Is Marriott International (MAR) a Good Long-term Buy?

NASDAQ: MAR | Marriott International Inc. News, Ratings, and Charts

MAR – Despite a challenging macroeconomic climate, Marriott (MAR) reported a strong financial performance in the first quarter and raised its RevPAR guidance for the rest of the year. With the company likely to benefit from high demand for travel and hospitality, investors could buy the fundamentally strong stock for the long term. Keep reading…

After facing the brunt of the restrictive lockdowns caused by the pandemic, the hotel sector stands strong, thanks to the growing demand for travel and hospitality. With the relaxation of restrictions on travel and movement, more people will be eager to explore new destinations and take vacations. This will benefit hotel chains such as Marriott International, Inc. (MAR).

In this piece, I have discussed several reasons why buying and holding the stock long-term could be wise.

After enduring a few painful years due to the pandemic, the fortunes of the travel and hospitality industry are looking up. With the relaxation of travel restrictions, there is expected to be a significant jump in demand for travel and hospitality.

Business travel was one of the worst affected due to the pandemic, as offices were shut down, and day-to-day operations and meetings were conducted online. However, with companies now opening their offices again, business travel is expected to make a strong comeback.

Moreover, there is enormous pent-up demand for travel as people could not take a vacation due to travel restrictions.

All these factors are expected to boost travel demand and directly benefit hotel chains that will accommodate these travelers. The results of the high demand for hospitality are evident from MAR’s EPS and revenue, which came above analyst estimates. Its EPS beat the consensus estimate by 13.1%, while its revenue beat the analyst estimates by 3.1%.

MAR’s President and Chief Executive Officer, Anthony Capuano, said, “We are off to a great start in 2023. First quarter worldwide, RevPAR grew 34 percent year over year, with meaningful gains in both occupancy and average daily rate. International markets were particularly robust, with RevPAR growth of 63 percent.”

“The lifting of travel restrictions throughout Asia Pacific, particularly in Greater China, significantly boosted first quarter demand in the region,” he added. During the first quarter, the company added 79 properties having 11,015 rooms to its worldwide lodging portfolio. At the end of the first quarter, MAR’s global lodging system had nearly 8,400 properties, with over 1,534,000 rooms.

For fiscal 2023, MAR’s worldwide RevPAR growth is expected to come between 10% and 13%, while the RevPAR growth in U.S. & Canada is likely to come between 6% and 9%. The International RevPAR growth is estimated to come between 22% and 25%. The company’s gross fee revenues are forecasted to come between $4.60 billion and $4.75 billion.

In addition, its adjusted EBITDA is expected to come between $4.36 billion and $4.54 billion. Its adjusted EPS for the year is estimated to be between $7.97 and $8.42.

Capuano further stated, “While the global economic picture is uncertain, demand remains strong, and we are not seeing signs of a slowdown. With the faster-than-expected recovery in international markets and continued solid booking trends globally to date in the second quarter, we are raising our RevPAR guidance for the full year.”

MAR’s stock has gained 13% in price year-to-date and 10.2% over the past year to close its last trading session at $168.25. Wall Street analysts expect the stock to hit $189.83 in the near term, indicating a potential upside of 12%.

Here are some factors that could influence MAR’s performance in the upcoming months:

Positive Developments

On May 1, 2023, MAR announced that it had completed its acquisition of the City Express brand portfolio from Hoteles City Express, S.A.B. de C.V.

MAR’s Chief Financial Officer and Executive Vice President, Development, Leeny Oberg, believes that the City Express brand acquisition is an essential first step as it enters the affordable midscale segment, allowing the company to provide a wider range of choices to its guests, as well as more growth opportunities for its owners and franchisees.

On May 24, 2023, MAR announced it had signed an industry-first agreement with Rappi, Inc., The collaboration aims to increase everyday earning opportunities and offer an elevated travel experience for both MAR Bonvoy members and Rappi users, showcasing MAR’s continued commitment to innovative and tech-forward collaborations that meet the evolving needs of its guests.

Robust Financials

For the fiscal first quarter that ended March 31, 2023, MAR’s total revenues increased 33.7% year-over-year to $5.62 billion. The company’s adjusted operating income increased 55.5% year-over-year to $941 million. Its adjusted net income rose 56.9% over the prior-year quarter to $648 million. In addition, its adjusted EPS came in at $2.09, representing a 67.2% increase over the prior-year quarter.

Solid Historical Growth

MAR’s revenue grew at a CAGR of 10.6% over the past three years. Its EBIT grew at a CAGR of 30.9% over the past three years. In addition, its EPS grew at a CAGR of 44.9% in the same time frame.

High Profitability

In terms of the trailing-12-month EBIT margin, MAR’s 56.98% is 670.6% higher than the 7.39% industry average. Its 41.46% trailing-12-month levered FCF margin is significantly higher than the 2.93% industry average. Likewise, its 40.43% trailing-12-month net income margin is 841.6% higher than the industry average of 4.29%.

Positive Analyst Estimates

The consensus EPS estimate of $8.33 for the fiscal year 2023 represents a 24.6% improvement year-over-year. The consensus revenue estimate of $23.51 billion for the same year indicates a 13.2% increase over the prior-year period. Its EPS and revenue for fiscal 2024 are expected to increase 8.5% and 4.1% year-over-year to $9.04 and $24.47 billion, respectively.

MAR’s EPS and revenue for the quarter ending June 30, 2023, are expected to increase 20.2% and 10.9% year-over-year to $2.16 and $5.92 billion, respectively.

POWR Ratings Show Promise

MAR has an overall B rating, equating to a Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated considering 118 distinct factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. MAR has a B grade for Sentiment and Quality, consistent with its favorable analyst estimates and high profitability.

Within the A-rated Travel – Hotels/Resorts industry, MAR is ranked #7 out of 21 stocks. Click here to access MAR’s ratings for Growth, Value, Momentum, and Stability.

Bottom Line

The strong demand for travel and hospitality was reflected in MAR’s strong financial performance during the first quarter despite the uncertain macroeconomic conditions. The company is expected to continue its strong momentum this year with strong growth in RevPAR (Revenue generated per room) and adjusted earnings.

Moreover, given the company’s broad portfolio of brands, strategic collaborations and acquisitions, and efficient asset‐light business model, it is confident in its long-term growth prospects.

Given its robust financials, favorable analyst estimates, solid historical growth, and high profitability, it could be wise to buy the stock for the long term.

How Does Marriott International, Inc. (MAR) Stack Up Against Its Peers?

MAR has an overall POWR Rating of B, equating to a Buy rating. One can also check out these other stocks within the Travel – Hotels/Resorts industry with a B (Buy) rating: Bluegreen Vacations Holding Corporation (BVH), Genting Berhad (GEBHY), and Genting Singapore Limited (GIGNY).

What To Do Next?

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MAR shares were trading at $170.28 per share on Thursday afternoon, up $2.03 (+1.21%). Year-to-date, MAR has gained 14.64%, versus a 8.68% rise in the benchmark S&P 500 index during the same period.


About the Author: Malaika Alphonsus


Malaika's passion for writing and interest in financial markets led her to pursue a career in investment research. With a degree in Economics and Psychology, she intends to assist investors in making informed investment decisions. More...


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