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Marriott's 1Q17 Earnings Preview: What Can Investors Expect?

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Part 2
Marriott's 1Q17 Earnings Preview: What Can Investors Expect? PART 2 OF 8

What Marriott’s Key Metrics Suggest ahead of Its 1Q17 Results

RevPAR grows

Marriott’s (MAR) RevPAR (revenue per available room) for 4Q16 rose 0.8% in constant dollars across its worldwide properties. Its North America RevPAR increased 1.1%, and the RevPAR for its International properties segment increased 0.2% in 4Q16.

For fiscal 2016, Marriott’s systemwide RevPAR grew 1.8% YoY, its North American RevPAR grew 2.3%, and its International Properties RevPAR grew 0.7%.

What Marriott&#8217;s Key Metrics Suggest ahead of Its 1Q17 Results

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Strong pipeline

In 2016, Marriott and Starwood together added 68,000 rooms, taking the total to 6,080 properties and timeshare resorts with ~1.2 million rooms.

At the end of 2016, the company had another 420,000 rooms in its development pipeline, including 1.3 million rooms under Starwood. Of these, 34,000 rooms are approved for development, but they have not been signed under contract.

1Q17 outlook

Marriott (MAR) expects 6% room growth for fiscal 2017. For 1Q17, its RevPAR is expected to increase 1%–3% in North America and 1%–2% in International Properties, leading to 1%–3% growth across its worldwide properties.

Long-term outlook

During its March 21, 2017, investor day, Marriott’s management revealed its growth plan to add 285,000–300,000 rooms worldwide by 2019. It expects these additional rooms to add $675 million in annual fees. Accordingly, it assumes that its RevPAR would grow at a compound annual growth rate (or CAGR) of 1%–3%.

You can gain exposure to the consumer discretionary sector by investing in the iShares Russell 1000 Growth ETF (IWF), which invests ~20.7% of its portfolio 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 0.01% in Hyatt Hotels (H).

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