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Why Marriott’s Pipeline is Increasing

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Mar. 23 2015, Published 4:05 p.m. ET

Developments in 4Q14

Marriott International’s (MAR) growth on a regional basis is of prime importance. Let’s take a look at Marriott’s regional development:

  • Marriott is entering into new secondary and tertiary markets in North America.
  • In Asia, the company expects to more than double its distribution as hotel projects in the current pipeline open.
  • Marriott also expects its robust growth to continue in the Middle East and Africa, as discussed earlier in this series.
  • In Europe, Marriott’s aggressive growth plans will leverage a broad portfolio of brands.

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Emerging markets

Rapid demand growth in emerging markets is an opportunity for hotel companies such as Marriott International, Hilton Worldwide (HLT), Starwood Hotels & Resorts Worldwide (HOT), Wyndham Worldwide (WYN), and Hyatt Hotels (H) to expand their presence in the international markets. Investors can gain exposure to emerging markets through ETFs such as the iShares Emerging Markets ETF (EEM).

According to its management, Marriott International added 70 new properties (14,605 rooms) to its worldwide lodging portfolio in 4Q14. Plus, 22 properties with 1,851 rooms exited the system during the fourth quarter. As of December 31, 2014, Marriott’s lodging system encompassed 4,175 properties and timeshare resorts with nearly 715,000 rooms, as shown in the above chart.

Pipeline

Marriott International’s worldwide development pipeline increased to nearly 1,450 properties, with ~240,000 rooms as of December 31, 2014, including 180 properties with ~30,000 rooms approved for development, but not yet subject to signed contracts.

The company’s pipeline at the end of 2014 does not include the ~10,000 rooms associated with the expected Delta transaction announced on January 27, 2015. We’ll explore the Delta acquisition in more detail in the next article.

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