Marriott stock forecast: High demand from leisure travellers

The hotel giant saw its stock price reach an all-time high after strong Q3 earnings

Marriott is starting to see hotel demand return to pre-pandemic levels. Revenue has increased by 75% year-on-year to $3.95bn this quarter, beating analysts predictions. This has driven net income to more than double, from $100m to $220m.

The hotel company is seeing strong demand from leisure travellers, whilst businesses customers are beginning to return. Marriott has reacted to this by opening 114 properties with 17,456 rooms this quarter.

Marriott was founded in 1927 and is now the largest hotel company with properties across the globe. Known for luxury, Marriot owns hotel chains including The Ritz-Carlton, W Hotels and JW Marriott. The company also owns a timeshare brand called Marriott Vacation Club.

Strong Q3 results

Marriott’s third quarter results revealed business getting back to usual. Marriott’s revenue per available room (RevPAR), a key success metric in the hotel industry, increased by a staggering 118% worldwide year-on-year. However, the figure is still down from pre-pandemic rates, with RevPAR 25.8% lower compared to Q3 2019.

It is a similar trend for revenue as well. It increased by 75% year-on-year to $3.95bn, but was still much lower than the $5.28bn reported in Q3 2019. The results did beat analysts’ predictions, however. MarketWatch reported that analysts expected revenue to reach $3.71bn, $240m lower than Marriott revealed.

The pandemic’s impact

The hotel industry was hit hard by the pandemic and Marriot was no exception. The hotel company recorded its first full-year loss in more than a decade. But its latest Q3 results reveal that Marriott is profiting as more people are looking to travel.

The results highlighted that the relaxation of European borders boosted the number of bookings in the continent. Marriott saw the average daily rate for its European hotels down by just 5% compared to the same quarter in 2019. The earnings revealed that this was due to tourism picking up, but the demand from business travellers was still low.

Anthony Capuano, chief executive, said: “Globally, leisure travel generally remained very strong throughout the quarter, while the Delta variant had the most impact on business transient demand.  With the worst of the Delta variant wave now hopefully behind us, business transient demand picked up again in October, a trend we expect to continue.”

Capuano said that a key way the hotel company survived the pandemic was by reducing costs. But these operating costs have already shot back up, from $2bn in Q3 2020 to $3.4bn this quarter. The earnings said that this is because of the pandemic measures that are no longer in place, which include furlough, reduced work weeks, and reduced executive compensation.

MAR price history

Date Close Change Change(%) Open High Low
Jan 21, 2022 156.79 0.41 0.26% 156.38 159.96 154.18
Jan 20, 2022 156.53 1.49 0.96% 155.04 161.48 155.04
Jan 19, 2022 154.00 -5.59 -3.50% 159.59 159.59 153.95
Jan 18, 2022 159.39 0.01 0.01% 159.38 160.94 157.47
Jan 14, 2022 162.54 -1.29 -0.79% 163.83 163.83 159.43
Jan 13, 2022 164.28 -0.50 -0.30% 164.78 167.08 163.87
Jan 12, 2022 164.60 -1.25 -0.75% 165.85 166.58 162.40
Jan 11, 2022 165.02 5.16 3.23% 159.86 165.47 159.86
Jan 10, 2022 161.84 -5.25 -3.14% 167.09 167.33 159.93
Jan 7, 2022 166.43 1.04 0.63% 165.39 168.53 164.51
Jan 6, 2022 165.01 -0.12 -0.07% 165.13 166.07 164.07
Jan 5, 2022 164.20 -3.89 -2.31% 168.09 168.65 164.16
Jan 4, 2022 167.82 1.52 0.91% 166.30 170.96 165.62
Jan 3, 2022 163.75 -0.66 -0.40% 164.41 166.05 161.08
Dec 31, 2021 165.08 0.57 0.35% 164.51 165.94 163.91
Dec 30, 2021 164.67 -1.67 -1.00% 166.34 167.69 164.54
Dec 29, 2021 166.37 0.55 0.33% 165.82 167.32 165.12
Dec 28, 2021 166.54 1.11 0.67% 165.43 167.43 164.84
Dec 27, 2021 166.53 2.60 1.59% 163.93 166.91 163.10
Dec 23, 2021 165.00 2.63 1.62% 162.37 165.62 162.34

Growing portfolio

Marriott has not let the pandemic shatter its dreams of expanding the property portfolio. During this quarter, the company has added 114 properties with a total of 17,456 rooms to its worldwide portfolio. Marriott is expecting that net room growth for 2021 will be 3.5%.

The hotel company is focusing on building more high-end rooms. Capuano said: “With more than 40 percent of our pipeline rooms in the luxury and upper upscale tiers, we believe we also have the most valuable pipeline in the industry.”

With more rooms in the pipeline, Marriott is betting that global hotel demand will return. However, it also recognises that the Covid will continue to impact the company’s earnings and as a result has not given any estimates for future earnings.

Marriott’s competitors

Marriott is not the only hotel company experiencing year-on-year growth. The Hilton saw RevPAR rise by 98.7% this quarter compared to Q3 2020. Although this is lower than Marriott’s 118%, Hilton’s RevPar was only 18.8% lower compared to Q3 2019.

Hilton’s earnings highlighted a similar trend that leisure travel remained strong and business travel has started to pick up this quarter. Like Marriott, the competitor had also continued expanding its property portfolio, with the opening of 96 new hotels this quarter with a total of 14,700 rooms.

The market’s response

The Marriott stock price (MAR) plummeted at the beginning of the pandemic, from $147.61 on 19 February 2020 to $63.79 on 18 March. Since the beginning of this year, it began to rise and reach pre-pandemic levels.

In September, the MAR share price started behaving particularly bullish. It increased from $134.63 on 1 September to $152.35 on 24 September. The market responded very positively to the Q3 results and the share price reached an all-time high of $168.19 on 8 November.

Marriott stock prediction

Analysts have mixed predictions when it comes to the future of the Marriott stock price. The Financial Times surveyed seven analysts for their Marriott stock forecast, which revealed a median target of $194 over the next 12 months. Four of the analysts said the stock would overperform and two recommended buying it.

CNN’s MAR stock forecast showed the opposite. Nineteen analysts offered a 12 month Marriott stock forecast and gave a median target of $160. Fifteen of the analysts recommended holding the stock.

WalletInvestor’s Marriot stock forecast 2021 predicts the share price to reach above $170. However, it describes the MAR stock forecast as a “not so good long term investment”. For the next 12 months, its Marriott stock forecast is for it to stay around the $170 mark. WalletInvestor’s Marriott stock forecast 2025 is between $180 and $185.

FAQs

It might be. Despite losing more than half its value at the beginning of the pandemic, Marriott’s stocks have been on a bullish trend. After releasing its Q3 results, the stock price jumped to an all time high of $168.19 on 8 November. However, prices can go down as well as up, so you should always do your own research before investing.

It could do. Analysts from the Financial Times gave a median price target of $194 over the next 12 months. However, the ninteneen analysts surveyed by CNN offered a median target of $160. WalletInvestor said the price will not increase more than $185 over the next four years. Remember, predictions can be wrong so you should never invest more than you can afford to lose.

It depends. Whilst four analysts surveyed by the Financial Times said the stock would overperform, fifteen of CNN’s analysts recommended holding the stock. Analysts are not always right, so you should always do your own research before investing.

Further reading

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