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Here's Why Marriott (MAR) Deserves a Place in Your Portfolio

Marriott International, Inc. MAR is well-poised from expansion efforts and improving demand.  The company is gaining from the reopening of international borders and leniency in travel restrictions. In the past year, the company’s shares have gained 13.5% against the industry’s decline of 3.1%.

In the past 30 days, Marriott’s earnings estimates have risen, suggesting bullish sentiments surrounding the company’s prospects. The Zacks Consensus Estimate for 2022 earnings has increased 5.9% and the same for the next year has risen 3% over the past 30 days. The Zacks Rank #2 (Buy) company also has an impressive long-term earnings growth of 40.1%.

Let us delve into the growth drivers.

Improving Demand

The company is gaining from improving demand. Throughout the second quarter of 2022, the company witnessed a steady increase in demand in the United States, Canada, the Middle East and Africa regions. The company benefited from robust leisure demand and business and cross-border travel improvements. It also reported a strong RevPAR recovery in Europe. Group demand in the United States and Canada increased sharply during the quarter, leading to improved occupancies and strength in ADR. Group bookings ADR in the region (made in June) were 16% above 2019 levels.

With global trends improving, the company expects the recovery momentum to continue in the future. Attributes such as pent-up demand for all types of travel, the shift of spending towards experiences versus goods, sustained high levels of employment, lifting of travel restrictions and opening borders (in most markets) are likely to aid the company in the upcoming periods.

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Robust Expansion Efforts

Marriott is consistently trying to expand its presence worldwide and capitalize on the demand for hotels in international markets. Moving ahead, the company plans to significantly expand its global portfolio of luxury and lifestyle brands. During the second quarter of 2022, the company announced an agreement with Vinpearl to open eight hotels in Vietnam. The deal is expected to add 1,700 rooms to the system. Meanwhile, Marriott is focusing on hotel conversion opportunities to mitigate the impact of construction delays caused by the pandemic.

For 2022, the company anticipates gross additions to reach 5%. At the end of second-quarter 2022, Marriott's development pipeline totaled nearly 2,942 hotels, with approximately 495,000 rooms. Nearly 203,300 rooms were under construction. During the quarter, the company added 97 new properties (16,917 rooms) to its worldwide lodging portfolio. In 2022, Marriott anticipates net room growth in the range of 3-3.5%. The hotel company is also trying to strengthen its presence 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.

Other Efforts to Drive Growth

The company is benefiting from the robust growth of its loyalty program. With nearly 169 million members globally, the company’s loyalty program Marriott Bonvoy plays a supporting hand in its marketing strategies. Notably, the company is focusing on non-hotel stay experiences such as Eat Around Town and Homes and Villas by Marriott International.

Also, the company is engaging its customers with promotional offers such as grocery and retail spending accelerators on its co-branded credit cards (American Express and Chase). During the first quarter of 2021, the company expanded its co-brand portfolio in South Korea and Mexico. In July 2022, the company unveiled a new credit card in China and reported solid feedback for the same. During the second quarter of 2022, the number of global card accounts rose 16% from 2019 levels. Backed by solid customer acceptance for credit card programs coupled with a rise in credit card average spending, the company anticipates higher contributions from credit card fees in 2022.

Other Key Picks

Some other top-ranked stocks in the Consumer Discretionary sector are Hyatt Hotels Corporation H, Playa Hotels & Resorts N.V. PLYA and Choice Hotels International, Inc. CHH.

Hyatt currently carries a Zacks Rank #2. H stock has increased 21.4% 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 H’s current financial year sales and EPS indicates growth of 78.1% and 93.9%, respectively, from the year-ago period’s reported levels.

Playa Hotels & Resorts currently carries a Zacks Rank #2. PLYA stock has decreased 10% in the past year.

The Zacks Consensus Estimate for PLYA’s current financial year sales and EPS indicates growth of 54.7% and 204.2%, respectively, from the year-ago period’s reported levels.

Choice Hotels carries a Zacks Rank #2, at present. CHH has a trailing four-quarter earnings surprise of 20.4%, on average. The stock has decreased 4.8% in the past year.

The Zacks Consensus Estimate for CHH’s current financial year sales and EPS indicates growth of 13.6% and 17.7%, respectively, from the year-ago period’s reported levels.

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Marriott International, Inc. (MAR) : Free Stock Analysis Report
Hyatt Hotels Corporation (H) : Free Stock Analysis Report
Choice Hotels International, Inc. (CHH) : Free Stock Analysis Report
Playa Hotels & Resorts N.V. (PLYA) : Free Stock Analysis Report
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