Please ensure Javascript is enabled for purposes of website accessibility

Why Marriott Stock Jumped Today

By Evan Niu, CFA - Updated Apr 12, 2019 at 4:38PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The hotel operator now believes far fewer guests were impacted in a previously disclosed security breach.

Check out the latest Marriott earnings call transcript.

What happened

Shares of Marriott (MAR 2.33%) jumped today, closing out the session with 6% gains amid a broad market rally, after the company provided an update on a previously disclosed data breach. The hotel chain now believes a smaller number of guests had information compromised.

So what

Marriott had disclosed a security breach in late November, and initially estimated that upwards of 500 million guests who had made a reservation at a Starwood hotel could have been impacted. The news sparked several class-action lawsuits and Marriott vowed to pay for new passports for any guest who experienced fraud due to the incident. The update today says that the "upper limit" for the number of affected records compromised is approximately 383 million, far less than previously thought. Some of those records could also be duplicates, so the number of unique guests affected is expected to be fewer still.

Westin hotel at Denver International Airport

Image source: Marriott.

Marriott also said over 25 million passport numbers were accessed, including 20.3 million that were encrypted and 5.25 million that were not encrypted. There were 8.6 million encrypted payment cards accessed as well, the vast majority of which were expired -- only about 354,000 cards were still valid as of September 2018. The company does not believe the hackers were able to access any of the encryption keys necessary to decrypt encrypted data.

Now what

The update reduces the potential liability and other costs -- Marriott had offered a free year of WebWatcher, a service that monitors sites for potentially compromised personal information, to affected guests, for example -- that the company could face related to the breach, as the number of affected guests and compromised records is significantly lower than previously believed. Much of the data was also encrypted, which should also limit the risk of the information being used fraudulently.

The company also said it has completed the phase out of Starwood's reservation database -- which was the system that was compromised in the first place -- and has transitioned all Starwood reservations to its Marriott system. The phase out was part of Marriott's broader integration efforts following its acquisition of Starwood Hotels, which closed in 2016.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Marriott International, Inc. Stock Quote
Marriott International, Inc.
$139.18 (2.33%) $3.17

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/05/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.