Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



With Big Development Pipeline, Marriott Looks Good

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

Marriott (NASDAQ: MAR  ) is the third-largest hotel chain in the world, yet the company continues to offer investors growth opportunities with its stock. Furthermore, the hospitality industry is projected to be one of the fastest-growing areas of business for years to come. With occupancy rates rising, revenue in each room gaining, and the company's premium brands expanding nicely into new territory, Marriott looks to continue its respectable track record of generating, on average, more than 11% per year in capital appreciation. With second-quarter earnings fresh off the press, here's what you need to know about Marriott.

Solid gains
For a hotelier, the go-to metric is RevPAR -- revenue per available room. More than any other, RevPAR tells both the company and investors how its key assets are performing on an individual basis -- similar to how retailers use same-store sales or sales per square foot.

For Marriott, RevPAR is looking strong, with a year-over-year increase of 5.3% coupled with a 4.3% increase in room rates. As mentioned by management during the conference call, occupancy rates are hovering around their pre-recessionary, 2007 peak. The company is comforted with different avenues of bookings -- leisure travel is increasing at an impressive rate, especially among luxury travelers, while group bookings have positive outlook as well with more conferences and meetings taking place. Weekend RevPAR posted the strongest gains, with the Ritz Carlton brand leading the pack at 9% year-over-year growth.

The weakest segment by far was the government travel business, which accounted for just 5% of group business last year and is projected to hit 2% by the end of 2013.

Internationally, the Middle East has overtaken Asia as the go-to area for RevPAR growth. Marriott found 11% RevPAR growth in the region, as opposed to just 3% (using local currency) in China. Management has taken a more conservative approach to RevPAR forecasting for both areas, but noted it remains "very bullish" on the long-term outlook.

As far as headline numbers, the company came in at the midpoint of guidance at $0.57 per share.

Looking ahead
Both on a macro and a company-specific level, things look great for Marriott. Management noted that the company's development chain is red-hot. Since 2009, the chain has grown its portfolio by 12%, with 22% more in development. Internationally, 1 in 8 new hotels is a Marriott brand. Domestically, that number is 1 in 4.

Though supply growth remains sluggish in the United States, the company is ambitiously building out for the boom in leisure and business travel. Through 2013, the company is expecting to open 30,000 new rooms.

Marriott pays a decent dividend, offers investors solid chances of capital appreciation, and has a management team that has navigated both the ups and downs of domestic and foreign economies with relative ease. For exposure to the booming industry, take a look at Marriott first.

You might also want to take a look at The Motley Fool's free report "3 Stocks That Will Help You Retire Rich," which names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2579383, ~/Articles/ArticleHandler.aspx, 9/28/2016 6:23:11 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 9 hours ago Sponsored by:
DOW 18,228.30 133.47 0.74%
S&P 500 2,159.93 13.83 0.64%
NASD 5,305.71 48.22 0.92%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/27/2016 4:00 PM
MAR $67.05 Down -0.10 -0.15%
Marriott Internati… CAPS Rating: ****