Marriott International (MAR, Financial) has finalized an agreement to purchase the lifestyle hotel brand citizenM, marking a strategic move to expand its presence in the select-service and lifestyle lodging sectors globally. This acquisition is poised to enhance Marriott's portfolio, offering a wider array of options for its guests and Marriott Bonvoy members.
citizenM currently operates 36 hotels across 20 major cities, including New York, London, Paris, and Rome, with a total of 8,544 rooms. The brand also has three additional hotels under construction, expected to add over 600 rooms by mid-2026. These properties, once integrated into the Marriott system, will operate under new long-term franchise agreements.
The acquisition deal, valued at $355 million, includes citizenM's brand and intellectual property. Marriott anticipates that the stabilized fees from the citizenM portfolio, both open and under-construction, will generate approximately $30 million annually. Additionally, if certain growth targets are met, the seller could earn up to $110 million in additional payments, beginning four years post-closing.
This acquisition, pending customary conditions like U.S. regulatory approval, is expected to close in 2025. With this expansion, Marriott expects its net room growth to approach 5% for the full year 2025.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 23 analysts, the average target price for Marriott International Inc (MAR, Financial) is $272.69 with a high estimate of $330.00 and a low estimate of $205.00. The average target implies an upside of 15.45% from the current price of $236.20. More detailed estimate data can be found on the Marriott International Inc (MAR) Forecast page.
Based on the consensus recommendation from 28 brokerage firms, Marriott International Inc's (MAR, Financial) average brokerage recommendation is currently 2.6, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Marriott International Inc (MAR, Financial) in one year is $277.91, suggesting a upside of 17.66% from the current price of $236.2. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Marriott International Inc (MAR) Summary page.
MAR Key Business Developments
Release Date: February 11, 2025
- Net Rooms Growth: 6.8% for the full year 2024.
- Global RevPAR: Increased over 4% for the full year 2024; 5% increase in Q4 2024.
- ADR (Average Daily Rate): Rose 3% in Q4 2024.
- Occupancy: Increased over 1-percentage-point in Q4 2024.
- US and Canada RevPAR: Increased over 4% in Q4 2024.
- International RevPAR: Rose over 7% in Q4 2024.
- APAC RevPAR: Increased 12.5% in Q4 2024.
- EMEA RevPAR: Rose 8% in Q4 2024.
- Greater China RevPAR: Declined 2% in Q4 2024.
- Leisure RevPAR: 6% globally in Q4 2024.
- Business Transient RevPAR: Up 3% globally in Q4 2024.
- Group RevPAR: Rose 3% in Q4 2024.
- Gross Fee Revenues: Grew 7% to $1.3 billion in Q4 2024.
- Adjusted EBITDA: Grew 7% to $1.29 billion in Q4 2024.
- Profit Margins: Rose 110 basis points in Q4 2024.
- Cash Returns to Shareholders: Over $4.4 billion in 2024.
- 2025 Net Rooms Growth Expectation: 4% to 5%.
- 2025 Global RevPAR Growth Expectation: 2% to 4%.
- 2025 Adjusted EBITDA Expectation: Increase between 6% and 9% to $5.3 billion to $5.4 billion.
- 2025 Capital Returns Expectation: Approximately $4 billion.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Marriott International Inc (MAR, Financial) achieved net rooms growth of 6.8% for the full year 2024, with global RevPAR rising over 4%.
- The company reported strong fourth-quarter worldwide RevPAR growth of 5%, with ADR rising 3% and occupancy increasing by over 1 percentage point.
- Marriott's loyalty program, Bonvoy, saw significant growth, adding over 31 million new members in 2024, reaching nearly 228 million members.
- The company expanded its portfolio with notable luxury hotel openings and plans to launch an outdoor-focused collection, enhancing its diverse offerings.
- Marriott returned over $4.4 billion to shareholders in 2024 through dividends and buybacks, demonstrating strong cash generation and shareholder value focus.
Negative Points
- Incentive management fees decreased year-over-year, with declines in Greater China and the US and Canada offsetting strength in APAC.
- RevPAR in Greater China declined by 2%, with Hainan Island experiencing a significant RevPAR decline due to weak domestic leisure demand.
- The company faces challenges in financing new construction in the US, although it led the industry in growth room additions.
- Marriott's 2025 guidance anticipates a decline in residential branding fees by nearly 50% due to the timing of unit sales.
- The effective tax rate is expected to increase to around 26% in 2025, compared to under 25% in 2024, impacting EPS growth.
