Marriott Expands Presence in Jamaica, Eyes RevPAR Growth

Zacks Equity Research

Marriott International, Inc. MAR) announced that its lifestyle hotel brand, AC Hotels by Marriott, debuted AC Hotel Kingston, Jamaica. The 219-roomed hotel features the company’s luxury offerings.

By opening a hotel in Jamaica, this Marriott brand is trying to fortify its international presence. It is also the hotelier’s strategy of combatting competition from the likes of Hyatt H and Hilton HLT.

Backed by solid expansion strategies and a strong brand presence, shares of Marriott have gained 5.9% over the past year against the industry’s decline of 2.3%.


Expansion — Major Positive

Marriott is consistently trying to expand its presence worldwide and capitalize on the demand for hotels in international markets. Moving ahead, the company plans to significantly expand its global portfolio of luxury and lifestyle brands. For 2019, Marriott anticipates 5.5% net room growth, which is likely to continue building economics, scale and consumer preference for its brands.

At the end of first-quarter 2019, the company’s development pipeline totaled nearly 475,000 rooms. The hotel company is also trying to expand its footprint outside the United States, especially in Asia, Latin America, the Middle East and Africa. Meanwhile, Marriott’s European pipeline has grown consistently in the recent past and is expected to continue, going forward. In fact, the company aims to expand its lead in the luxury and full-service segments in the region, have the largest portfolio in the upscale division and also win over millennials in the affordable lifestyle group by 2020.

Our Take

We believe that the addition of AC Hotel Kingston, Jamaica would help Marriott to strengthen overall revenues. It will also help the company witness greater revenue per available room (RevPAR) for its worldwide comparable system-wide properties.

In the first quarter of 2019, RevPAR for worldwide comparable system-wide properties increased 1.1% in constant dollars (down 0.3% in actual dollars), driven by a 1.5% improvement in average daily rate (ADR).

Comparable system-wide RevPAR in North America grew 0.8% in constant dollars (up 0.6% in actual dollars), owing to 2% gain in ADR. On a constant-dollar basis, international comparable system-wide RevPAR rose 1.9% (down 2.5% in actual dollars).

Zacks Rank & Stock to Consider

Marriott currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the hotel space is Choice Hotels CHH, currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Choice Hotel’s long-term EPS is projected to grow 9.9%.

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Hilton Worldwide Holdings Inc. (HLT) : Free Stock Analysis Report
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