In order to further ramp up its presence in Mexico, JW Marriott
Hotels & Resorts brand, one of the world class luxury brands of
Marriott International, Inc.
(
MAR
), recently struck a deal with Operadora Punta Peninsula, S.A. de
C.V., and ownership group Grupo Diestra to unveil a 'JW Marriott
Los Cabos' hotel in Los Cabos, Mexico in 2015. This property
highlights the fourth hotel of the JW Marriott brand in Mexico.
Situated within the Puerto Los Cabos master-planned development and
in close proximity with the Los Cabos International Airport, which
is Mexico's seventh busiest airport, the new hotel will offer 300
guest rooms and suites along with several other amenities and will
enjoy a prime location. Moreover, the site of the hotel is also
attractive with 14 acres overlooking the Sea of Cortez and exposure
to 820 feet of beach front, which will further drive tourists.
Marriott's expansion plan in Mexico is mainly driven by strong
economic growth and a large tourism industry. In Mexico, the brand
is present in an upscale Polanco neighborhood and in Santa Fe and
Cancun city.
The country is the number one destination for foreign tourists in
Latin America. As per World Travel & Tourism Council, the total
contribution of travel & tourism to gross domestic product
(GDP) was 12.4% of GDP in 2011, and is forecast to rise by 3.3% in
2012, and to rise by 4.5% in 2022.
Moreover, the middle income population in Mexico is growing. This
fraction of the population also has an inclination to spend on
travel and leisure. Apart from tourism, the region is successfully
emerging as a business hub. Additionally, a long-standing presence
in this country allows Marriott to have a stable relationship with
owners and developers across the country.
According to renowned consulting firm specializing in real estate,
Jones Lang LaSalle
(
JLL
), the hotel market in Mexico is showing strong growth, following a
steep decline in 2009 and lackluster performance for a part of
2010. Strong demand with limited supply provides robust growth
opportunities to hoteliers over the next several years. Mexico
City's average daily rate (ADR) is expected to accelerate further
in 2012 and beyond.
Marriott currently operates 52 JW Marriott hotels in 21 countries
and remains on track to open 77 JW Marriott properties in 28
countries by 2014. The JW Marriott brand consists of luxurious
properties and distinctive resort locations across the world. The
brand, which mainly has hotels in international locations, also has
properties in major U.S. states like California, Texas and Arizona.
However, the market is not free from competition. Many of
Marriott's peers like
Starwood Hotels & Resorts Worldwide Inc.
(
HOT
),
InterContinental Hotels Group
(
IHG
) and
Hyatt Hotels Corporation
(
H
) are present in Mexico. Furthermore, a sluggish macroeconomic
environment acts as another short-term restraint.
The company is likely to release its third quarter 2012 earnings on
October 3, 2012. The Zacks Consensus Estimate for the third quarter
is pegged at 40 cents per share. We presently have a long-term
Neutral recommendation on Marriott. Also, it carries a Zacks #4
Rank (a short-term Sell rating).
HYATT HOTELS CP (H): Free Stock Analysis Report
STARWOOD HOTELS (HOT): Free Stock Analysis
Report
INTERCONTL HTLS (IHG): Free Stock Analysis
Report
JONES LANG LASL (JLL): Free Stock Analysis
Report
MARRIOTT INTL-A (MAR): Free Stock Analysis
Report
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