Unfazed by an uncertain environment, Marriott continues to steadily grow.
The lodging specialist’s Marriott Bonvoy loyalty program is experiencing rapid growth.
With a handful of growth drivers, Marriott’s growth story looks extremely durable.
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As investors all seem to be tripping over each other to buy into the momentum in artificial intelligence (AI) stocks, there are some good investment opportunities sitting in plain sight. One that is out of favor this year, with its shares down almost 7% year to date as of this writing, is hospitality company Marriott International (NASDAQ: MAR).
The company’s second-quarter results showed growth in both revenue per available room (RevPAR) and total rooms available, leading to robust top and bottom-line growth. A powerful loyalty program and successful co-branded credit cards are driving results and creating an engaged customer base that can continue fueling growth for years to come.
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One of the biggest things Marriott has going for it is the breadth of its growth drivers. Sure, the business looks good on the surface. Second-quarter adjusted revenue (total revenue less cost reimbursement revenue) rose about 6% year over year to more than $1.8 billion, and adjusted earnings per share rose by the same amount. But the diversified sources of Marriott’s growth strengthen the stock’s bull case, capturing the durability of the company’s growth story.
Consider the different ways the company is growing. First, there’s the Marriott’s net rooms growth. Management confirmed in its second-quarter update that it expected net rooms growth for the full year to approach 5%.
Second, the company benefits from an extremely fast-growing loyalty program. Second-quarter Marriott Bonvoy members totaled 248 million, up 18% year over year. This membership program is translating into tangible loyalty, with a record 69% of rooms booked globally during the quarter coming from Marriott Bonvoy members. The penetration was even…
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