Marriott outlines bold growth plans for next three years
Marriott International, the world’s largest luxury hotelier, has outlined its plan to open as many as 1,700 hotels over the next three years. The company made the announcement on Monday, just prior to its annual investor day in New York. The company also took the time to detail how beneficial its acquisition of Starwood had been, and the successes it was seeing with its upholstered loyalty program.
Marriott’s share price has appreciated by 18% so far this year
Source: Yahoo Finance
The company said that it expects to have between 275,000 and 295,000 new rooms by 2021, including the approximately 214,000 rooms that are currently under construction. That’s an ambitious goal, even by Marriott’s high standards – but the fact it’s already so far along goes to show that it’s more than just a promise – it’s a plan that’s already more-than half way executed.
Marriott’s CEO and international president, Arne Sorensen, also used the announcement to discuss how a previous bid for growth – the acquisition of Starwood – has played out for the company so far:
“Starwood has made us a more formidable competitor, providing a more valuable loyalty program, brands with strong appeal to loyalty members and owners, talented associates, terrific locations, particularly in the fast-growing Asia Pacific region, significant cost synergies and meaningful scale.”
The company added that it expects the new rooms to add about $400 million in fee revenue in 2021, and as much as $700 million annually once they’re all up and running. Marriott’s executive vice president and chief financial officer, Leeny Oberg, was keen to stress that this demonstrated the power of the company’s business model, saying:
“Our new three-year plan, with Starwood fully integrated, demonstrates how our fee-based, asset-light business model generates even stronger and more sustainable cash flows. This allows us to invest profitably in our core business at high rates of return and also return significant amounts of capital to shareholders.”
At the same announcement, the company told investors that its new loyalty program, Marriott Bonvoy, was proving incredibly popular. Sorensen said it had “reached 125 million members as of year-end 2018 adding roughly 50,000 members per day.”
Dominion holds Marriott International in its Global Trends Luxury Fund.
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