Wyndham Worldwide Corp

Hilton Worldwide Holdings is one of the largest hospitality companies in the world. It was founded in 1919 by Conrad Hilton. The company started when he bought his first hotel in Texas.

Hilton’s consensus 12-month target price is $64.6, which indicates a 12.6% return potential over its April 21 closing price of $58.

Hilton is poised to grow in its industry and could generate substantial shareholder value for its investors in the long term.

Wyndham Worldwide’s Wyndham Vacation Ownership segment is its largest business segment, accounting for 49.9% of its total revenues in 2014.

Approximately 63% of Wyndham’s revenues come from fees for providing services referred to as its “fee-for-service” businesses.

Marriott increased its fee income at a ten-year compound annual growth rate (or CAGR) of 7.6% to $1,543 million in 2013—from $742 million in 2003.

Of the 29 analysts tracking Marriott International (MAR), 17.0% (five analysts) have a “strong buy” recommendation for the stock.

In the second quarter of 2015, Marriott International’s net income grew by a strong 25% YoY to $240 million. Demand increased in both the US and Europe.

Since 2010, Wyndham’s stock has outperformed all its peers, growing by over 270%. In that time, Marriot grew by ~176%, Starwood by 102%, and Hyatt by 67%.

For 1Q17, analysts are estimating Hilton’s (HLT) revenue to fall 25% to $2.1 billion.

Marriott repurchased 7.7 million shares of common stock valued at $544 million in 4Q14 and 24 million shares for $1.5 billion in 2014.

Hyatt is focusing on increasing its presence to under-penetrated markets. The company believes that its presence in emerging markets such as India and China is essential for its growth.

Marriott has been expanding its presence in the international market. It added new brands in Europe, Asia Pacific, and the Middle East and African regions.

In the Starwood-Marriott merger, the companies have placed a limit on divestitures of $700 million, based on 12x annual EBITDA for any hotels required to be divested.

Hilton’s valuation hasn’t risen over the last year. Most of the increase in the share price was due to growth in EBITDA.

Marriott International’s headquarters are in Bethesda, Maryland. The company was founded in 1927 by J. Willard and Alice S. Marriott.

Hilton’s goal is to serve any customer, anywhere in the world, for any lodging need that they have. The company has a portfolio of 11 world-class brands. Hilton’s portfolio allows it to accomplish this goal.

Hotel companies, like Hilton, expand their operations based on the demand for accommodations by location. They also expand based on customer preference for the level of service offerings.

Hilton expanded its operations in segments that require less capital investment. These include the Management and Franchise segment and the Timeshare segment.

Marriott completed the spinoff of its timeshare segment to Marriott Vacations Worldwide Corporation (or MVW) in 2011. MVW is now operating as an independent company.

In 3Q15, Wyndham (WYN) saw its adjusted EBITDA margin decrease to 24.2% from 27.1% in 3Q14.

Hilton used net cash to finance activities during the year ending December 31, 2014. The net cash was $1,070 million. It was $1,863 million the year before.

The US dollar’s strength compared to currencies that are widely used in international trade is measured by the Trade Weighted Dollar Index.

InterContinental Hotels Group, which is incorporated in Great Britain, franchises, leases, manages, or owns over 4,700 hotels and 688,000 guest rooms in nearly 100 countries and territories, with more than 1,100 hotels in its development pipeline.

On January 19, 2018, Jefferies upgraded Philip Morris International (PM) to a “buy” and raised the target price to $124.

On January 18, Viacom B gained 6.2% and closed the day at $33.95—the highest daily close since August 3, 2017.

Analyst views Of the 22 analysts tracking Hyatt (H), two analysts (9.1%) have a “strong buy” rating on the stock, and three analysts (13.6%) have a “buy” rating. These analysts were surveyed by Reuters. Only one analyst has changed the rating from “strong buy” to “buy” after the company’s 2Q17 earnings. Sixteen analysts (72.7%) maintained […]

Current valuation Hyatt (H) is trading at a forward EV-to-EBITDA[1. enterprise value to earnings before interest, tax, depreciation, and amortization] multiple of 11.2x. The current valuation is lower than its average valuation of 12.2x since January 2010. Peer comparison Hyatt is trading at one of the lowest multiples among its peers. Wyndham Worldwide (WYN) is trading […]

Hyatt’s debt Hyatt’s (H) total debt increased from $1.6 billion at the end of 2016 to $1.7 billion at the end of 1Q17. Its debt remained constant at $1.7 billion at the end of 2Q17.  Hyatt’s debt has fluctuated from $1.3 billion to $1.7 billion for the past five years, thanks to its routine acquisitions […]

Second breach in two years On October 12, 2017, Hyatt revealed that its payment system had been breached. There was unauthorized access detected in 41 hotels in 11 countries, exposing customer credit card information at these locations. About 50% of these hotels were located in China. *Other affected countries and territories include Brazil, Colombia, Guam, Indonesia, […]

Hyatt’s RevPAR (revenue per available room) for 2Q17 rose 2.4% in constant dollars and 2.9% year-over-year in constant currency terms across its systemwide properties.

Hyatt (H), which is expected to report its 3Q17 results on November 2, is the only major hotel stock to fall in October. Hyatt stock has fallen 0.74% month-to-date.

Marriott’s RevPAR for 2Q17 rose 2.2% YoY in constant dollars across its worldwide properties. Its North America RevPAR rose 0.9% YoY in constant dollars.

Of the 28 analysts tracking Marriott, five (17.9%) have a “strong buy” recommendation, while nine (32.1%) have a “buy,” and 13 (46.4%) have a “hold.”

Marriott is now trading at a forward EV-to-EBITDA multiple of 15.5x, compared with its average historical valuation of 13.9x since January 2008.

In 2Q17, Marriott International’s (MAR) operating income grew 59% YoY (year-over-year) to $620 million.

In 2Q17, Marriott’s revenues grew 49% YoY to $5.8 billion, compared with $3.9 billion in 2Q16, due to higher fee revenues and RevPAR and room growth.

According to a Reuters consensus of 28 analysts tracking Marriott (MAR), five analysts have a “strong buy” recommendation on the stock, and nine analysts have a “buy” recommendation on the stock.

Marriott (MAR) currently trades at a forward EV-to-EBITDA multiple of 15.6x.

Total debt on Marriott’s balance sheet increased from $3.8 billion at the end of 2014 to $4.1 billion at the end of 2015 and $8.2 billion at the end of 4Q16.

For fiscal 2017, Marriott’s EBITDA is expected to rise 44.3% to ~$3.1 billion.

For 2Q17, Marriott’s total fee revenues are expected to increase to $820 million–$835 million.

During the second quarter, Marriott (MAR) added 17,000 rooms, including 6,400 rooms internationally and 3,300 rooms from competitors.

Analyst views According to Reuters, of the 22 analysts tracking Hyatt (H), three analysts (13.6%) have a “strong buy” rating on the stock, two analysts (9.1%) have a “buy” rating, 16 analysts (72.7%) have a “hold” rating, and one analyst (4.5%) has a “sell” rating. There are no “strong sell” ratings on the stock. Analyst […]

Current valuation Hyatt (H) currently trades at a forward EV-to-EBITDA multiple of 15.1x. Hyatt’s valuation is significantly higher than its average valuation since January 2010 of 13.0x. Peer comparison Hyatt’s valuation is among the highest in its peer group. Marriott International (MAR) has a multiple of 15.3x, Hilton Worldwide Holdings (HLT) is trading at a […]

Increasing debt Hyatt’s growth has been partly organic and partly inorganic. The inorganic growth has been supported by debt. Hyatt’s current debt is similar to that seen in 2014, at $1.4 billion. It fell to $1.0 billion at the end of 2015. Prior to 2014, its debt was even lower, at $1.3 billion in 2013 and […]

Analyst estimates In 2Q17, analysts expect Hyatt’s (H) EBITDA (earnings before interest, tax, depreciation, and amortization) to fall 4.9% YoY (year-over-year) to $215.9 million. EBITDA are expected to fall another 3.0% YoY in the third quarter to $186.3 million. Growth is expected to resume in the fourth quarter, with EBITDA rising 18.1% YoY to $174.9 million. […]

Analyst estimates In 2Q17, analysts expect Hyatt’s revenue to grow by 3.9% YoY (year-over-year) to $1.2 billion. Sales growth is expected to increase for the rest of the year. Sales are expected to grow 5.4% YoY to $1.1 billion in 3Q17, and 5.5% YoY to $1.2 billion in 4Q17. Hyatt is expected to see revenue […]

Revenue per available room A hotel’s operational efficiency is measured by its RevPAR (revenue per available room), which is calculated by dividing a hotel’s total guest room revenue by its room count. The two main factors driving a hotel’s RevPAR are its occupancy rates and average daily rates. In 1Q17, Hyatt’s RevPAR fell 4.7% YoY […]

Hyatt will report its 2Q17 earnings on August 3, 2017. In this series, we’ll assess Hyatt’s performance based on key metrics and look at analyst estimates for Hyatt’s 2Q17 performance,

Ten analysts currently have active coverage on Wyndham Worldwide (WYN) stock. Of these analysts, 20% have “strong buy” recommendations on the stock.

On July 21, 2017, Wyndham Worldwide (WYN) had a closing price of $103.1 and an indicated dividend yield of 2.3%, the highest among its peers.

After Wyndham’s fall in 1Q17, Wall Street analysts expect it to clock EBITDA (earnings before interest, tax, depreciation, and amortization) of 2.4% year-over-year to $349.3 million.

Marriott International has provided a return of 22.5% so far in this year.

After rising steadily from August 2016 to December 2016, crude oil prices have been falling in 2017.

The average daily rate (or ADR) measures the average room price paid in the market. In 1Q17, the ADR rose 2.5% year-over-year (or YoY) to $124.27.

The US hotel industry saw its largest revenue fall of 14% year-over-year (or YoY) in 2009. Since then, recovery has been steep.

Marriott (MAR) currently trades at a forward EV-to-EBITDA multiple of 14.5x.

Marriott (MAR) has an indicated dividend yield of 1.8%, which is the lowest among its peers.

Marriott (MAR) generated $1.6 billion from its cash flow from operations in 2016.

Analysts estimate that Marriott’s (MAR) 1Q17 revenues could grow 40.1% year-over-year to $5.3 billion.

Marriott (MAR) is expected to report its 1Q17 earnings on May 8, 2017. Analysts expect Marriott’s 1Q17 revenues to grow 40.1% year-over-year to $5.3 billion.

Hyatt (H) currently trades at a forward EV-to-EBITDA multiple of 10.2x.

Hyatt (H) stock has had a volatile ride so far in 2017. After falling in January and February, its stock rose in March and April. Hyatt will report its 1Q17 earnings on May 4, 2017.

Hilton (HLT) currently trades at a forward EV-to-EBITDA multiple of 17.6x.

The hotel sector is capital intensive, and companies in the industry normally carry high debt.

Hilton (HLT) started paying dividends in mid-2015.

A hotel’s operational efficiency is measured by its RevPAR (revenues per available room), which is calculated by dividing a hotel’s total guest room revenue by its room count.

For the first quarter of 2017, analysts are estimating that Hilton’s (HLT) revenue will fall 25% to $2.1 billion.

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.

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.

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.

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.

Marriott’s RevPAR for 4Q16 rose 0.80% in constant dollars across its worldwide properties.

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 (MAR) currently trades at a forward EV-to-EBITDA multiple of 15.8x. Its valuation has been significantly higher than its average valuation.

Marriott’s cash dividend ratio was 3.0x at the end of 3Q16, which indicates its ability to sustain dividend payouts.

For 3Q16, Marriott and Starwood Hotels & Resorts together added 17,600 rooms, taking the total to 4,554 properties and 777,000 timeshare resorts.

Marriott (MAR) will report its 4Q16 earnings on February 16, 2017, after the market opens. Analysts are expecting revenue to rise 33.9% YoY.

One of Trump’s highly criticized policies was a complete ban on Muslims entering the United States. However, a complete ban on a race or religion is impossible to implement politically.

Marriott’s (MAR) RevPAR for 2Q16 rose 2.9% across its worldwide properties. North America RevPAR rose 3.2% due to a 2.2% rise in ADR.

Marriott (MAR) stock has had a volatile year, which was expected with the acquisition of Starwood Hotels. MAR stock rose 6.2% in 1Q16, fell 6.6% in 2Q16, and rose 1.3% in 3Q16.

TRIP’s airlines platform will allow users not only to be able to book flights, but also to provide reviews, drawing on its highly successful feature of user experiences.

Since the merger received final approval on September 20, 2016, Marriott stock (MAR) fell 2.2%, while Starwood (HOT) stock rose 2.2%.

According to Marriott’s (MAR) CEO, Arne Sorensen, Starwood’s (HOT) guest loyalty program was a “central, strategic rationale for the transaction.”

On April 29, 2015, Starwood put itself up for sale. On August 29, 2015, Anbang offered to buy it at a 20% all-cash premium deal on its last closing price.

Just as the merger was announced, Starwood loyalty program members showed concerns over their rewards points and elite status.

The Marriott–Starwood deal holds immense significance for Marriott International because the combined entity of Marriott International and Starwood Hotels and Resorts Worldwide would create the world’s largest lodging company.

The forward EV-to-EBITDA multiple for the hotel industry currently stands at 9. It has declined from 13.1, which was recorded at the beginning of 2015.

Marriott has one of the lowest asset bases among its industry peers, having reduced its PPE-to-total-assets ratio from 24% in 2012 to 21.2% in 2014.

Marriott’s operating margin increased from 5.9% in 2010 to 8.4% in 2014. Its operating income grew from $695 million in 2010 to $1,159 million in 2014.

Marriott International’s total debt has increased from approximately $7.4 billion in 2010 to about $9.1 billion in 2014.

The hotel pipeline tells potential investors how development activity in the hotel sector looks. It also points to the future supply trends.

ADR, or average daily rate, measures the average room price paid in the market. Hotels saw unprecedented occupancy levels in 2015 driven by strong demand.

Hotel investors can use the indicators discussed in this series to gauge the industry’s general trends. Leisure travelers make up ~60% of the total hotel room sales, and business travelers account for 40% of total sales.