Must-Know: Management’s Guidance for Marriott in 2015



Rooms growth

Marriott International (MAR) expects its portfolio of hotels to surpass 1 million rooms by the end of 2015, including properties that are open as well as hotels that are under development. Once the under-development hotels open, they should generate more than $50 billion in real estate investment globally by Marriott’s owner partners, creating ~150,000 new hotel jobs.

Worldwide, Marriott anticipates gross room additions of ~6% net for the full year 2015. This does not include the ~10,000 rooms associated with the expected Delta transaction.

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Fee revenue

Marriott derives ~12% of its revenue from franchise fees, base management fees, and incentive management fees. In the last five years, Marriott has improved its fee revenue by 60%.

The company expects fee revenues between $1,875 million–$1,915 million for 2015, with a growth rate of 9%–11% over 2014. According to the company’s 4Q14 earnings call, Marriott’s management believes that fee revenue growth will likely be constrained by factors such as unfavorable foreign exchange rates, lower deferred fee recognition, and renovations.

As noted in the 4Q14 earnings call, the Marriott International expects its franchise fees to grow faster than its management fees, given its performance in the US.

RevPAR guidance

Marriott expects its comparable system-wide revenue per available room (or RevPAR) on a constant dollar basis to increase 5%–7% in North America, 3%–5% outside North America, and 5%–7% worldwide for 2015.

Earnings guidance

Marriott International expects its 2015 adjusted earnings before interest, taxes, depreciation, and amortization (or EBITDA) between $1,715 million and $1,765 million, a 13$–16% increase over its 2014 EBIDTA. The company’s management also expects its 2015 diluted earnings per share (or EPS) to total $3.00–$3.12, an 18%–23% increase over 2014.

Among Marriott’s peers, Starwood Hotels and Resorts Worldwide (HOT) expects its fiscal 2015 adjusted EBITDA to be about $1.175 billion–$1.2 billion, and its fiscal 2015 EPS before special items to be about $2.87–$2.97. Hilton’s (HLT) adjusted EBITDA is projected to be between $2,790 million–$2,870 million for fiscal 2015 and adjusted diluted EPS is projected to be between $0.78–$0.83 for fiscal 2015. A good way to get access to these companies, plus other hotel companies such as Wyndham Worldwide (WYN) is to invest in ETFs like the Consumer Discretionary Select Sector SPDR Fund (XLY).


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