One sign of the broad economy is how well hotel chains are faring, and Marriott International Inc (NASDAQ:MAR) is a perfect example.
When times are good, families travel and business men and women shuttle back and forth servicing clients and looking for new ones. Therefore, hotel rooms are full, and profits are strong.
When the economy softens, travel becomes shorter — maybe a long weekend holiday for the family instead of a week — or as business gets weak, travel budgets are one of the first things to go; overnight trips become day trips or Skype or conference calls.
And in the hotel industry it’s not just the room revenue that gets hit. Food and beverage service in the restaurants as well as catering and event planning also suffer. Since the bottom fell out of the global economy, hotel stocks have been hibernating until 2013.
The big chains used this lull to expand their reaches, buy up brands and properties and build a broader base in anticipation of the economic turnaround. Now, those moves are starting to pay off for Marriott
Since 2013, MAR stock is up over 100%, 57% of that in 2014. Marriott stock is up 10% since earnings were announced last week (Feb. 18).
Not only that, but Marriott’s Q4 numbers surprised to the upside. Revenue for the quarter was up 10.6% year over year. Earnings per share were up almost 40% year over year. The core rate of profitability — revPAR or revenue per available room — in North America was up 6.9% in Q$ and 7% for the year, which outpaced revPAR globally but not by much.
After seeing these numbers, it’s less of a surprise why MAR has raised its guidance for 2015.
MAR comprises 18 brands totaling more than 3,900 properties around the world that hit every demographic price point, from rental houses and apartments for executives, to five-star luxury travel, to business travelers, to family vacation resorts, to budget travelers.
And to top it all off — MAR announced earlier this month the opening of its largest North American property, the JW Marriott Austin. With more than 1,000 guest rooms, the 34-story hotel is the largest in the city of Austin, Texas and the second-largest of 70 JW Marriott luxury properties around the world.
Right now, MAR is firing on all cylinders and is outpacing its peers. If you’re looking for a solid long-term growth stock, look no further than Marriott.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
