#2 - Marriott (NASDAQ:MAR)
Year-to-Date Loss: 50%
For many of the reasons I was high on Marriott (NASDAQ:MAR) stock at the beginning of the year have gone by the wayside. Your views on Marriott stock really depend on how optimistic you are about the company, and the industry, coming out of this coronavirus-induced slowdown.
According to J.P. Morgan Chase, U.S. hotel revenues per available room have declined more than 30% relative to their pre-virus status as of March 14. That decline is almost sure to accelerate before it reverses.
Marriott has a silver lining in that it does not own a high percentage of the properties that bear its brand name. It’s an asset-light approach that gives some investors reason to believe that Marriot will be able to withstand this turbulent period.
And I do think Marriott has taken the right, if not unpopular steps, to cut expenses. First of all, Marriott recently announced major layoffs. Many of these jobs simply won’t be coming back. Second, nobody knows exactly when the company will be ready to bring those jobs back.
And, although moves like this tend to be more symbolic, Marriott CEO Arne Sorenson will not take a salary for the remainder of the year. Sorenson also announced that top executive will take a 50% pay cut for the rest of the year.
And like the airline industry, it’s likely that the hotel industry (and by extension Marriott) will receive stimulus funds. All of that points to the idea that Marriott does not appear to be in danger of bankruptcy.
But the question is will demand come back? Marriott relies heavily on business travel. I’m not sure if that is coming back any time soon. As more employees experience the forced reality of working from home, it’s likely that the world will become even smaller than it already is. It’s likely that we could be heading into a period where companies begin to isolate within their borders like never before. And Marriott will have to cut its dividend. This makes it less appealing from a value perspective.
About Marriott International
Marriott International, Inc engages in operating, franchising, and licensing hotel, residential, timeshare, and other lodging properties worldwide. It operates its properties under the JW Marriott, The Ritz-Carlton, The Luxury Collection, W Hotels, St. Regis, EDITION, Bvlgari, Marriott Hotels, Sheraton, Westin, Autograph Collection, Renaissance Hotels, Le Méridien, Delta Hotels by Marriott, Tribute Portfolio, Gaylord Hotels, Design Hotels, Marriott Executive Apartments, Apartments by Marriott Bonvoy, Courtyard by Marriott, Fairfield by Marriott, Residence Inn by Marriott, SpringHill Suites by Marriott, Four Points by Sheraton, TownePlace Suites by Marriott, Aloft Hotels, AC Hotels by Marriott, Moxy Hotels, Element Hotels, Protea Hotels by Marriott, City Express by Marriott, and St.
Read More - Current Price
- $284.29
- Consensus Rating
- Hold
- Ratings Breakdown
- 6 Buy Ratings, 13 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $259.00 (8.9% Downside)
