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Marriott International Inc Class A MAR

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Economic Moat

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Capital Allocation

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Marriott's Demand and Profitability Trend Higher in Q2, Harmonizing With Our 2021 Forecast

Dan Wasiolek Senior Equity Analyst

Analyst Note

| Dan Wasiolek |

Narrow-moat Marriott’s second-quarter global revenue per available room improved to 56% of 2019 levels (versus 62% for Hilton), up from 42% in the first quarter (45%), led by the U.S./Canada and China regions. U.S./Canada revPAR reached 61% of prepandemic levels versus 43% in the prior three months, while China revPAR surpassed 2019 marks this past spring. Strength continued into July, with U.S. revPAR rebounding to 84% of 2019 levels. We were encouraged to hear that U.S. group bookings for all future dates returned to 71% of prepandemic marks in June, up sharply from 44% in March, with rates having largely fully recovered. As a result, we plan to maintain our 2021 revPAR forecast of low 60s of 2019 levels, with a full recovery by 2023. We don’t plan a material change to our $130 fair value estimate, leaving the shares slightly overvalued.

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Company Profile

Business Description

Marriott operates over 1.4 million rooms across roughly 30 brands. Luxury represents nearly 9% of total rooms, while full service, limited service, and time-shares are 43%, 46%, and 2% of all units, respectively. Marriott, Courtyard, and Sheraton are the largest brands, while Autograph, Tribute, Moxy, Aloft, and Element are newer lifestyle brands. Managed and franchised represent 97% of total rooms. North America makes up 66% of total rooms. Managed, franchise, and incentive fees represent the vast majority of revenue and profitability for the company.

Contact
10400 Fernwood Road
Bethesda, MD, 20817
T +1 301 380-3000
Sector Consumer Cyclical
Industry Lodging
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2020
Stock Type Cyclical
Employees 121,000

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