The Ritz-Carlton Hotel Company, a wholly-owned subsidiary of Marriott International, Inc. (MAR - Analyst Report) is set to expand its portfolio to 100 hotels by 2016 by adding 15 new hotels in both emerging as well as established destinations. Ritz-Carlton currently operates 85 hotels in the Americas, Europe, Asia, the Middle East, Africa and the Caribbean.
Marriott is focused on expanding its footprint in international markets, especially in Asia, the Middle East, Europe, Australasia and the Indian subcontinent, which boast solid growth potential. The demand for hotels in the international market is greater than in the U.S., and the pace of recovery is particularly fast in the underserved Asia-Pacific region.
Of late, this luxury brand has accelerated its expansion efforts. the last 20 months, it has opened hotels in nine destinations which include Japan, Israel, China, India, Kazakhstan, Aruba, Puerto Rico and Austria.
Over the next two and a half years, the company plans to open properties in Egypt, Tunisia, Morocco, Indonesia and Panama. Driven by aggressive demand, the company plans to launch five new hotels in the Asia Pacific region, with further plans to expand in Malaysia and India. Currently, the company is focusing on expanding in established destinations such as Bali as well as emerging destinations like Bangalore. It intends to open two new properties in Bali, The Ritz-Carlton, Bali and a Ritz-Carlton Reserve in Ubud, Mandapa.
Asia is one of the most popular tourism and business hotspots. According to World Travel & Tourism Council, Asia’s travel and tourism industry will grow by more than 6% each year, the fastest expansion rate for any region in the world. This justifies the company’s decision to expand in the region.
Apart from Asia, the company also has plans for Middle East & Africa with the opening of The Nile Ritz-Carlton, Cairo (Egypt); The Ritz-Carlton, Tunisia, The Ritz-Carlton, Marrakech; The Ritz-Carlton, Rabat and the Tamuda Bay Reserve in Morocco.
Recently, this leading hotelier posted solid first quarter results with earnings and revenue beating the Zacks Consensus Estimate driven by its successful domestic expansion. Also, Marriott increased its financial outlook for 2014 on the back of its strong development pipeline, which would help it to gain market share in the hospitality industry, thus boosting its business.
One other leading hotelier Starwood Hotels & Resorts Worldwide Inc. is also busy expanding worldwide. Recently, the company announced that it is expanding its portfolio in the Middle East with the launch of 35 hotels. The hotels are slated to be opened in the next three years, bringing the count to over 80 hotels in the region.
Marriott International currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the hotel industry include Marriott Vacations Worldwide Corp. (VAC - Snapshot Report) and Wyndham Worldwide Corp. (WYN - Analyst Report) . Both these stocks carry a Zacks Rank #2 (Buy).