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MAR for Africa Job Loss Reduction

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Marriott International, Inc.(MAR) recently announced that it has inked a deal with The Akilah Institute for Women (Akilah) to educate and train 15 young women in Rwanda in Africa to work in the hotel industry. The move is a part of company’s objective to reduce youth unemployment mainly in Sub-Saharan Africa.

The Akilah Institute offers courses on hospitality management and works in alliance with private companies to ensure job placement for graduates in the top growing sectors of emerging economies. The first graduates from the institute are expected to be placed in the Marriott’s upcoming hotel - The Kigali Marriott Hotel – in Rwanda.

The chosen young women are under training in Marriott’s hotels in Dubai and Doha. They will prepare for supervisory roles in the hotel industry. Later, they will train around 250 other associates, who will be employed at the Kigali Marriott. Marriott expects to hire 10,000 employees, majority of which will be local residents, in its upcoming hotels on the continent.

According to the International Labour Organization (:ILO), the euro crisis is slowing down world economies and increasing youth unemployment in both developed and undeveloped economies across the globe.  Since 2005, unemployment rate for young people aged between 15 to 24 years, has been 12% in Sub-Saharan Africa. The organization expects the figure to lessen somewhat to 11.8% by 2017.

The Kigali Marriott hotel, the company’s debut hotel in the Sub-Saharan African region, is the largest hotel in Rwanda. The tourism industry is emergent in Rwanda, a sovereign state in central and east Africa. The tourism industry reported an 11% rise in revenue to around $128.3 million for the first half of 2012. The revenue is expected to increase further in the second half of the year, with the increase in permit fees for tourists who wish to experience Gorilla tourism – one of the major tourist activities of Rwanda.

As a matter of fact, Marriott is on an expansion spree to expand its footprint in the African market. The company intends to extend the number of hotels to 50 on the continent by the year 2020. Of the 50 properties, ten are slated to be opened in Sub Saharan Africa by 2015. Currently, the company has eight properties in two major African countries– Egypt and Algeria.

The company, which competes with Hyatt Hotels Corporation (H), is likely to release its third quarter 2012 earnings on October 3, 2012. The Zacks Consensus Estimate for the third quarter is pegged at 40 cents per share. We presently have a long-term Neutral recommendation on Marriott. However, it carries a Zacks #4 Rank (a short-term Sell rating).

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