Marriott beats the Street, combined loyalty scheme could be secret weapon
Marriott International, the world’s largest hotelier and owner of numerous luxury brands in the space, reported earnings this week, demonstrating a robust business, and piquing analysts’ interest with its new, combined, loyalty scheme. The company announced a merger of the rewards programs across its brands earlier this year, but as the months roll on, it’s looking more and more like it might be a crucial strategic play in putting Marriott head and shoulders above the competition.
Over the past 12 months, Marriott’s share price has appreciated by 18%
SOURCE: Yahoo Finance
Analysts were hoping for some serious outperformances in regard to revenue and earnings this quarter, following on from a very successful first quarter earlier in the year. Marriott did not disappoint. The company said gross fee revenue climbed by 12% to $951 million, and net income improved by an impressive 25% to $610 million. Both of these figures are reported against the same quarter in the previous year. Most impressive of all, however, was Marriott’s adjusted earnings per share, which came in at $1.73 for the second quarter. That’s a major beat against the Street’s predictions of $1.38.
The company’s underlying metrics remained strong too. RevPAR (Revenue Per Available Room – a key metric in the hospitality business) continued its ascent, improving by 3.8% worldwide. The company also added 23,000 new rooms across 142 new properties over the quarter.
The company’s CEO Arne Sorenson, demonstrated Marriott’s strength globally, saying: “in North America solid group business allowed us to drive higher room rates in the quarter,” and “over 40% of gross room additions are located outside North America, and more than one-third are in upper-scale and luxury tiers.”
Results aside, though, the thing that has analysts interested at the moment is the impending unification of Marriott’s multiple loyalty schemes. Right now, there are three, but on August 18, they will be succeeded by a single set of benefits that should drive cross selling between the group’s brands and deliver better value to its customers. That’s good for them, good for the company, and, ultimately, good for investors too!
Dominion holds Marriott International in its Global Trends Luxury Fund.
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