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Marriott's (MAR) Brand Debuts in Oman, Opens W Muscat Hotel

Zacks Equity Research

Marriott International, Inc. MAR announced that its W Hotels brand makes a debut in Shatti Al Qurum, Oman, with the launch of W Muscat.  Notably, this 279-roomed hotel marks the brand’s second property in the Middle East this year. W Muscat features its newest beachfront W Escape.

This W Hotels brand’s playful luxury hotel spiritualizes Omani design and cultural traditions to give its traditional charm and natural beauty a whole new definition.

Apart from highlighting Marriott’s relentless expansion strategies, the opening of W Muscat mirrors the hotelier’s way of countering intense competition from the likes of Hyatt H, Hilton HLT and Wyndham WYND.

We believe the company’s expansion strategy will also help revive revenues. In second-quarter 2019, the company’s revenues declined 2% year over year. The top line has also missed the consensus estimate in the trailing five quarters.

Expansion Strategy & Solid Brand Position to Drive Revenues

Marriott banks on its hotel expansion strategy. The company keeps on investing in new locations for its various brands to meet the emerging demand for hotels in domestic as well as international markets. Moreover, its solid brand presence, which is encouraging.

In April 2019, the company opened its 7000 property — the 27 storey St. Regis Hong Kong. At the second-quarter 2019 end, the company’s worldwide development pipeline totaled nearly 2,900 rooms and more than 487,000 rooms (of these nearly 213,000 rooms were already under construction). For 2019, Marriott anticipates 5-5.5% net room growth, which is likely to continue building economics, scale, and consumer preference for its brands.

By 2020, the company aims to lead in the luxury and full-service segments in the region served, intends to have the largest portfolio in the upscale division and also win over millennials in the affordable lifestyle group.

Backed by solid expansion strategies and a strong brand presence, shares of Marriott have gained 16.3% so far this year compared with the industry’s 15.3% rally. Notably, the addition of W Muscat is likely to help Marriott boost its overall revenues and witness increased revenue per available room (RevPAR) for its worldwide comparable system-wide properties.

In the second quarter, RevPAR for worldwide comparable system-wide properties increased 1.2% in constant dollars and 0.3% in actual dollars, driven by a 1.1% improvement in average daily rate (ADR). Higher leisure transient demand in Europe, the Caribbean and South America, and the Asia Pacific regions helped it to deliver impressive results.

Particularly in North America, the said metric grew 0.7% in constant dollars (up 0.4% in actual dollars) and 2.8% internationally (down 2.4% in actual dollars).

Zacks Rank

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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