Do Marriott’s Key Metrics Suggest a Buoyant 2017?
A hotel’s operational efficiency is measured by its RevPAR (revenue per available room), which is calculated by dividing a hotel’s total guest room revenue by its room count. The two main factors driving a hotel’s RevPAR are occupancy rates and ADR (average daily rates).
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Marriott’s RevPAR for 4Q16 rose 0.80% in constant dollars across its worldwide properties. North American RevPAR rose 1.1%, and international properties RevPAR rose 0.20%.
For 2016, worldwide RevPar rose 1.8% on a constant dollar basis (a 1.0% rise in actual dollars). North American RevPar rose 2.3% (a 2.2% rise in actual dollars), and international RevPar rose 0.70% (a 2.1% fall in actual dollars).
For 2016, Marriott and Starwood together added 68,000 rooms, including 11,000 rooms from competitors and 31,000 international rooms. That took the total to 1.2 million rooms across 6,080 properties and timeshare resorts.
At the end of 2016, there were 420,000 rooms across 2,500 properties in the development pipeline. That included 130,000 rooms under Starwood. Of those, 12,000 rooms are approved for development but not yet under signed contracts.
For the first quarter of 2017, RevPAR is expected to rise 1.0%–3.0% for properties in North America and worldwide. Outside North America, RevPar is expected to rise 1.0%–2.0%.
For 2017, North American RevPar is expected to be flat at 2.0%. Outside of North America, RevPar growth will be in the range of 1.0%–3.0%. That will lead to a rise in RevPar of 0.50%–2.5% for all Marriott properties. Marriott also expects room growth of 6.0% for 2017. Together, that will lead to good revenue growth for the company, which we’ll look at more closely in the next part of this series.
You can get exposure to the hotel sector by investing in the First Trust Consumer Discretionary AlphaDEX ETF (FXD), which invests approximately 14.8% in the hotel, restaurants, and leisure sector. It holds 0.58% in Wyndham Worldwide (WYN), 0.87% in Hyatt Hotels (H), 0.90% in Hilton Worldwide Holdings (HLT), and 1.2% in Marriott International (MAR).