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Here's Why Investors Should Retain Marriott Vacations (VAC) Now
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Marriott Vacations Worldwide Corporation (VAC - Free Report) is likely to benefit from digitalization, expansion efforts and strategic initiatives. Also, focus on the Hyatt Vacation Club brand bodes well. However, increased expenses are a concern.
Let’s discuss the factors that highlight why investors should retain the stock for the time being.
Factors Driving Growth
Marriott Vacations emphasizes increasing 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. Management is optimistic about integrating further data analytics into its marketing strategy. Also, it intends to implement an online booking engine (for previews) and improve predictive modeling (for marketing campaigns) to drive growth.
In 2023, the company reported significant developments within the Hyatt business. The company consolidated 22 Hyatt resorts under the Hyatt Vacation Club brand, simplifying customer interactions. It also unveiled the BEYOND program to provide owners with enhanced vacation options. Enhancements were made to the preview booking engine. VAC undertook steps to phase out ineffective off-premise marketing channels in favor of more efficient branded channels. These initiatives aim to drive growth and increase VPG (Volume Per Guest) in the Hyatt Vacation Ownership business, thereby optimizing marketing and sales expenses.
On the development front, the company unveiled plans for two domestic Westin Vacation Club projects in Charleston and Savannah. The resort will also introduce new sales centers to the market upon its opening in a few years. This apart, the company emphasized the debut of the Marriott Vacation Club Resort in Waikiki during the latter part of 2024, accompanied by the establishment of a new sales center. Internationally, the company announced an agreement for a 58-unit expansion at one of the existing Marriott Vacation Clubs in Bali, thereby increasing the company's presence to nearly 200 units in the region.
The company is focused on utilizing Marriott, Sheraton, Westin and Hyatt brands in the Vacation Ownership segment to drive growth. Attributes of strong customer feedback and refined core offerings (aligned with today’s consumer needs) are likely to aid the company in the upcoming periods.
Concerns
Image Source: Zacks Investment Research
Shares of Marriott Vacations have declined 2.3% in the past six months against the industry’s growth of 3.7%. The downside can be attributed to increased expenses and Maui wildfires.
During the fourth quarter, total expenses increased 10.1% year over year to $1,092 million from $992 million reported in the year-ago quarter. Escalated rental costs and general and administrative expenses affected total costs. During the quarter, general and administrative costs increased $22 million year-over-year on account of elevated wages resulting from inflation, transitioning costs associated with IT service providers and additional spending on IT projects aimed at advancing digital and data initiatives. The company anticipates the inflationary environment to affect margins for some time.
Although Maui's occupancy has rebounded effectively, rebuilding the sales force is anticipated to be a prolonged process. The company anticipates the development margin to decline in the first quarter of 2024 owing to the impact of Maui wildfires and increased costs.
Zacks Rank and Stocks to Consider
Marriott Vacations currently carries a Zacks Rank #3 (Hold).
The Zacks Consensus Estimate for RCL’s 2024 sales and earnings per share (EPS) indicates a rise of 14.7% and 47.9%, respectively, from the year-ago levels.
Trip.com Group Limited (TCOM - Free Report) currently flaunts a Zacks Rank #1. TCOM has a trailing four-quarter earnings surprise of 53.1%, on average. Shares of TCOM have gained 19.1% in the past year.
The Zacks Consensus Estimate for TCOM’s 2024 sales and EPS indicates a rise of 18.2% and 1.8%, respectively, from the year-ago levels.
Hyatt Hotels Corporation (H - Free Report) carries a Zacks Rank #2 (Buy). It has a trailing four-quarter earnings surprise of 17.8% on average. Shares of H have increased 40.3% in the past year.
The Zacks Consensus Estimate for H’s 2024 sales and EPS indicates a rise of 3.4% and 25%, respectively, from the year-ago levels.
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Here's Why Investors Should Retain Marriott Vacations (VAC) Now
Marriott Vacations Worldwide Corporation (VAC - Free Report) is likely to benefit from digitalization, expansion efforts and strategic initiatives. Also, focus on the Hyatt Vacation Club brand bodes well. However, increased expenses are a concern.
Let’s discuss the factors that highlight why investors should retain the stock for the time being.
Factors Driving Growth
Marriott Vacations emphasizes increasing 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. Management is optimistic about integrating further data analytics into its marketing strategy. Also, it intends to implement an online booking engine (for previews) and improve predictive modeling (for marketing campaigns) to drive growth.
In 2023, the company reported significant developments within the Hyatt business. The company consolidated 22 Hyatt resorts under the Hyatt Vacation Club brand, simplifying customer interactions. It also unveiled the BEYOND program to provide owners with enhanced vacation options. Enhancements were made to the preview booking engine. VAC undertook steps to phase out ineffective off-premise marketing channels in favor of more efficient branded channels. These initiatives aim to drive growth and increase VPG (Volume Per Guest) in the Hyatt Vacation Ownership business, thereby optimizing marketing and sales expenses.
On the development front, the company unveiled plans for two domestic Westin Vacation Club projects in Charleston and Savannah. The resort will also introduce new sales centers to the market upon its opening in a few years. This apart, the company emphasized the debut of the Marriott Vacation Club Resort in Waikiki during the latter part of 2024, accompanied by the establishment of a new sales center. Internationally, the company announced an agreement for a 58-unit expansion at one of the existing Marriott Vacation Clubs in Bali, thereby increasing the company's presence to nearly 200 units in the region.
The company is focused on utilizing Marriott, Sheraton, Westin and Hyatt brands in the Vacation Ownership segment to drive growth. Attributes of strong customer feedback and refined core offerings (aligned with today’s consumer needs) are likely to aid the company in the upcoming periods.
Concerns
Image Source: Zacks Investment Research
Shares of Marriott Vacations have declined 2.3% in the past six months against the industry’s growth of 3.7%. The downside can be attributed to increased expenses and Maui wildfires.
During the fourth quarter, total expenses increased 10.1% year over year to $1,092 million from $992 million reported in the year-ago quarter. Escalated rental costs and general and administrative expenses affected total costs. During the quarter, general and administrative costs increased $22 million year-over-year on account of elevated wages resulting from inflation, transitioning costs associated with IT service providers and additional spending on IT projects aimed at advancing digital and data initiatives. The company anticipates the inflationary environment to affect margins for some time.
Although Maui's occupancy has rebounded effectively, rebuilding the sales force is anticipated to be a prolonged process. The company anticipates the development margin to decline in the first quarter of 2024 owing to the impact of Maui wildfires and increased costs.
Zacks Rank and Stocks to Consider
Marriott Vacations currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Consumer Discretionary sector are as follows:
Royal Caribbean Cruises Ltd. (RCL - Free Report) sports a Zacks Rank #1 (Strong Buy). RCL has a trailing four-quarter earnings surprise of 26.4% on average. Shares of RCL have surged 110.1% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for RCL’s 2024 sales and earnings per share (EPS) indicates a rise of 14.7% and 47.9%, respectively, from the year-ago levels.
Trip.com Group Limited (TCOM - Free Report) currently flaunts a Zacks Rank #1. TCOM has a trailing four-quarter earnings surprise of 53.1%, on average. Shares of TCOM have gained 19.1% in the past year.
The Zacks Consensus Estimate for TCOM’s 2024 sales and EPS indicates a rise of 18.2% and 1.8%, respectively, from the year-ago levels.
Hyatt Hotels Corporation (H - Free Report) carries a Zacks Rank #2 (Buy). It has a trailing four-quarter earnings surprise of 17.8% on average. Shares of H have increased 40.3% in the past year.
The Zacks Consensus Estimate for H’s 2024 sales and EPS indicates a rise of 3.4% and 25%, respectively, from the year-ago levels.