Marriott International (NASDAQ:MAR), global hotelier with over 4,000 properties worldwide and 2013 gross revenue of over $13 billion, has rewarded investors with a 48% stock-price jump year to date. The company continues to show strong results each quarter, and the most recent quarter's year-over-year revenue and earnings growth was no exception.
But even after the incredible run-up in Marriott's stock over the past year, it still doesn't look very expensive in the industry, especially compared with competitors such as Hilton Worldwide (NYSE:HLT). There still seems to be room for Marriott's stock to rise further, and here are three reasons why.
1. Aggressive international growth
Marriott continues to expand its brands around the world. In the most recent quarter alone, the company added 162 properties, including 18,729 rooms total throughout the world. The total portfolio of Marriott-owned properties now stands at 4,087, with nearly 697,000 rooms.
While the company still maintains North America as one of its largest markets, with a nearly 50/50 split of U.S. and international locations, the company is working to expand aggressively in key international markets that will provide even more growth in the coming years. Two key markets right now are Latin America and, most recently, Africa.
Marriott's room development pipeline in Latin America has nearly doubled in the past 12 months, with 35 projects currently under way. Even more hotels in Latin America will be especially beneficial to the company's bottom line going forward, as revenues per room there are expected to reach double-digit year-over-year growth by the end of 2014.
Marriott's other major push right now is to be the leading hotelier in Africa. In April, Marriott acquired African hotel group Protea, which included 117 properties in seven African countries. Marriott management plans to expand further in the region, with an additional 40 properties in up to 13 African nations by 2020.
2. Higher revenue per room
RevPAR, or revenue per available room, an average for all rooms available at that time, is one way hotel companies gauge how profitable their average room is. RevPAR growth has been another highlight for Marriott so far this year, with Q2 global RevPAR growth of nearly 6% year over year.
The company also raised its guidance for RevPAR growth for the full year 2014 during its Q2 earnings announcement, having raised it during the first-quarter earnings release as well. With higher RevPAR, mixed with an increasing number of rooms from global expansion, Marriott is likely to see its year-over-year revenue growth continue.
3. Innovative technology in a traditional market
Marriott might be a surprising company to see near the top of Forbes' list of more innovative companies. However, Marriott got the 18th spot on the top 100 list for its innovation in design and technology.
Marriott has created what it calls an "Innovation Lab," a 10,000-square-foot facility below its Maryland headquarters that offers rapid prototyping, Internet-enabled cameras, and means for customers to give feedback to Marriott developers.
"We are designing hotels for a new generation that is used to working, staying, and playing how and where they want," said Marriott Chief Marketing Officer Stephanie Linnartz. "Our Innovation Lab is helping us to create solutions that elevate, innovate, and evolve our guest experience."
The company wants to connect with a new era of tech-savvy travelers with its mobile-app integration that allows full mobile check-in and check-out. It also includes extra conveniences like ordering more coffee or service to conference rooms during meetings without leaving the room. The service has been offered at certain locations to test and is now expanding to other Marriott-owned brands. It's currently at about 1,200 properties globally.
But the biggest tech-innovation news for Marriott now is its new virtual-reality vacation "teleportation" devices. Guests use virtual-reality headsets to visit virtual versions of sandy beaches in Hawaii or the top of a skyscrapers in London. They even get the experience of wind, ocean spray, and realistic smells. The virtual-reality vacation allows customers to "test" Marriott locations, giving the company valuable feedback to make smart developments. The teleporter is touring eight U.S. properties this fall.
Final resting call: Is Marriott a good place for your cash to sleep?
As the rise in share price shows, Marriott has had a strong past few years, and the most recent quarter reported of 25% higher earnings over the same quarter last year continues that trend. So now that the stock is up nearly 50% this year, is there much chance that the price will go higher?
Actually, Marriott's stock looks relatively inexpensive right now. At a current P/E multiple of 31, Marriott is cheaper than Hilton at a P/E of 47. Marriott's forward-looking 2015 year-end estimated P/E of just 23 looks even better, especially considering the company has continued to beat estimates so far during both quarters of 2014 and has raised 2014 guidance for the second time this year already. With big expansion plans that could make the coming years even more successful than the past, Marriott looks like a comfortable place for your cash to rest a while.
Bradley Seth McNew owns shares of Apple. The Motley Fool owns and recommends shares of Apple, Google (A and C shares), and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.