Marriott International (NYSE:MAR) said its adjusted diluted earnings per share (EPS) could rise 25% to 29% year-over-year in 2023, and at a 10% to 15% two-year compound annual growth rate to reach $10.10 to $11.45 in 2025.
Ahead of a meeting with analysts and institutional investors in Florida on Wednesday, the hotel chain said it expects its global revenue (RevPAR) to grow at a two-year compound annual growth rate of 3% to 6% from 2023 to 2025.
It projected the addition of 230,000 to 270,000 net rooms over three years, expanding to nearly 1.8 million rooms by the year-end of 2025.
Additionally, it reiterated its 2023 outlook on continued strong demand for travel.
On August 1, the company updated its guidance to expect RevPAR growth of 12% to 14% for the full year 2023 compared to the previous fiscal year and net room growth of 6.4% to 6.7%. It also projected adjusted diluted EPS of $8.36 to $8.65.
Analysts at Jefferies noted that Marriott’s updated outlook was supportive of the long-term growth algorithm for the stock and is supportive of the year-to-date outperformance of the shares.
“The structure of the projections is consistent with prior analyst meetings, whereby the RevPAR soft guide provides a base for demonstrating the growth algorithm,” they wrote in a note to clients.
“Notably, the outlook steers clear of any position on the economy, which remains a matter of debate in the capital markets. We expect a neutral reaction in the shares.”
Shares of Marriott added 1.4% to US$194.50 in early trade on Wednesday following the news.
The analysts have a ‘Hold’ rating on Marriott stock and a US$200 price target.
They wrote that the hotel chain has a roadmap to create shareholder value through net unit growth and strong execution.
“The company continues to focus on growing net units in segments of midscale, extended stay, leisure and luxury, and conversion,” they noted.
“Through the City Express acquisition and the launch of Apartments by Bonvoy, the company continues strong brand execution.”
The analysts added that multi-unit conversions remain critical to the growth algorithm, accounting for 63% of its room signing in the first half of 2023.
“As well, the credit card offerings should be constructive to the fee growth and cash flow growth, which we consider a strong value driver for the shares,” the Jefferies analysts wrote.
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