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New Look for Marriott New Orleans

Zacks Equity Research

As a part of its continued brand revitalization initiative, Marriott International Inc. (MAR) has recently come up with an extensive makeover program for its New Orleans property at a cost of around $4.5 million.

Situated at French Quarter, a place full of historic attractions, the hotel enjoys excellent positioning. The location of the property, adjacent to Bourbon Street, also ensures easy access to major sightseeing locations of the city. Also, its proximity to the business district makes the property far more lucrative to business travelers. New Orleans is touted as one of the prime U.S. tourist spots.

According to the New Orleans Convention & Visitors Bureau (‘CVB’), this city received 4.9 million visitors in the first half of 2012, up 2.0% over the same period in 2011, who spent a total of $3.45 billion, an increase of 11.0% on a comparable basis.

New Orleans has also recorded the biggest increase in occupancy during the week 16-22 December 2012, according to Smith Travel Research. In terms of revenue per available room (RevPAR), New Orleans also posted the highest increase during the same time frame. Citing the prospect, Marriott planned to revamp the New Orleans hotel, already featuring 80,000 square feet of meeting area and 1300 rooms.  

In a competitive environment, most hotel companies across the globe have been making diligent efforts over the last couple of years to augment guest satisfaction and gain a better foothold in the industry. Hence, brand conversion and remodeling has become a trend today. Many of Marriott’s peers like Starwood Hotels & Resorts Worldwide Inc. (HOT) and InterContinental Hotels Group (IHG) are also walking the same path.

Renovation work, however, hurts near-term revenue when construction is on. But after the overhaul work, existing properties pay off more.

Marriott is comprehensively working on its assets to offer an upgraded travel experience to its guests. At present, several properties like Marriott St. Louis International Airport, Essex House at Manhattan, Marriott’s managed Residence Inn and Courtyard portfolios in the United States are going through an extensive renovation program, which will likely boost RevPAR once fully unveiled.

Marriott currently carries a Zacks #4 Rank (short-term Sell rating).We reiterate our long-term Neutral recommendation on the shares of Marriott.

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