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Marriott to Open W Hotel in Argentina, Eyes Revenue Growth

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Marriott International, Inc. (MAR - Free Report) has announced that it entered an agreement with GNV Group to launch a W branded hotel, named W Buenos Aires in Argentina. The hotel is slated to open in 2024 and will join W hotel’s portfolio in Central and South America, including W Bogota, W Costa Rica, W Mexico City, W Panama, W Punta de Mita and W Santiago.

The move not only underscores Marriott’s relentless expansion strategies but also is the hotelier’s way of countering intense competition from the likes of Hyatt (H - Free Report) , Hilton (HLT - Free Report) and Wyndham (WYND - Free Report) .

Backed by solid expansion strategies and a strong brand presence, shares of Marriott have gained 30.7% so far this year compared with the industry’s rally of 26.7%.



Expansion Strategies Bode Well

The company is consistently trying to expand its presence worldwide and capitalize on the demand for hotels in international markets. Moving ahead, Marriott plans to significantly expand its global portfolio of luxury and lifestyle brands. For 2019, it anticipates 5.5% net room growth, which is likely to continue building economics, scale and consumer preference for its brands.

At the end of first-quarter 2019, Marriott’s development pipeline totaled nearly 475,000 rooms. The hotel company is also trying to expand its footprint outside the United States, especially in Asia, Latin America, the Middle East and Africa. Meanwhile, The company’s European pipeline has grown consistently in the recent past and is expected to continue, going forward. In fact, it aims to expand its lead in the luxury and full-service segments in the region. It also plans to have the largest portfolio in the upscale division and win over millennials in the affordable lifestyle group by 2020.

Our Take

We believe that the addition of W Buenos Aires would help Marriott to strengthen overall revenues. It will also help the company witness greater revenue per available room (RevPAR) for its worldwide comparable system-wide properties.

In the first quarter of 2019, RevPAR for worldwide comparable system-wide properties increased 1.1% in constant dollars (down 0.3% in actual dollars), driven by a 1.5% improvement in average daily rate (ADR).

Comparable system-wide RevPAR in North America grew 0.8% in constant dollars (up 0.6% in actual dollars), owing to 2% gain in ADR. On a constant-dollar basis, international comparable system-wide RevPAR rose 1.9% (down 2.5% in actual dollars).

Marriott currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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