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Here's Why You Should Retain Marriott (MAR) in Your Portfolio
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Marriott International, Inc. (MAR - Free Report) is likely to benefit from solid leisure demand, digital initiatives and unit-expansion efforts. The focus on new midscale brands bodes well. However, an uncertain macroeconomic environment is a concern.
Let us discuss the factors highlighting why investors should retain the stock for now.
Growth Catalysts
Marriott has been gaining from pent-up leisure demand. In first-quarter 2024, global RevPAR increased 4.2% year over year, with ADR rising approximately 3% and occupancy reaching nearly 66%. Despite industry-wide normalization of RevPAR growth post-COVID, Marriott continues to gain the RevPAR index across its portfolio and increase its market share of global hotels.
During the first quarter, the company reported RevPAR growth in all three customer segments, including group, leisure transient and business transient. Group travel accounted for 24% of global room nights (in the first quarter), registering a global RevPAR increase of 6% year over year. Leisure transient travel, comprising 42% of worldwide room nights, witnessed a 4% increase in RevPAR, backed by resilient demand and ADR growth. Business transient travel, accounting for the remaining 34% of global room nights, experienced a 1% increase in RevPAR. With global trends improving, the company expects the recovery momentum to continue for some time.
Marriott is making significant progress on its multi-year digital and technology transformation, focusing on reservations, property management and loyalty. The transformation aims to unlock new revenue opportunities, strengthen the operating model, enhance Marriott Bonvoy and improve the digital experience for associates and customers. The company expects to roll out the new cloud-based systems to properties next year. Also, it emphasized digital enhancements concerning shopping and booking through Marriott's channels.
Marriott is consistently trying to expand its presence worldwide and capitalize on the demand for hotels in international markets. In the first quarter, Marriott added 46,000 net rooms, increasing its distribution by 7.1% year over year. The MGM collection with Marriott Bonvoy has launched with 16 properties in Las Vegas and other key U.S. cities, surpassing initial booking expectations. Excluding the addition of 17,000 City Express rooms, open and pipeline rooms rose 6.7% year over year. Conversions during the quarter represented 30% of global signings. MAR reported strong momentum in global signings, with notable deal production in Greater China and APEC.
Marriott's new midscale brands — City Express by Marriott, Four Points Express and StudioRes — are attracting significant developer interest. During the first quarter, Marriott signed its first midscale deal in the APEC region, including a portfolio of over a dozen hotels (expected to join the system in 2024). In the United States and Canada, it mentioned commitments for approximately 140 StudioRes properties, with active negotiations for more than 100 additional properties. Going forward, the company stated plans to launch a conversion-friendly midscale brand.
Image Source: Zacks Investment Research
Shares of Marriott have gained 27.4% in the past year compared with the industry’s 21.9% growth.
Concerns
Marriott is pursuant to uncertainties in financial markets on account of liquidity constraints. The banking environment in the United States and Europe has been challenging due to rising interest rates. Financing conditions in these regions have been challenging, with some banks waiting for more clarity on capital requirements and potential regulations. Despite lending challenges, deals with committed financing are still progressing, with no significant increase in deals falling through the pipeline. The company is cautious of the uncertain macroeconomic environment.
Zacks Rank & Stocks to Consider
Marriott currently carries a Zacks Rank #3 (Hold).
STRA has a trailing four-quarter earnings surprise of 36.2%, on average. The stock has surged 49.4% in the past year. The Zacks Consensus Estimate for STRA’s 2024 sales and earnings per share (EPS) indicates an increase of 6.4% and 33.3%, respectively, from the year-ago levels.
Royal Caribbean Cruises Ltd. (RCL - Free Report) currently sports a Zacks Rank of 1. RCL has a trailing four-quarter earnings surprise of 18.3%, on average. The stock has rallied 71% in the past year.
The Zacks Consensus Estimate for RCL’s 2024 sales and EPS calls for growth of 16.8% and 63.7%, respectively, from the year-ago levels.
Hasbro, Inc. (HAS - Free Report) presently flaunts a Zacks Rank of 1. The company has a trailing four-quarter earnings surprise of 17.5%, on average. The stock has gained 12.6% in the year-to-date period.
The Zacks Consensus Estimate for HAS’ 2025 sales and EPS suggests an improvement of 4% and 14%, respectively, from the year-ago levels.
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Here's Why You Should Retain Marriott (MAR) in Your Portfolio
Marriott International, Inc. (MAR - Free Report) is likely to benefit from solid leisure demand, digital initiatives and unit-expansion efforts. The focus on new midscale brands bodes well. However, an uncertain macroeconomic environment is a concern.
Let us discuss the factors highlighting why investors should retain the stock for now.
Growth Catalysts
Marriott has been gaining from pent-up leisure demand. In first-quarter 2024, global RevPAR increased 4.2% year over year, with ADR rising approximately 3% and occupancy reaching nearly 66%. Despite industry-wide normalization of RevPAR growth post-COVID, Marriott continues to gain the RevPAR index across its portfolio and increase its market share of global hotels.
During the first quarter, the company reported RevPAR growth in all three customer segments, including group, leisure transient and business transient. Group travel accounted for 24% of global room nights (in the first quarter), registering a global RevPAR increase of 6% year over year. Leisure transient travel, comprising 42% of worldwide room nights, witnessed a 4% increase in RevPAR, backed by resilient demand and ADR growth. Business transient travel, accounting for the remaining 34% of global room nights, experienced a 1% increase in RevPAR. With global trends improving, the company expects the recovery momentum to continue for some time.
Marriott is making significant progress on its multi-year digital and technology transformation, focusing on reservations, property management and loyalty. The transformation aims to unlock new revenue opportunities, strengthen the operating model, enhance Marriott Bonvoy and improve the digital experience for associates and customers. The company expects to roll out the new cloud-based systems to properties next year. Also, it emphasized digital enhancements concerning shopping and booking through Marriott's channels.
Marriott is consistently trying to expand its presence worldwide and capitalize on the demand for hotels in international markets. In the first quarter, Marriott added 46,000 net rooms, increasing its distribution by 7.1% year over year. The MGM collection with Marriott Bonvoy has launched with 16 properties in Las Vegas and other key U.S. cities, surpassing initial booking expectations. Excluding the addition of 17,000 City Express rooms, open and pipeline rooms rose 6.7% year over year. Conversions during the quarter represented 30% of global signings. MAR reported strong momentum in global signings, with notable deal production in Greater China and APEC.
Marriott's new midscale brands — City Express by Marriott, Four Points Express and StudioRes — are attracting significant developer interest. During the first quarter, Marriott signed its first midscale deal in the APEC region, including a portfolio of over a dozen hotels (expected to join the system in 2024). In the United States and Canada, it mentioned commitments for approximately 140 StudioRes properties, with active negotiations for more than 100 additional properties. Going forward, the company stated plans to launch a conversion-friendly midscale brand.
Image Source: Zacks Investment Research
Shares of Marriott have gained 27.4% in the past year compared with the industry’s 21.9% growth.
Concerns
Marriott is pursuant to uncertainties in financial markets on account of liquidity constraints. The banking environment in the United States and Europe has been challenging due to rising interest rates. Financing conditions in these regions have been challenging, with some banks waiting for more clarity on capital requirements and potential regulations. Despite lending challenges, deals with committed financing are still progressing, with no significant increase in deals falling through the pipeline. The company is cautious of the uncertain macroeconomic environment.
Zacks Rank & Stocks to Consider
Marriott currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Consumer Discretionary sector include:
Strategic Education, Inc. (STRA - Free Report) currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
STRA has a trailing four-quarter earnings surprise of 36.2%, on average. The stock has surged 49.4% in the past year. The Zacks Consensus Estimate for STRA’s 2024 sales and earnings per share (EPS) indicates an increase of 6.4% and 33.3%, respectively, from the year-ago levels.
Royal Caribbean Cruises Ltd. (RCL - Free Report) currently sports a Zacks Rank of 1. RCL has a trailing four-quarter earnings surprise of 18.3%, on average. The stock has rallied 71% in the past year.
The Zacks Consensus Estimate for RCL’s 2024 sales and EPS calls for growth of 16.8% and 63.7%, respectively, from the year-ago levels.
Hasbro, Inc. (HAS - Free Report) presently flaunts a Zacks Rank of 1. The company has a trailing four-quarter earnings surprise of 17.5%, on average. The stock has gained 12.6% in the year-to-date period.
The Zacks Consensus Estimate for HAS’ 2025 sales and EPS suggests an improvement of 4% and 14%, respectively, from the year-ago levels.