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Here's Why You Should Retain Marriott (MAR) in Your Portfolio
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Marriott International, Inc. (MAR - Free Report) is likely to benefit from solid leisure demand, digital initiatives and the loyalty program. Also, the focus on unit-expansion efforts bodes well. However, an uncertain macroeconomic environment is a concern.
Let us discuss the factors highlighting why investors should retain the stock for now.
Growth Catalysts
Marriott has been gaining from pent-up leisure demand. During the fourth quarter of 2023, the company witnessed a seasonally higher level of leisure transient travel, accounting for 44% of global room nights, accompanied by a 3% rise in Average Daily Rate (ADR) compared with the previous year’s levels. Group demand showed impressive strength, with group revenues in the United States and Canada rising 7% year over year. At the end of fourth-quarter 2023, group revenues for 2024 were up 13% globally and 11% in the United States and Canada on a year-over-year basis, driven by robust increases in room nights and ADR. With global trends improving, the company expects the recovery momentum to continue for some time.
The company is benefiting from robust growth of its loyalty program. With nearly 196 million members globally, the company’s loyalty program, Marriott Bonvoy, is supporting its marketing strategies. The company is prioritizing the enhancement of customer experience across various booking channels as part of its ongoing multi-year technology transformation. It aims to strengthen engagement with members beyond hotel stays through successful collaborations within the Marriott Bonvoy ecosystem, including co-branded credit cards. For 2024, the company anticipates a 9-10% year-over-year increase in total non-RevPAR-related fees, driven by strong credit card and residential branding fee growth.
Marriott is consistently trying to expand its presence worldwide and capitalize on the demand for hotels in international markets. Expanding its lodging offerings globally, the company is making strides in the high-growth mid-scale segment, with discussions underway for deals such as Citi Express in the Caribbean and Latin America and Four Points Express in Europe, the Middle East, and Africa. Plans for a new transient mid-scale brand in the United States are in progress. At the end of fourth-quarter 2023, Marriott's development pipeline totaled 3,379 hotels, with approximately 573,000 rooms. More than 232,000 rooms were under construction. For 2024, the company anticipates net room growth in the range of 5.5-6% year over year.
Image Source: Zacks Investment Research
Shares of Marriott have gained 61% in the past year compared with the industry’s 43.3% growth.
Concerns
Marriott is pursuant to uncertainties in financial markets on account of liquidity constraints. The banking environment in the United States and Europe has been challenging due to rising interest rates. Financing conditions in these regions have been challenging, with some banks waiting for more clarity on capital requirements and potential regulations. Despite lending challenges, deals with committed financing are still progressing and there hasn't been a significant increase in deals falling through the pipeline.
Zacks Rank & Stocks to Consider
Marriott currently carries a Zacks Rank #3 (Hold).
The Zacks Consensus Estimate for TCOM’s 2024 sales and earnings per share (EPS) indicates a rise of 18.2% and 8%, respectively, from the year-ago levels.
Royal Caribbean Cruises Ltd. (RCL - Free Report) carries a Zacks Rank #2. RCL has a trailing four-quarter earnings surprise of 26.4% on average. Shares of RCL have surged 125.3% in the past year.
The Zacks Consensus Estimate for RCL’s 2024 sales and EPS indicates a rise of 14.7% and 47.9%, respectively, from the year-ago levels.
Hyatt Hotels Corporation (H - Free Report) carries a Zacks Rank #2. It has a trailing four-quarter earnings surprise of 17.8% on average. Shares of H have increased 51.5% in the past year.
The Zacks Consensus Estimate for H’s 2024 sales and EPS indicates a rise of 3.5% and 27%, respectively, from the year-ago levels.
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Here's Why You Should Retain Marriott (MAR) in Your Portfolio
Marriott International, Inc. (MAR - Free Report) is likely to benefit from solid leisure demand, digital initiatives and the loyalty program. Also, the focus on unit-expansion efforts bodes well. However, an uncertain macroeconomic environment is a concern.
Let us discuss the factors highlighting why investors should retain the stock for now.
Growth Catalysts
Marriott has been gaining from pent-up leisure demand. During the fourth quarter of 2023, the company witnessed a seasonally higher level of leisure transient travel, accounting for 44% of global room nights, accompanied by a 3% rise in Average Daily Rate (ADR) compared with the previous year’s levels. Group demand showed impressive strength, with group revenues in the United States and Canada rising 7% year over year. At the end of fourth-quarter 2023, group revenues for 2024 were up 13% globally and 11% in the United States and Canada on a year-over-year basis, driven by robust increases in room nights and ADR. With global trends improving, the company expects the recovery momentum to continue for some time.
The company is benefiting from robust growth of its loyalty program. With nearly 196 million members globally, the company’s loyalty program, Marriott Bonvoy, is supporting its marketing strategies. The company is prioritizing the enhancement of customer experience across various booking channels as part of its ongoing multi-year technology transformation. It aims to strengthen engagement with members beyond hotel stays through successful collaborations within the Marriott Bonvoy ecosystem, including co-branded credit cards. For 2024, the company anticipates a 9-10% year-over-year increase in total non-RevPAR-related fees, driven by strong credit card and residential branding fee growth.
Marriott is consistently trying to expand its presence worldwide and capitalize on the demand for hotels in international markets. Expanding its lodging offerings globally, the company is making strides in the high-growth mid-scale segment, with discussions underway for deals such as Citi Express in the Caribbean and Latin America and Four Points Express in Europe, the Middle East, and Africa. Plans for a new transient mid-scale brand in the United States are in progress. At the end of fourth-quarter 2023, Marriott's development pipeline totaled 3,379 hotels, with approximately 573,000 rooms. More than 232,000 rooms were under construction. For 2024, the company anticipates net room growth in the range of 5.5-6% year over year.
Image Source: Zacks Investment Research
Shares of Marriott have gained 61% in the past year compared with the industry’s 43.3% growth.
Concerns
Marriott is pursuant to uncertainties in financial markets on account of liquidity constraints. The banking environment in the United States and Europe has been challenging due to rising interest rates. Financing conditions in these regions have been challenging, with some banks waiting for more clarity on capital requirements and potential regulations. Despite lending challenges, deals with committed financing are still progressing and there hasn't been a significant increase in deals falling through the pipeline.
Zacks Rank & Stocks to Consider
Marriott currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Consumer Discretionary sector are as follows:
Trip.com Group Limited (TCOM - Free Report) carries a Zacks Rank #2 (Buy). TCOM has a trailing four-quarter earnings surprise of 53.1%, on average. Shares of TCOM have gained 23.7% in the past year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for TCOM’s 2024 sales and earnings per share (EPS) indicates a rise of 18.2% and 8%, respectively, from the year-ago levels.
Royal Caribbean Cruises Ltd. (RCL - Free Report) carries a Zacks Rank #2. RCL has a trailing four-quarter earnings surprise of 26.4% on average. Shares of RCL have surged 125.3% in the past year.
The Zacks Consensus Estimate for RCL’s 2024 sales and EPS indicates a rise of 14.7% and 47.9%, respectively, from the year-ago levels.
Hyatt Hotels Corporation (H - Free Report) carries a Zacks Rank #2. It has a trailing four-quarter earnings surprise of 17.8% on average. Shares of H have increased 51.5% in the past year.
The Zacks Consensus Estimate for H’s 2024 sales and EPS indicates a rise of 3.5% and 27%, respectively, from the year-ago levels.