Marriott’s Third Quarter Results: Ongoing Recovery, Long-Term Growth Drivers, Continuing Execution Risks


Yuji Chen

Short-term recovery foMarriott (NASDAQ:MAR) is longunderway, but a recession may delay full recovery. Long-term strategies to fuel growth include expanding the property portfolio, growing internationally and expanding the rewards program could help capture room revenue and market share, but execution Risks can harm Marriott’s positioning and brand value.

Recovery in progress

Global hotel chain Marriott is recovering from a pandemic-induced lodging crisis, with the company seeing steady year-over-year improvement in revPAR, revenue and profit this year.

Year-over-year global revPAR growth (%)

Revenues (millions USD)

Year-over-year revenue growth (%)

Net income (USD million)

Year-over-year net income growth (%)

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However, for the nine months through September 2022, revenue is still below pre-pandemic levels ($14.85 billion in revenue through September 2022 versus $15.6 billion for the same period in 2019), and a further recovery is expected in the coming months. Drivers of the recovery include a continued resumption of international travel (from countries such as China, for example, where quarantine restrictions and flight bans were eased just a few days ago, and Japan and the Thailand, where restrictions on international travel were lifted last month) as well as a recovery in business and group travel (the global travel recovery has so far been driven by leisure travel, but the gap is narrowing and business travel is expected to reach 65% of pre-pandemic levels this year, not reaching a full recovery until 2026).

Business trips around the world


Expanded hotel brand portfolio, international expansion to help drive long-term revenue and market share growth

The vast majority of Marriott’s hotel properties are franchised, and the majority of Marriott’s revenue comes from base fees (fees collected as a percentage of hotel revenue) and franchise fees. The expansion of their portfolio of hotel properties contributes directly to revenue growth through base fees and franchise fees.

Marriott Revenue

Marriott Annual Report

North America accounts for the bulk of Marriott’s revenue, but more than 50% of the 485,000 rooms in Marriott’s development pipeline are outside of North America. Marriott is aggressively expanding into fast-growing markets such as China, India and Africa.

Marriott Revenue by Geography

Marriott Annual Report

Already the largest hotel chain in the industry by number of rooms with an extensive portfolio of brands ranging from ultra-luxury to economy, with a wide geographic reach, Marriott is already a strong contender. An expanding portfolio of hotel brands not only makes their rewards program significantly more attractive to users (which could help Marriott capture a greater share of member travel spend, attract new members and retain members) , but it could also generate cross-selling opportunities. and economies of scale, potentially making Marriott more attractive to hotel owners, thereby allowing Marriott to capture revenue and room market share.

Marriott Bonvoy: from loyalty program to lifestyle platform

Marriott has one of the largest hotel loyalty programs in the industry with 160 million members in its Marriott Bonvoy program at the end of 2021 (Hilton has around 128 million (HLT) and Wyndham has over 95 million (WH) ); that’s nearly half of the total population of the United States, and if loyal Marriott members were an independent country, it would be the ninth largest in the world by population, and probably one of richer given Marriott’s positioning as an upscale and luxury hotel chain.

Marriott is set to strengthen its grip on Marriott Bonvoy members by transforming its loyalty program into a platform of lifestyle products and services, including travel insurance, credit cards and VIP access to concerts , culinary events and premier sporting events such as the Superbowl, Formula 1 and more. Marriott has also forged a host of partnerships to allow members to earn points when shopping with partners such as Uber, which can be redeemed at nearly 8,000 Marriott hotels around the world, as well as cruises such as the Marriott’s chic new collection of Ritz-Carlton yachts launched last month. This effort reinforces Marriott Bonvoy’s value proposition, which could not only attract new members to what is already one of the largest hotel rewards programs, and increase loyalty, but also incentivize spending and thereby generate revenue. .

High-end extended stay deals to fend off Airbnb

Leisure travelers and travelers on long business trips are increasingly looking for new experiences and stays; Marriott discovered a few years ago that more than a quarter of its members were booking outside of their hotel ecosystem when it came to renting vacation homes (Airbnb was likely one of the beneficiaries). Airbnb’s success demonstrated an underserved market, an idea further reinforced when a 2018 pilot as part of Marriott’s Tribute Homes portfolio found that 90% of homes booked during the pilot came from Marriott Bonvoy members. .

To fill this gap, Marriott ventured into the extended stay space in 2019, with the launch of its home rentals offering Homes & Villas by Marriott. The hotel chain has gone further with its new long-term upscale accommodation offering Apartments by Marriott Bonvoy, in what appears to be a strategy to retain Marriott Bonvoy members within Marriott’s hotel ecosystem, and eventually attract high-end travelers away from Airbnb and VRBO. The timing seems opportune, with Airbnb receiving considerable negative publicity lately, from guests reporting hidden cameras to hygiene lapses.


Covid cases are rising again in some countries including the US, Australia and even China, despite its zero covid policy. Rising cases worldwide and potential new lockdowns to prevent imported covid cases could be particularly problematic for international travel, hampering the recovery of the travel and hospitality industry. Meanwhile, the risk of a global recession is very high (there is a 98% chance of a global recession according to research firm Ned Davis) could deal another blow to the recovery of the industry in the short term. term.

Execution risks could harm Marriott’s brand name and impede Marriott’s market share growth; there are rumors that Marriott’s ever-growing portfolio of brands, accommodations, and experiences is dragging down hotel service and quality. This can alienate their discerning and affluent customers who may turn to higher-end rival hotels such as Hilton for example, which has so far opted to remain focused on its hotels.


Marriott is recovering from a pandemic-induced drop in demand and further recovery is expected. However, a possible recession could delay the recovery.

Longer term, the company aims to capture room and revenue share through a number of strategies, including an expanding hotel portfolio, international expansion, extending to extended stays and expanding its rewards program. . However, rumors are surfacing of deteriorating hotel quality, and Marriott’s growth plans could backfire if disgruntled members turn to rival high-end players such as Hilton, Hyatt and Four Seasons.

With a P/E of 24.9, Marriott isn’t exactly cheap and investors can opt for a better entry point.

Analysts are mostly neutral on the stock.

Marriott Analyst Rating



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