Maryland-based Marriott International Inc.’s (MAR, Financial) Q4 result announcement expected in the next two weeks is one of the anticipated ones amongst hospitality stocks. The company is slated to announce the Q4 earnings on Feb. 18 followed by a conference for investor community the next day to discuss the Q4 earnings.
Brand Reckoner
Marriott is in the business of hospitality through self-operated and franchise modules. The hospitality giant is currently present in approximately 80 countries through more than 4,000 properties. Some of the brands held by Marriott International are Marriott Hotels & Resorts, Marriott Conference Centres, JW Marriott, Renaissance Hotels, Ritz-Carlton, Bulgari Hotels & Resorts, Courtyard, Fairfield Inn & Suites, Spring Hill Suites, Residence Inn, Marriott Executive Apartments and Autograph Collection. Marriott’s guest loyalty program ‘Marriott Rewards’ has more than 47 million members. Marriott indulges in aggressive buy back.
Plans for 2015
Marriott plans to open or initiate inventory production on global scale to reach a target of 1 million rooms by end of 2015. Once the company achieves the mission of opening up of the targeted room inventory, Marriott will have generated $50 billion in global real estate.
As a part of global expansion roadmap, in the last week of Jan 2015 Marriott announced acquisition of Delta Hotels and Resorts brand and management and franchise business form Delta Hotels LP for $138 Million.
Stock Talk
Marriott reported $13 billion revenues for fiscal year 2013. It reported a 20% rise in its Q3 profits ending Sept. 30, 2014. The net income for the quarter rose to $192 Million and total revenue increased by 9.5% to $3.46 Billion. Marriott attributed higher occupancy and increased room rates in the North American region as the key growth driver for Q3. In November 2014, Marriott declared cash dividend of 20 cents per share of common stocks. Marriott has maintained a good pace in the recent past and analysts forecast an overall 18% earnings growth. The company is all set to carry the momentum at a higher pace in some international markets, for example Marriott is poised to witness 75% growth in Middle East & African continent and 50% in Caribbean and Latin America.
Competitors
Some of the key competitors of Marriott in the domestic and international markets are Las Vegas Sands Corp. (LVS, Financial), Hyatt Hotels Corporation (H, Financial) and Hilton Worldwide Holdings Inc. (HLT, Financial). All these groups are key players in the domestic and international hospitality businesses and have sizable numbers and equally impressive profile.
Industry overview and global scenario for 2015
Low oil prices will fuel increased domestic spending on lifestyle and travel. The US business travel is expected to hit record levels this year and reach $310.0 Billion, which is a rise of 6.2%. The individual travel is expected to rise by 1.7% to touch 490.4 Million trips in 2015. This directly translates into increased hotel occupancy thereby leading to more revenues, more profits, expansion and additional investment for hotels. According to a recent analysis by Hotel News Now, the overall hotel room rates in US are expected to increase by 30% by 2020 and the revenue per room is expected to cross $96.
Conclusion
The stock has consistently risen over the past year. Trading at a $50 rate around same time last year, Marriott stock has risen by more than 50% in the following months. The stock is currently trading in the $78 to $80 bracket. The good work and favourable market conditions indicate that the Q4 results will be surpass the Q3 results taking the stock to a level beyond $80 in anticipation or after the result announcement. Hence it is a ‘Must buy’ recommendation. Investors may also consider some of the competitors of Marriott group as a good investment opportunity.
