For 2016, Marriott’s and Starwood’s revenues combined rose 3.0% YoY (year-over-year) to $22.5 billion. That compares to a combined revenue of $21.9 billion in 2015. The rise was due to rises in RevPar, room growth, and property-level margins.
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Marriott’s fee revenue rose 4.0% YoY to $2.9 billion. Owned, leased, and other revenue fell 5.0% to $2.1 billion. Cost reimbursements rose 3.0% to $17.5 billion.
Marriott hasn’t seen a significant impact of the recent short-lived travel ban on its business. In the earnings call, CEO (chief executive officer) Arne Sorensen said, “There is a broad sense, particularly across the Middle East and the world, that the executive order is a really big deal, the symbolism is wrong and that it is effectively a communication from the U.S. to the rest of the world that you should anticipate you shouldn’t come to this part of the world.”
Although the impact is not measurable today, travelers could be looking for alternative travel destinations.
For 1Q17, Marriott expects total fee revenue to rise 10.0%–13.5% to $740.0 million–$750.0 million. However, owned, leased, and other revenues are expected to fall to $60.0 million–$70.0 million from $688.0 million in 2015.
Marriott seems to be positive about prospects for 2017. It expects total fee revenue to rise 10.0%–13.5% to $3.2 billion–$3.3 billion. Owned, leased, and other revenue is expected to fall to $345.0 million–$360.0 million compared to $2.1 billion in 2015.
You can get exposure to the consumer discretionary sector by investing in the iShares Russell 1000 Growth (IWF), which invests approximately 20.7% in the sector and 0.36% in the hotel industry. Its holdings include 0.08% in Wyndham Worldwide (WYN), 0.19% in Marriott International (MAR), 0.08% in Hilton Worldwide Holdings (HLT), and 0.009% in Hyatt Hotels (H). Next, we’ll look at an important topic for investors—Marriott’s profitability.