContinental Hotels Group (IHG - Snapshot Report) and Hyatt Hotels Corporation (H - Snapshot Report) are present in Mexico. Furthermore, a sluggish macroeconomic environment acts as another short-term restraint.

The company is likely to release its third quarter 2012 earnings on October 3, 2012. The Zacks Consensus Estimate for the third quarter is pegged at 40 cents per share. We presently have a long-term Neutral recommendation on Marriott. Also, it carries a Zacks #4 Rank (a short-term Sell rating).
 

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
LAKE SHORE G LSG 0.77 +6.05%
QUESTCOR PHA QCOR 80.07 +2.47%
VIPSHOP HOLD VIPS 156.35 +1.82%
ENLINK MIDST ENLC 36.29 +1.60%
BNC BANCORP BNCN 17.33 +1.58%