Marriott Earnings: Decelerating Demand Growth Natural and Expected at This Point in the Cycle

We see little reason to materially change our Marriott $217 fair value estimate after the company reported a fourth-quarter revenue per available room, or revPAR, lift of 7% (in line with our estimate), adjusted EBITDA of $1.2 billion ($1.15 billion), and gave 2024 revPAR growth guidance of 3%-5% (3.5%). In our view, the 5% pullback in shares is a function of elevated expectations with the stock up 12% year to date and trading about 15% above our valuation before the earnings call, as well as concerns that travel demand is weakening given guidance for 2024 revPAR to decelerate from 2023's 15% rate. On the latter point, we see decelerating growth as expected and a natural evolution back to normalized levels after a strong recovery in 2020-23. While shares of travel companies could remain choppy the next few months as investors grapple with the industry's transition to normalized growth, we would not need much discount to our valuation to view shares of this wide-moat company as attractive.