Shares of Marriott International (MAR) edged higher on Monday after the company announced a three-year plan to open more than 1,700 hotels around the world, return up to $11B to shareholders and report earnings of up to $8.50 per share by 2021.
THREE-YEAR PLANS: Marriott on Monday announced its three-year growth plan, which includes opening more than 1,700 hotels around the world. At its meeting with institutional investors and security analysts at the New York Marriott Marquis, Marriott said it would add between 275,000 and 295,000 rooms over three years, potentially adding $400M in fee revenue in 2021 and $700M annually when stabilized. The company's three-year growth plan assumes comparable hotel revenue per available room, or RevPAR, growth of 1% and 3%, compounded annually, it said.
The company also forecast EPS of $7.65-$8.50 per share by 2021, a compound growth rate of 11%-15% over 2018's adjusted results, as well as adjusted EBITDA growth of 6%-9% compounded, with net income increasing 5%-8% compounded.
During the three-year period, the company plans to pay $1.9B-$2B in dividends and buy back $7.6B-$9B in shares, Marriott said.
"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," said Arne Sorenson, Marriott's president and chief executive officer. "We launched our newly branded loyalty program, Marriott Bonvoy, just last month. The program reached 125 million members as of year-end 2018 adding roughly 50,000 members per day."
WHAT'S NOTABLE: Last month, Marriott's fourth quarter revenue missed analysts' expectations forecast lower-than-expected EPS for fiscal 2019, blaming weak demand in North America.
Previously, the company was hit by a massive data breach involving up to 383M guests in its Starwood hotels reservation system. Last week, CEO Arne Sorenson apologized before the Senate Permanent Subcommittee on Investigations on the breach, saying the hacking prompted the company to accelerate the retirement of the Starwood reservation system that was completed in December. He said the company first became aware of a security issue in September 2018, notified the FBI in October and disclosed the issue publicly on November 30. Sorenson has vowed to protect against future attacks.
ACTIVIST ACTION: Activist investor Land & Buildings Investment Management is seeking a seat on Marriott International's board, Cara Lombardo and Aisha Al-Muslim of Wall Street Journal reported last week, citing people familiar with the matter. Land & Buildings has a small stake in Marriott and is displeased with the company's purchase of Starwood Hotels and believes Marriott should narrow its brand portfolio, according to the report. The firm has nominated its founder, Jonathan Litt, to take a seat on the company's board.
Marriott is evaluating Litt's nomination.
PRICE ACTION: In morning trading, shares of Marriott are up 2.5% to $125.35.
