Posted on January 18th, 2021
Marriott International, Inc. (MAR) faced challenges in 2020 but has slowly regained momentum in recent months after declines last spring. Still, the stock has underperformed the S&P 500, falling by approximately 15% compared to the S&P’s overall gain of almost 18% since January 2020. Despite the hospitality company’s challenging year amidst the coronavirus pandemic, it was added to the WhaleWisdom 100 Index on November 16, 2020.
Marriott operates as a multinational hospitality company that manages and franchises a broad portfolio of hotels and other lodging facilities, in addition to rental properties. Pandemic induced fear of travel and government restrictions dramatically curbed leisure demand in 2020, adversely affecting Marriott’s bookings.
While the pandemic has had a severe impact on Marriott’s business, the company took measures to adapt and reduce costs while waiting out the storm. Marriott also elevated its commitment to cleanliness to meet the coronavirus challenges and fostered goodwill by donating hotel stays to medical professionals in support of their efforts to battle the virus throughout the United States. The recent release and continued research of coronavirus vaccines worldwide offer additional hope for a rainbow to come for this industry. Marriott anticipates a gradual rise in bookings, and analysts predict a multi-year recovery towards pre-virus demand.
Optimistic Long-term Estimates
Beginning in 2021, analysts are more optimistic with estimates. Forecasts call for revenue to fall in 2020 by about 48.7%, and then increase in 2021 by approximately 35.9% to about $14.7 billion. Overall, Marriott is expected to see revenue growth ranging from 35.9% to 9.5% from 2021 through 2024. Between 2020 and 2024, revenue could very likely grow from $10.8 billion to about $24.6 billion.
Earnings per share are initially expected to decline to a loss of $0.21 in 2020 and rebound in 2021 to about $2.35. Profits are then expected to nearly double in 2022, bringing earnings per share to an estimated $4.56. Moderate growth is expected to continue in 2023 and 2024, and by December 2024, earnings per share are predicted at about $7.46.
Analysts Predict Recovery
Argus Research Co.’s analyst, John Staszak, moved Marriott’s stock to a Buy rating from a Hold and believes that the industry is in the early stages of another multi-year upturn. Staszak reduced loss estimates for 2020 to $0.10 from $0.18 and raised earnings per share estimates for 2021 to $3.15, noting that the company has an adaptive global operating model that allows it to expand room capacity anywhere in the world.
Citigroup, Inc. turned bullish on the stock, influenced by the start of coronavirus vaccine distribution around the world. Citi upgraded Marriott to a Buy rating with an overweight position and a $150 price target. Vaccine distribution restores confidence for many.
Favorable Long-term Outlook
Being realistic of the disruptive effect of the pandemic on the hospitality industry and tourism, Marriott’s financial recovery will not happen overnight. However, recent news concerning vaccines for the coronavirus has resonated positively. Once travelers feel safe again, both personal and business trip bookings are likely to rebound. Marriott’s business strategies improved revenue estimates, and continued growth may encourage investors.