Marriott International, Inc. (MAR - Free Report) is poised to benefit on the back of strong brand position, digital innovations and acquisitions. However, fluctuations in exchange rates as well as coronavirus outbreak are likely to hurt the company going forward. Thanks to the outbreak of the deadly virus, the company’s shares have plunged 50.3% so far this year compared with the industry’s decline of 46.3%.
Let us discuss the factors that are currently making an impact on this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Marriott is a leading company in the luxury and lifestyle space, comprising more than 7,300 properties in 134 countries and territories. The company’s extensive portfolio and a strong brand position allow it to charge a premium room rate in the highly-competitive lodging industry. Given its property locations, we believe that the company is well poised to benefit from the increasing market demand on the back of stepped-up business as well as leisure traveling in major North American and international locations.
Marriott continues to rely on acquisitions in order to expand its footprint globally. In late 2016, it completed the acquisition of Starwood and became the world's largest hotel company. Owing to this acquisition, the company’s distribution has more than doubled in Asia and the Middle East & Africa combined. Also, Marriott’s move to buy Starwood shows that the hospitality industry thrives on such blockbuster deals, which are critical to their success at a time when online booking is important in the lodging business.
Given that digital innovations and social media are playing increasingly important role in hotel bookings, Marriot isn’t far behind to improvise. Notably, the company re-imagined its Marriott Mobile app to meet the needs of the modern traveler. Through the platform, the company offers new and extended digital features, customized travel content, easier one-button navigation as well as a new swipe-able discovery home screen. In 2019, the company earned $410 million in credit card fees.
The Hotel and Motels industry is currently grappling with the coronavirus outbreak and Marriott isn’t immune to the trend. The company’s 2020 guidance does not include any impact of the coronavirus outbreak. The company stated that the outbreak is impacting its operations in China and other parts of Asia Pacific segment by necessitating the closure of numerous hotels as well as reducing demand in Greater China and certain other Asia Pacific markets.
Moreover, the company is highly vulnerable to fluctuations in exchange rates. Notably, it has been witnessing fewer international guests at its U.S. hotels, given the stronger dollar. Moreover, the company is also bearing the brunt of Venezuelan currency devaluation. On the whole, though leisure demand remains strong, cautious corporate group and transient demand are concerns.
Some better-ranked stocks in the Zacks Consumer Discretionary sector are Vista Outdoor Inc. (VSTO - Free Report) , YETI Holdings, Inc. (YETI - Free Report) and Mattel, Inc. (MAT - Free Report) , each sporting a Zacks Rank #1.
Vista Outdoor’s 2020 earnings are expected to surge 42.9%.
YETI Holdings has a three-five year expected earnings per share growth rate of 17.6%.
Mattel’s 2020 earnings are expected to surge 120%.
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