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Marriott's (MAR) Expansion Efforts on Track, RevPAR Dismal
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Marriott International, Inc. (MAR - Free Report) is poised to benefit from a strong brand position, expansion initiatives, digital efforts and the loyalty program. These along with improved demand in Mainland China bode well. However, declines in occupancy rates and revenue per available room (RevPAR) on account of the coronavirus pandemic pose concerns. So far this year, shares of Marriott have gained 14.9% compared with the industry’s 15.5% growth.
Let us delve deeper into the factors that highlight why investors should hold on to the stock for the time being.
Catalysts
Marriott’s extensive portfolio and 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 on the back of a stepped-up business as well as leisure traveling in major North American and international locations.
The company is consistently trying to expand presence worldwide and capitalize on the demand for hotels in international markets. Moving ahead, the company plans to significantly expand the global portfolio of luxury and lifestyle brands. In 2021, the company anticipates net room growth of 3-3.5%. The hotel company is also trying to strengthen its presence outside the United States, especially in Asia, Latin America, the Middle East and Africa. Meanwhile, the company’s European pipeline has grown consistently in the recent past and the trend is likely to continue. Within the Asia Pacific, China promises immense growth potential, despite the economic slowdown.
During the fourth quarter, Mainland China continues to lead growth owing to a rise in demand. Notably, the company is witnessing improvements in occupancy and new bookings. The company announced that more than 95% of its hotels in Greater China generated positive gross operating profit in fourth-quarter 2020.
Given that digital innovation and social media are playing increasingly important roles in hotel bookings, Marriot isn’t far behind to improvise. Notably, the company re-imagined its Marriott Mobile app to meet the needs of the modern traveler. Also, the company’s loyalty program, Marriott Bonvoy, has been playing a supporting hand in its marketing strategies. The company is engaging its customers with promotional offers, such as grocery and retail spending accelerators on its co-branded credit cards (American Express and Chase). Notably, the company’s loyalty program is benefiting from robust cash inflow from its credit card program. Also, the initiatives are likely to boost leisure demand and capture additional revenues, going forward.
Concerns
The company’s operations have been negatively impacted by the coronavirus pandemic. Due to the crisis, it has not provided earnings and RevPAR guidance for 2021. It has also suspended its share repurchase and dividend payments until further notice.
Moreover, the company is experiencing substantial declines in RevPAR and occupancy in all regions served. During fourth-quarter 2020, revenue per available room (RevPAR) for worldwide comparable system-wide properties fell 64.1% in constant dollars (down 63.9% in actual dollars) due to 35.6% and 27.4% declines in occupancy and average daily rate (ADR), respectively. These metrics were negatively impacted by the coronavirus pandemic. Comparable system-wide RevPAR in the Asia Pacific slumped 46.4% in constant dollars due to declines of 18.1% and 25.4% in ADR and occupancy, respectively. On a constant-dollar basis, international comparable system-wide RevPAR plunged 62.7% (down 62.2% in actual dollars) due to declines of 37.1% and 22.3% in occupancy and ADR, respectively. Notably, low occupancy levels and steep RevPAR declines were witnessed in the Europe, the Middle East and Africa region (or EMEA) and the Caribbean and Latin America region (or CALA).
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Shutterstock
Marriott's (MAR) Expansion Efforts on Track, RevPAR Dismal
Marriott International, Inc. (MAR - Free Report) is poised to benefit from a strong brand position, expansion initiatives, digital efforts and the loyalty program. These along with improved demand in Mainland China bode well. However, declines in occupancy rates and revenue per available room (RevPAR) on account of the coronavirus pandemic pose concerns. So far this year, shares of Marriott have gained 14.9% compared with the industry’s 15.5% growth.
Let us delve deeper into the factors that highlight why investors should hold on to the stock for the time being.
Catalysts
Marriott’s extensive portfolio and 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 on the back of a stepped-up business as well as leisure traveling in major North American and international locations.
The company is consistently trying to expand presence worldwide and capitalize on the demand for hotels in international markets. Moving ahead, the company plans to significantly expand the global portfolio of luxury and lifestyle brands. In 2021, the company anticipates net room growth of 3-3.5%. The hotel company is also trying to strengthen its presence outside the United States, especially in Asia, Latin America, the Middle East and Africa. Meanwhile, the company’s European pipeline has grown consistently in the recent past and the trend is likely to continue. Within the Asia Pacific, China promises immense growth potential, despite the economic slowdown.
During the fourth quarter, Mainland China continues to lead growth owing to a rise in demand. Notably, the company is witnessing improvements in occupancy and new bookings. The company announced that more than 95% of its hotels in Greater China generated positive gross operating profit in fourth-quarter 2020.
Given that digital innovation and social media are playing increasingly important roles in hotel bookings, Marriot isn’t far behind to improvise. Notably, the company re-imagined its Marriott Mobile app to meet the needs of the modern traveler. Also, the company’s loyalty program, Marriott Bonvoy, has been playing a supporting hand in its marketing strategies. The company is engaging its customers with promotional offers, such as grocery and retail spending accelerators on its co-branded credit cards (American Express and Chase). Notably, the company’s loyalty program is benefiting from robust cash inflow from its credit card program. Also, the initiatives are likely to boost leisure demand and capture additional revenues, going forward.
Concerns
The company’s operations have been negatively impacted by the coronavirus pandemic. Due to the crisis, it has not provided earnings and RevPAR guidance for 2021. It has also suspended its share repurchase and dividend payments until further notice.
Moreover, the company is experiencing substantial declines in RevPAR and occupancy in all regions served. During fourth-quarter 2020, revenue per available room (RevPAR) for worldwide comparable system-wide properties fell 64.1% in constant dollars (down 63.9% in actual dollars) due to 35.6% and 27.4% declines in occupancy and average daily rate (ADR), respectively. These metrics were negatively impacted by the coronavirus pandemic. Comparable system-wide RevPAR in the Asia Pacific slumped 46.4% in constant dollars due to declines of 18.1% and 25.4% in ADR and occupancy, respectively. On a constant-dollar basis, international comparable system-wide RevPAR plunged 62.7% (down 62.2% in actual dollars) due to declines of 37.1% and 22.3% in occupancy and ADR, respectively. Notably, low occupancy levels and steep RevPAR declines were witnessed in the Europe, the Middle East and Africa region (or EMEA) and the Caribbean and Latin America region (or CALA).
Marriott — which shares space with Hilton Worldwide Holdings Inc. (HLT - Free Report) , Hyatt Hotels Corporation (H - Free Report) and Extended Stay America, Inc. — has a Zacks Rank #3 (Hold), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>