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Why Investors Should Retain Marriott Vacations (VAC) Now
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Marriott Vacations Worldwide Corporation (VAC - Free Report) is likely to benefit from improvement in occupancy rate, solid contract sales and digital initiatives. Also focus on vacation ownership business bodes well. However, pandemic-induced disruptions and increased expenses are a concern.
Let’s delve deeper into the factors highlighting why investors should hold on to the stock for the time being.
Factors Driving Growth
Marriott Vacations continues witnessing sequential improvement in occupancy rates, thereby highlighting people’s willingness to go on vacations. During fourth-quarter 2021, VAC reported solid occupancies at its North American resorts. Occupancy rates in Hawaii and Florida Beach resorts increased more than 95%, while occupancy rates in urban locations, such as San Diego and Boston came in at approximately 85% and 95%, respectively.
Also, VAC reported solid improvements in occupancy at its Desert resorts, such as Phoenix, Scottsdale and Palm Desert with occupancy rates coming in at approximately 90%. Although Marriott Vacations reported softness in a few markets (European and Asian resorts) due to the Omicron variant, it reported sequential growth in tourists. Going forward, much optimism prevails as VAC noted increasing willingness among customers to resume travel.
Marriott Vacations continues to witness robust recovery during fourth-quarter 2021. While both occupancies and tours witnessing sequential growth in the fourth quarter, VPGs remain well above the 2019 levels. VAC reported contract sales of $406 million in the fourth quarter of 2021, thereby exceeding the 2019 levels. For 2022, VAC anticipates contract sales to grow 22-29%, backed by an increase in tours and strength in VPGs.
VAC continues using technology to lower back-office costs and improve associates' experience, leveraging artificial intelligence to augment and automate many high-volume internal transactional processes. During the third quarter of 2021, Marriott Vacations’ Vacation Ownership business launched a digital reservation technology to boost marketing efficiency and improve customer service. Also, VAC is making a good progress on the technology needed to link Marriott, Westin and Sheraton products into single points-based offerings. Going forward, VAC will increase the use of digital tools to strengthen its infrastructure, grow online package sales, enable self-service bookings, make real-time offerings to enhance the overall customer experience and drive back-office efficiencies.
Marriott Vacations focuses on high vacation ownership business to drive growth. During the fourth quarter of 2021, VAC made a solid progress with respect to the integration of Welk into its high vacation ownership business. VAC is on track to rebrand Welk's points program to Hyatt and allow Welk sales centers to sell Hyatt branded vacation ownership product. Also, management stated that initiatives relating to new owner benefits and providing Welk owners with the ability to trade their points for World of Hyatt points are in the pipeline.
VAC anticipates the resorts to be added to the Hyatt Reservation System by the second quarter of 2022. Marriott Vacations focuses on its partnership with Interval International to provide its members with comprehensive exchange services and a variety of other benefits that offer value and convenience. During the fourth quarter of 2021, VAC announced a new agreement affiliating Disney Vacation Club with Interval with nearly 270,000 members. Given sequential growth in tour package pipeline, VAC anticipates the initiatives to drive tours and sales in the upcoming periods.
Concerns
Image Source: Zacks Investment Research
Shares of Marriott Vacations have dropped 7.7% in the past year against the industry’s 6.2% growth. The decline was mainly due to the coronavirus crisis. Given the widespread and profound nature of the business, VAC suffered downfalls in occupancy due to “stay-at-home” recommendations (or requirements), quarantines and reluctance of consumers to travel. Although sequential improvements (month over month) are noted (owing to the reopening of the majority of its sales centers, resorts and other properties), occupancy at most of its resorts is lagging the pre-pandemic levels. VAC anticipates sequential improvements to continue. However, uncertainty with respect to pandemic-induced implications is a concern.
Marriott Vacations has been bearing the brunt of steep expenses for some time now. During the fourth quarter of 2021, total expenses increased 28.1% year over year to $935 million from $730 million reported in the year-ago quarter. Escalated marketing and sales expenses along with management and exchange costs affected total costs. This along with a rise in wage costs added to the downside.
Funko sports a Zacks Rank #1 at present. FNKO has a trailing four-quarter earnings surprise of 96.2%, on average. Shares of FNKO have declined 6.8% in the past year.
The Zacks Consensus Estimate for Funko’s current financial-year sales and EPS (earnings per share) suggests growth of 22.7% and 26.8%, respectively, from the corresponding year-ago period’s levels.
Bluegreen Vacations presently carries a Zacks Rank #2 (Buy). BVH has a trailing four-quarter earnings surprise of 425.1%, on average. The stock has surged 58.8% in the past year.
The Zacks Consensus Estimate for Bluegreen Vacations’ current financial-year sales and EPS indicates growth of 8.3% and 20.8%, respectively, from the corresponding year-ago period’s levels.
Marriott carries a Zacks Rank of 2 at present. MAR has a trailing four-quarter earnings surprise of 86.6%, on average. Shares of MAR have gained 19.1% in the past year.
The Zacks Consensus Estimate for Marriott’s current financial-year sales and EPS indicates growth of 40.3% and 73%, respectively, from the corresponding year-ago period’s levels.
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Why Investors Should Retain Marriott Vacations (VAC) Now
Marriott Vacations Worldwide Corporation (VAC - Free Report) is likely to benefit from improvement in occupancy rate, solid contract sales and digital initiatives. Also focus on vacation ownership business bodes well. However, pandemic-induced disruptions and increased expenses are a concern.
Let’s delve deeper into the factors highlighting why investors should hold on to the stock for the time being.
Factors Driving Growth
Marriott Vacations continues witnessing sequential improvement in occupancy rates, thereby highlighting people’s willingness to go on vacations. During fourth-quarter 2021, VAC reported solid occupancies at its North American resorts. Occupancy rates in Hawaii and Florida Beach resorts increased more than 95%, while occupancy rates in urban locations, such as San Diego and Boston came in at approximately 85% and 95%, respectively.
Also, VAC reported solid improvements in occupancy at its Desert resorts, such as Phoenix, Scottsdale and Palm Desert with occupancy rates coming in at approximately 90%. Although Marriott Vacations reported softness in a few markets (European and Asian resorts) due to the Omicron variant, it reported sequential growth in tourists. Going forward, much optimism prevails as VAC noted increasing willingness among customers to resume travel.
Marriott Vacations continues to witness robust recovery during fourth-quarter 2021. While both occupancies and tours witnessing sequential growth in the fourth quarter, VPGs remain well above the 2019 levels. VAC reported contract sales of $406 million in the fourth quarter of 2021, thereby exceeding the 2019 levels. For 2022, VAC anticipates contract sales to grow 22-29%, backed by an increase in tours and strength in VPGs.
VAC continues using technology to lower back-office costs and improve associates' experience, leveraging artificial intelligence to augment and automate many high-volume internal transactional processes. During the third quarter of 2021, Marriott Vacations’ Vacation Ownership business launched a digital reservation technology to boost marketing efficiency and improve customer service. Also, VAC is making a good progress on the technology needed to link Marriott, Westin and Sheraton products into single points-based offerings. Going forward, VAC will increase the use of digital tools to strengthen its infrastructure, grow online package sales, enable self-service bookings, make real-time offerings to enhance the overall customer experience and drive back-office efficiencies.
Marriott Vacations focuses on high vacation ownership business to drive growth. During the fourth quarter of 2021, VAC made a solid progress with respect to the integration of Welk into its high vacation ownership business. VAC is on track to rebrand Welk's points program to Hyatt and allow Welk sales centers to sell Hyatt branded vacation ownership product. Also, management stated that initiatives relating to new owner benefits and providing Welk owners with the ability to trade their points for World of Hyatt points are in the pipeline.
VAC anticipates the resorts to be added to the Hyatt Reservation System by the second quarter of 2022. Marriott Vacations focuses on its partnership with Interval International to provide its members with comprehensive exchange services and a variety of other benefits that offer value and convenience. During the fourth quarter of 2021, VAC announced a new agreement affiliating Disney Vacation Club with Interval with nearly 270,000 members. Given sequential growth in tour package pipeline, VAC anticipates the initiatives to drive tours and sales in the upcoming periods.
Concerns
Image Source: Zacks Investment Research
Shares of Marriott Vacations have dropped 7.7% in the past year against the industry’s 6.2% growth. The decline was mainly due to the coronavirus crisis. Given the widespread and profound nature of the business, VAC suffered downfalls in occupancy due to “stay-at-home” recommendations (or requirements), quarantines and reluctance of consumers to travel. Although sequential improvements (month over month) are noted (owing to the reopening of the majority of its sales centers, resorts and other properties), occupancy at most of its resorts is lagging the pre-pandemic levels. VAC anticipates sequential improvements to continue. However, uncertainty with respect to pandemic-induced implications is a concern.
Marriott Vacations has been bearing the brunt of steep expenses for some time now. During the fourth quarter of 2021, total expenses increased 28.1% year over year to $935 million from $730 million reported in the year-ago quarter. Escalated marketing and sales expenses along with management and exchange costs affected total costs. This along with a rise in wage costs added to the downside.
Zacks Rank and Stocks to Consider
Marriott Vacations currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the Consumer Discretionary sector are Funko, Inc. (FNKO - Free Report) , Bluegreen Vacations Holding Corporation and Marriott International, Inc. (MAR - Free Report) .
Funko sports a Zacks Rank #1 at present. FNKO has a trailing four-quarter earnings surprise of 96.2%, on average. Shares of FNKO have declined 6.8% in the past year.
The Zacks Consensus Estimate for Funko’s current financial-year sales and EPS (earnings per share) suggests growth of 22.7% and 26.8%, respectively, from the corresponding year-ago period’s levels.
Bluegreen Vacations presently carries a Zacks Rank #2 (Buy). BVH has a trailing four-quarter earnings surprise of 425.1%, on average. The stock has surged 58.8% in the past year.
The Zacks Consensus Estimate for Bluegreen Vacations’ current financial-year sales and EPS indicates growth of 8.3% and 20.8%, respectively, from the corresponding year-ago period’s levels.
Marriott carries a Zacks Rank of 2 at present. MAR has a trailing four-quarter earnings surprise of 86.6%, on average. Shares of MAR have gained 19.1% in the past year.
The Zacks Consensus Estimate for Marriott’s current financial-year sales and EPS indicates growth of 40.3% and 73%, respectively, from the corresponding year-ago period’s levels.