Marriott International, Inc. (MAR) is positioned to thrive, driven by robust leisure demand, increasing group bookings, and ambitious expansion initiatives. However, challenges in the Chinese market pose concerns.
Marriott’s Key Growth Drivers
In the last three months, Marriott’s shares jumped 26.6%, outpacing the industry’s 18.9% increase. The surge reflects a boost in global travel demand alongside rising group bookings.
In the third quarter, Marriott’s group revenue per available room (RevPAR) improved by 10% year-over-year, bolstered by growth in both room nights and average daily rates (ADR). Business travel showed an upward trend, while leisure transient RevPAR remained above pre-pandemic levels. At the end of the third quarter, the company projected group revenues for 2025 would rise by 7%, with a 3% increase in room nights and a 4% rise in ADR.
Image Source: Zacks Investment Research
Marriott is also enhancing its Bonvoy loyalty program, which has exceeded 219 million members as of the third quarter of 2024. Programs to boost member engagement, such as co-branded credit cards and the Taylor Swift Eras Tour sweepstakes, are proving effective. Additionally, a new partnership with Starbucks allows members with even one hotel stay to redeem points for coffee.
The company remains focused on expanding its global footprint to meet growing international hotel demand. As of the third quarter of 2024, Marriott’s development pipeline reached a record 585,000 rooms, reflecting a 5% sequential increase. The addition of 16,000 net rooms last quarter brought the total number of rooms globally to over 1.67 million.
A significant portion of this growth stemmed from conversion activity, making up over 30% of new room additions and more than 50% of third-quarter signings. A notable agreement with Sonder expanded Marriott’s portfolio by 9,000 existing rooms, particularly targeting long-stay options in markets such as New York and Dubai. The company is optimistic about ongoing development and conversion opportunities.
Challenges in China
Despite its strengths, Marriott faces challenges in China, where domestic demand has softened. Third-quarter 2024 performance reflected a decline in RevPAR in Greater China by about 8%, stemming from weak leisure demand, broader economic pressures, and adverse weather conditions. The company remains cautious as it anticipates continued softness in demand and pricing trends throughout the remainder of 2024.
Outlook for MAR Stock
With increasing global travel demand, solid group bookings, and aggressive expansion strategies, Marriott demonstrates strong growth potential. The enhancements to the Bonvoy program and strategic collaborations enhance its competitive position. However, the ongoing challenges in China and a higher valuation pose risks.
Currently, Marriott trades at a forward price-to-earnings (P/E) ratio of 27.43, compared to the industry average of 25.61. This premium valuation may limit significant gains in the near term. Despite these risks, Marriott’s solid fundamentals and strategic growth efforts provide a compelling case for investors to retain the stock, as indicated by its Zacks Rank of #3 (Hold).
Other Notable Stocks
Investors may also consider other promising stocks in the Zacks Consumer Discretionary sector:
Carnival Corporation & plc (CCL) holds a Zacks Rank of #1 (Strong Buy). Its average trailing four-quarter earnings surprise is 318.1%, while the stock has climbed 72.5% over the past year. The Zacks Consensus Estimate for CCL’s fiscal 2024 sales shows an expected growth of 16.6% compared to last year.
Norwegian Cruise Line Holdings Ltd. (NCLH) also bears a Zacks Rank of #1, with an average trailing four-quarter earnings surprise of 4.2%. The stock has surged by 88.7% over the past year, with Zacks Consensus Estimates for NCLH’s 2024 sales and EPS expected to grow by 10.2% and 134.3%, respectively.
Royal Caribbean Cruises Ltd. (RCL), carrying a Zacks Rank of #2 (Buy), shows an average trailing four-quarter earnings surprise of 16.2% and has seen its stock gain 125.8% in the past year. Zacks Consensus Estimates for RCL’s 2024 sales and EPS predict growth of 18.6% and 71.6%, respectively.
5 Stocks with High Growth Potential
Expert analysts at Zacks have identified five stocks primed to potentially double in value in 2024. Previous stock picks have achieved astounding returns of +143.0%, +175.9%, +498.3%, and +673.0%.
Many of these stocks are under the radar, presenting an opportunity for savvy investors. Interested? Discover these 5 potential high-fliers >>
Want more investment insights from Zacks Investment Research? Download the report on 5 Stocks Set to Double for free.
Carnival Corporation (CCL) : Free Stock Analysis Report
Marriott International, Inc. (MAR) : Free Stock Analysis Report
Royal Caribbean Cruises Ltd. (RCL) : Free Stock Analysis Report
Norwegian Cruise Line Holdings Ltd. (NCLH) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
