Should You Make a Reservation in Marriott International Stock?

Key Points

• It’s overall operations have returned and surpassed 2019 pre-pandemic levels
  Revenues per average room (RevPAR) rose 70.1% worldwide rising beyond 2019 pre-pandemic levels
• Despite recession concerns, business shows no signs of slowing down it raised EPS estimates for Q3 and full-year 2022
• The Company has repurchased 1.9 million shares for $300 million at an average cost of $152.99 in 2022

Global hotel operator Marriott International NYSE: MAR business has been a rollercoaster ride since the pandemic, but business has recovered better than 2019 pre-pandemic levels. The Company owns and operates 30 brands including luxury names like The Ritz-Carlton, St. Regis, and Bvlgari hotel and resorts to W hotels, Westin, and Sheraton hotels to lower priced Fairfield Inn and Courtyard brands. Marriott competes with Hilton Worldwide NYSE: HLT, Wyndham Hotels and Resorts NYSE: WH, and Choice Hotels International NYSE: CHH for business travelers, which are the most profitable segment. The recovery of air travel and lifting of  COVID restrictions in most destinations, with the exception of China has been a key tailwind for the hotel business. Business travelers made up 60% with leisure travelers comprising of 40% of the revenues. Further recovery of its business traveler segment can provide a tailwind since there is more runway as corporate travel is still below 2019 levels. Its loyalty program Bonvoy has transcended 169 million members. A global recession remains as the top threat to its operations just as it has recovered from the damage caused by the pandemic. However, growth hasn’t slowed down as evidenced by the 69.5% top-line growth in its Q2 2022 earnings report. The Company added 9,200 rooms and converted 4,400 rooms internationally in the second quarter to bring the total to more than 8,100 properties and over 1.5 million total rooms.

Growing in All Directions

On Aug. 2, 2022, Marriott released its fiscal second-quarter 2022 results for the quarter ending June 2022. The Company reported a profit of $1.80 per share beating consensus analyst estimates for $1.57 per share by $0.23. Revenues rose 69.5% year-over-year (YoY) to $5.34 billion beating consensus analyst estimates for $4.96 billion. Comparable system-wide constant dollar revenue per average room (RevPAR) rose 70.6% worldwide, 66.1% in North America, and 87.8% internationally. The Company added 17,000 rooms globally comprised of 9,200 rooms in international markets and nearly 4,400 conversion rooms. Marriott’s worldwide development pipeline totaled nearly 2,950 properties with over 495,000 rooms including 27,400 rooms approved but not signed yet. Nearly 203,000 rooms were under contract by the end of the second quarter. Co-branded credit card fees rose 40% driven by both new card members and record cardholder spending levels. Franchise fees rose to $938 million compared to $587 million in the year ago period. The Company ended the quarter with $10.1 billion in total debt and $1.4 billion in total cash and cash equivalents. Marriott bought back 1.9 million shares in the quarter at an average price of $157.38 per share. Total buybacks in 2022 were 2.9 million shares for $448 million with an average price of $152.99.

CEO Comments

Marriott CEO Anthony Capuano commented, "Marriott's second quarter results highlight consumers' love for travel.  We reported outstanding results, as momentum in global lodging recovery continued.  With demand increasing across all customer segments throughout the quarter, and nearly all countries easing travel restrictions, worldwide RevPAR¹ surpassed 2019 levels in June.  Second quarter average daily rate was robust, at 7 percent above 2019 levels, and worldwide occupancy reached 68 percent.” He added that the Company has signed 23,000 rooms worldwide with nearly 30% being conversion rooms from competitor brands. He hopes to return $2.2 billion back to shareholders in 2022 through stock buybacks and dividends.

Future Still Looks Bright

Marriott issued upside guidance Q3 2022 EPS of $1.59 to $1.69 versus $1.59 consensus analyst estimates. The Company raised full-year 2022 EPS guidance of $6.33 to $6.59 versus $5.99 consensus analyst estimates. The question is when will normalization kick in for Marriott as its still in the rebound and reopening stage, or is this the new normal?

What the Charts Say

Using the rifle charts on weekly and daily charts can provide a near-term perspective of the playing field for MAR stock. The weekly rifle chart breakdown is led by the falling weekly 5-period moving average (MA) overlapping the $143.55 Fibonacci (fib) level crossing down through the flat weekly 15-period MA  at $150.98 and testing the weekly market structure low (MSL) buy trigger at $144.44. The weekly 50-period MA sits near the $159.55 fib and 200 period MA sits at $133.54. The weekly stochastic has fallen to the 30-band. The weekly lower Bollinger Bands (BBs) sit at $123.74. The daily rifle chart is the opposite as its attempting a breakout with a flat 5-period MA trying to coil up at $141.58 to cross up through the 15-period MA at $141.89. This is powered by the rising daily stochastic breaking through the 40-band. The daily 50-period MA resistance sits at $152.97 and daily 200-period MA resistance overlaps with the $160.30 fib. Attractive pullback levels sit at the $142.96 fib, $140.53 fib, $137.29 fib, $131.46 fib, $127.62 fib, and the $125.17 fib level.