Marriott (MAR) Stock Down 10% YTD: Can It Bounce Back in 2023?

The Zacks Hotels and Motels industry struggled in 2022 and Marriott International, Inc. MAR is no exception. Year to date, the stock is down 10.2%, compared with the industry’s decline of 14.4%. The decline can be primarily attributed to COVID-19 and inflationary pressure.

During the third quarter, strict COVID policies in China weighed on travel demand. RevPAR remained constrained in Greater China and Asia Pacific (excluding China). Although most properties have lifted or eased restrictions, RevPAR is still lagging behind pre-pandemic levels.

The company expects demand to remain uneven in the near term. Fresh restrictions in various states and cities across the county are likely to affect the industry.

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During the third quarter, comparable system-wide RevPAR in Asia Pacific (excluding China) fell 14.1% (in constant dollars) from 2019 levels. Occupancy declined 11.3% from 2019 levels but ADR inched up 1.4% from 2019 levels. Comparable system-wide RevPAR in Greater China fell 23% from 2019 levels.

Can the Stock Stage a Comeback in 2023?

This Zacks Rank #3 (Hold) company’s sales and earnings in fiscal 2023 are expected to witness growth of 7.5% and 14.2% year over year, respectively. The company also has an impressive long-term earnings growth rate of 38.2%.

Marriott is a leading company in the luxury and lifestyle space, with brands that own nearly 8,000 properties in 139 countries and territories. The company’s extensive portfolio and a strong brand position allow it to charge a premium room rate in the highly competitive lodging industry.

Marriott is consistently trying to expand its presence worldwide and capitalize on the demand for hotels in international markets. At the end of third-quarter 2022, Marriott's development pipeline totaled 3,024 hotels, with approximately 502,000 rooms. Nearly 204,800 rooms were under construction.

During the quarter, the company added 77 new properties (14,071 rooms) to its worldwide lodging portfolio. In 2022, Marriott anticipates net room growth in the range of 3-3.5%.

The hotel company is also trying to strengthen its presence outside the United States, especially in Asia, Latin America, the Middle East and Africa. Meanwhile, the company’s European pipeline has grown consistently in the recent past and is expected to continue going forward.

Robust demand is likely to drive the company’s performance in 2023. During third-quarter 2022, the company witnessed solid demand in the United States, Canada, the Middle East and Africa region. The company benefited from robust leisure demand, and business and cross-border travel improvements.

Also, it reported a strong RevPAR recovery in Europe. Group demand in the United States and Canada increased sharply during the quarter, leading to improved occupancies and strength in ADR.

The company is also likely to benefit from robust loyalty program. With nearly 173 million members globally, the company’s loyalty program Marriott Bonvoy plays a supporting hand in its marketing strategies. During the third quarter of 2022, the program reported solid penetration levels of 60% in the United States and Canada and 53% globally.

Key Picks

Some better-ranked stocks in the Zacks Consumer Discretionary sector are Hilton Grand Vacations Inc. HGV, RCI Hospitality Holdings, Inc. RICK and Hyatt Hotels Corporation H.

Hilton Grand Vacations currently sports a Zacks Rank #1 (Strong Buy). HGV has a trailing four-quarter earnings surprise of 3.7%, on average. The stock has declined 26.7% in the past year. You can see the complete list of today's Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for HGV’s 2023 sales and earnings per share (EPS) indicates a rise of 4.7% and 24.6%, respectively, from the year-ago period’s levels.

RCI Hospitality currently has a Zacks Rank #2 (Buy). RICK has a trailing four-quarter earnings surprise of 6.1%, on average. The stock has gained 29.3% in the past year.

The Zacks Consensus Estimate for RICK’s 2023 sales and EPS indicates growth of 12.7% and 10.6%, respectively, from the year-ago period’s reported levels.

Hyatt currently has a Zacks Rank #2. H has a trailing four-quarter earnings surprise of 652.3%, on average. The stock has declined 5.6% in the past year.

The Zacks Consensus Estimate for H’s 2023 sales and EPS indicates a surge of 7.4% and 136.6%, respectively, from the year-ago period’s reported levels.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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