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Here's Why Investors Should Retain Marriott Vacations (VAC) Now
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Marriott Vacations Worldwide Corporation (VAC - Free Report) is likely to benefit from solid contract sales, digital initiatives and vacation ownership business. This and its focus on owner benefit and exchange program bode well. However, increased expenses are a concern.
Let’s discuss the factors that highlight why investors should retain the stock for the time being.
Factors Driving Growth
Marriott Vacations continues to witness robust recovery during first-quarter 2023. While occupancies and tours are witnessing growth in the first quarter, VPGs remain well above 2019 levels. The company reported benefits from its development and rental businesses. VAC reported contract sales of $434 million in the first quarter of 2023, up 10% from $394 million reported in the prior-year quarter. Given the rise in tours and strength in vacation ownership products, VAC anticipates contract sales to grow in the range of 5-9% (year over year) in 2023.
Marriott Vacations emphasizes on increasing the use of digital tools to strengthen its infrastructure, grow online package sales, enable self-service bookings, make real-time offerings to enhance the overall customer experience and drive back-office efficiencies. Management is optimistic about integrating further data analytics into its marketing strategy. Also, it emphasizes on implementing an online booking engine (for previews) and improving predictive modeling (for marketing campaigns) to drive growth.
Marriott Vacations focuses on high vacation ownership business to drive growth. In April 2022, the company rebranded Welk's points program as the Hyatt Vacation Club Platinum program and allowed the conversion of Welk sales centers to sell Hyatt-branded vacation ownership products. The Platinum program includes expanded vacation benefits and access to a collection of upscale resorts. In 2023, the company intends to rebrand all legacy Welk Resorts into Hyatt Vacation Club. Also, it stated plans to expand its vacation offerings with the launch of the Beyond program.
Increased focus on owner benefit and exchange program bodes well. During the third quarter of 2022, the company launched Abound by Marriott Vacations (Marriott-branded vacation ownership products) at majority of its Marriott, Sheraton and Westin sales centers and reported positive owner feedback. The program focuses on unifying Marriott branded vacation ownership products by providing access to more than 90 branded resorts using a common points currency. The program harmonizes fee structures and owner benefit levels and allows the transition of sales galleries to sell Marriott Vacation Club Destinations products. The company is optimistic in this regard and anticipates the initiative to drive growth.
Concerns
Image Source: Zacks Investment Research
Shares of Marriott Vacations have declined 11.4% in the past six months against the industry’s growth of 10.4%. The downside was mainly due to inflationary pressures. During first-quarter 2023, total expenses increased 11.4% year over year to $1,015 million from $911 million reported in the year-ago quarter. Escalated marketing and sales expenses and rental cost affected total costs. The company anticipates the inflationary environment to affect margins for some time. Per our model, total operating expenses in 2023 is anticipated to rise 8.5% year over year.
Zacks Rank and Stocks to Consider
Marriott Vacations currently carries a Zacks Rank #3 (Hold).
Trip.com Group Limited (TCOM - Free Report) flaunts a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 147.9%, on average. Shares of TCOM have increased 41.4% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Trip.com Group’s 2023 sales and EPS suggest an increase of 101.6% and 531%, respectively, from the year-ago period’s levels.
OneSpaWorld Holdings Limited (OSW - Free Report) carries a Zacks Rank #2 (Buy). OSW has a trailing four-quarter earnings surprise of 65.8%, on average. Shares of OSW have increased 75.1% in the past year.
The Zacks Consensus Estimate for OSW’s 2023 sales and EPS indicates a rise of 33.9% and 89.3%, respectively, from the year-ago period’s levels.
Royal Caribbean Cruises Ltd. (RCL - Free Report) carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 26.4%, on average. Shares of RCL have surged 206.3% in the past year.
The Zacks Consensus Estimate for Royal Caribbean Cruises’ 2023 sales and EPS indicates a rise of 48.7% and 162.9%, respectively, from the year-ago period’s levels.
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Here's Why Investors Should Retain Marriott Vacations (VAC) Now
Marriott Vacations Worldwide Corporation (VAC - Free Report) is likely to benefit from solid contract sales, digital initiatives and vacation ownership business. This and its focus on owner benefit and exchange program bode well. However, increased expenses are a concern.
Let’s discuss the factors that highlight why investors should retain the stock for the time being.
Factors Driving Growth
Marriott Vacations continues to witness robust recovery during first-quarter 2023. While occupancies and tours are witnessing growth in the first quarter, VPGs remain well above 2019 levels. The company reported benefits from its development and rental businesses. VAC reported contract sales of $434 million in the first quarter of 2023, up 10% from $394 million reported in the prior-year quarter. Given the rise in tours and strength in vacation ownership products, VAC anticipates contract sales to grow in the range of 5-9% (year over year) in 2023.
Marriott Vacations emphasizes on increasing the use of digital tools to strengthen its infrastructure, grow online package sales, enable self-service bookings, make real-time offerings to enhance the overall customer experience and drive back-office efficiencies. Management is optimistic about integrating further data analytics into its marketing strategy. Also, it emphasizes on implementing an online booking engine (for previews) and improving predictive modeling (for marketing campaigns) to drive growth.
Marriott Vacations focuses on high vacation ownership business to drive growth. In April 2022, the company rebranded Welk's points program as the Hyatt Vacation Club Platinum program and allowed the conversion of Welk sales centers to sell Hyatt-branded vacation ownership products. The Platinum program includes expanded vacation benefits and access to a collection of upscale resorts. In 2023, the company intends to rebrand all legacy Welk Resorts into Hyatt Vacation Club. Also, it stated plans to expand its vacation offerings with the launch of the Beyond program.
Increased focus on owner benefit and exchange program bodes well. During the third quarter of 2022, the company launched Abound by Marriott Vacations (Marriott-branded vacation ownership products) at majority of its Marriott, Sheraton and Westin sales centers and reported positive owner feedback. The program focuses on unifying Marriott branded vacation ownership products by providing access to more than 90 branded resorts using a common points currency. The program harmonizes fee structures and owner benefit levels and allows the transition of sales galleries to sell Marriott Vacation Club Destinations products. The company is optimistic in this regard and anticipates the initiative to drive growth.
Concerns
Image Source: Zacks Investment Research
Shares of Marriott Vacations have declined 11.4% in the past six months against the industry’s growth of 10.4%. The downside was mainly due to inflationary pressures. During first-quarter 2023, total expenses increased 11.4% year over year to $1,015 million from $911 million reported in the year-ago quarter. Escalated marketing and sales expenses and rental cost affected total costs. The company anticipates the inflationary environment to affect margins for some time. Per our model, total operating expenses in 2023 is anticipated to rise 8.5% year over year.
Zacks Rank and Stocks to Consider
Marriott Vacations currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Consumer Discretionary sector are as follows:
Trip.com Group Limited (TCOM - Free Report) flaunts a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 147.9%, on average. Shares of TCOM have increased 41.4% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Trip.com Group’s 2023 sales and EPS suggest an increase of 101.6% and 531%, respectively, from the year-ago period’s levels.
OneSpaWorld Holdings Limited (OSW - Free Report) carries a Zacks Rank #2 (Buy). OSW has a trailing four-quarter earnings surprise of 65.8%, on average. Shares of OSW have increased 75.1% in the past year.
The Zacks Consensus Estimate for OSW’s 2023 sales and EPS indicates a rise of 33.9% and 89.3%, respectively, from the year-ago period’s levels.
Royal Caribbean Cruises Ltd. (RCL - Free Report) carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 26.4%, on average. Shares of RCL have surged 206.3% in the past year.
The Zacks Consensus Estimate for Royal Caribbean Cruises’ 2023 sales and EPS indicates a rise of 48.7% and 162.9%, respectively, from the year-ago period’s levels.