What Are Analysts Recommending for Major Hotels?
Among the five major hotels, most analysts seem to favor Hilton Worldwide (HLT). However, Marriott International (MAR) has the highest following.
According to the University of Michigan Consumer Sentiment Index, consumer confidence for February 2017 surged to 95.7%, 4.0 percentage points higher than in February 2016.
According to STR Global’s US Construction Pipeline Report for January 2017, rooms under contract rose 16.1% to reach 576,000 rooms in 4,763 hotel properties.
According to data released by data company STR for 2016, occupancy rates saw a year-over-year (or YoY) rise of 0.1% to 65.5%.
ADR (average daily rate) measures the average room price paid in the market. In 2016, the ADR rose 3.1% year-over-year (or YoY) to $123.97, slower than the 4.4% rise it recorded in 2015.
In January 2017, the Baird/STR Hotel Stock Index rose 0.5% to close at 3,723. The index recorded a great performance in 2016 as well.
The strength of the US dollar measured against currencies that are widely used in international trade is measured by the Trade Weighted Dollar Index.
A booming economy allows people to spend money on discretionary items such as air travel, so hotel revenues are higher during economic growth and lower during economic contraction.
After rising 8.7% in December to $53.72, crude prices fell 2.3% in January 2017 to $52.81 then rose 2.4% to $54.01 in February 2017.
The hotel industry is largely driven by the growth of the general economy, which instills spending confidence in both businesses and households.
Marriott (MAR) currently trades at a forward EV-to-EBITDA multiple of 15.8x. It’s significantly higher than its average valuation of 13.9x since January 2008.
Of the 29 analysts tracking Marriott International (MAR), 17.0% (five analysts) have a “strong buy” recommendation for the stock.
Eventually, artificial intelligence will allow Marriott to make customized recommendations to customers based on what they have shared with Marriott.
For 2016, Marriott”s (MAR) operating income rose 14.0% to $2.2 billion. Some of the growth can be attributed to the consolidation of Starwood’s financials with Marriott’s.
For 2016, Marriott’s and Starwood’s revenues combined rose 3.0% YoY to $22.5 billion. That compares to a combined revenue of $21.9 billion in 2015.
Marriott’s RevPAR for 4Q16 rose 0.80% in constant dollars across its worldwide properties.
On February 15, 2017, Marriott International (MAR) reported its results for the fourth quarter of 2016. It beat analysts’ estimates for revenue and EPS.
According to a Reuters consensus, of the 28 analysts tracking Marriott (MAR), five of them (18.0%) have a “strong buy” for the stock.
Marriott’s cash dividend ratio was 3.0x at the end of 3Q16, which indicates its ability to sustain dividend payouts.
Marriott (MAR) currently trades at a forward EV-to-EBITDA multiple of 15.8x. Its valuation has been significantly higher than its average valuation.