Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Why Marriott International Stock Surged 11% in November

By John Ballard - Dec 4, 2019 at 4:22PM

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 chain is scoring big with its loyalty program.

What happened

Shares of Marriott International ( MAR 4.48% ) gained 10.9% last month, according to data provided by S&P Global Market Intelligence.

Marriott has been a best-of-breed hotel operator, and the results for the third quarter, released in early November, validated investors' confidence. Despite missing earnings estimates, Marriott showed much better growth than its peers in revenue per available room (RevPAR), and management issued a positive outlook, helping send the shares higher.

Marriott hotel exterior

Image source: Marriott International.

So what

For the third quarter, RevPAR increased 1.5% worldwide, while North America RevPAR rose 1.3%. This was much better than Hilton Hotels ( HLT 4.01% ) and Hyatt Hotels ( H 4.94% ), which reported RevPAR that was up 0.4% and flat, respectively. 

Adjusted earnings per share were $1.47, slightly lower than the $1.49 that analysts expected. But it was a messy year-over-year comparison, given that year-ago earnings included $0.26 per share in asset sale gains. Investors were apparently more impressed with the company's performance on the top line.

The main factors contributing to Marriott's strong quarter were the Bonvoy loyalty program and the synergies from the 2016 Starwood acquisition. Membership for Marriott Bonvoy reached 137 million in the quarter. This is a key driver of revenue, since members tend to be repeat customers. It's proving to be an important competitive advantage because loyalty members help generate revenue that might otherwise go to a competitor. 

Marriott reported that the addition of Starwood has "enhanced guest satisfaction." It has also unlocked tremendous value. Management has sold over $2.2 billion worth of assets since the acquisition, including the recent sale of the St. Regis New York for $310 million. 

That cash is going back to shareholders. Management expects to return $3 billion by the end of the year through dividends and share repurchases.

Now what

The company expects the recent trend to continue into 2020. For the fourth quarter, it's calling for growth in RevPAR (adjusted for currency rates) in a range of 0% to 1% in North America. Internationally, it's expected to be up about 1%, bringing worldwide growth to 1% as well. 

For 2020, management is calling for RevPAR to increase between 0% to 2% worldwide. Analysts expect Marriott to report adjusted earnings of $6.52 per share next year, up from $5.90 in 2019. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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.
MAR
$156.70 (4.48%) $6.72
Hyatt Hotels Corporation Stock Quote
Hyatt Hotels Corporation
H
$84.34 (4.94%) $3.97
Hilton Worldwide Holdings Inc. Stock Quote
Hilton Worldwide Holdings Inc.
HLT
$144.31 (4.01%) $5.57

*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 service.

Stock Advisor Returns
624%
 
S&P 500 Returns
140%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/06/2021.

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

Our Most Popular Articles

Premium Investing Services

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