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Marriott (MAR) Outlines Long-term Growth Plan, Stock Up

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Marriott International, Inc. (MAR - Free Report) is striving to maintain its position as the fastest-growing global hospitality company. In an effort to boost its performance, the company announced a three-year growth plan. Following the news, shares of Marriott gained 2.1% on Mar 18. Moreover, a glance at the company’s price performance the past three months shows that it has rallied 20.3% compared with the industry’s 22.2% growth.

Notably, Marriott’s three-year plan includes the opening of above 1,700 hotels globally. By 2021, the company’s is planning to add rooms in the range of 275,000-295,000. The company has already 478,000 rooms under pipeline, which includes nearly 214,000 rooms under construction.

Marriott is also consistently trying to expand its presence worldwide and capitalize on the demand for hotels in international markets. Moving ahead, the company plans to significantly strengthen its global portfolio of luxury and lifestyle brands.

Additionally, this hotel company’s efforts to expand its footprint outside the United States, especially in Asia, Latin America, Middle East and Africa, are commendable. The company said that its pipeline includes increasing number of legacy-Starwood branded hotels.

Solid Guidance

Marriott’s three-year growth plan anticipates comparable hotel revenue per available room (RevPAR) growth in the rage of 1-3%, compounded annually. New room openings during the period are likely to garner $400 million in fee revenues during 2021. The company expects earnings in the range of $7.65-$8.50 per share by 2021, a compound growth rate of 11-15% over 2018 adjusted earnings. Further, adjusted earnings per share are anticipated to increase in the 6-9% band, compounded annually.

Further, the company plans to pay $1.9-$2 billion in dividends and wants to repurchase shares worth $7.6-$9 billion during the same period.

Marriott’s, executive vice president and chief financial officer, Leeny Oberg, said that “Our new three-year plan, with Starwood fully integrated, demonstrates how our fee-based, asset-light business model generates even stronger and more sustainable cash flows. This allows us to invest profitably in our core business at high rates of return and also return significant amounts of capital to shareholders.”

Marriott, which shares space with Choice Hotels International, Inc. (CHH - Free Report) and Extended Stay America, Inc. (STAY - Free Report) , carries a Zacks Rank #3 (Hold).

Key Pick

A better-ranked stock in the same space is Hilton Worldwide Holdings Inc. (HLT - Free Report) . The company has a Zacks Rank #1 (Strong Buy) and an impressive long-term earnings growth rate of 8.7%. You can see the complete list of today’s Zacks #1 Rank stocks here.

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