Its stock has briskly snapped back and jumped on Mar. 26, 2012, a whisker away from its 52-week high of $38.64 a share, closing at $38.62, way up from its 52-week low of $25.49 hit on October 2011. LaFleur sees Marriott’s shares continuing to climb, to his 12-month target of $41, based on earnings and revenue growth.
Chart: Marriott North America Quarterly ADR and RevPar Growth
While its international footprint is growing, Marriott generates the vast majority of its earnings in the U.S. Its hotels in Europe and the Middle East, two troubled regions, only produce about 10% of Marriott’s fees, notes the analyst. He figures Marriott can increase franchise and base nmanagement fees by some 10% a year on revenue growth and opening of new units.
“The bigger prize is the 20%-25% annual incentive free growth that we predict, as hotel profits recover from the 2008-2009 downturn, and as Marriott opens more managed-properties overseas,” says LaFleur. Marriott is now very focused, notes the analyst, on aggressive expansion overseas as only 22% of its rooms are located outside North America. Half of Marriott’s pipeline projects are now located in foreign markets, and more importantly, 85% of the more lucrative full-service pipeline is projects outside North America, says LaFleur. The development pipeline currently has 110,000 rooms, which represent 18% of Marriott’s total existing room base.