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Marriott on track for 4,000 hotels by 2014

Marriott is growing significantly in China

Marriott International has confirmed it is on track to have 4,000 hotels in 90 countries across its 14-brand lodging portfolio by 2014.

With 115,000 hotel rooms in its development pipeline, it could open between 90,000 and 105,000 new rooms around the world in 2012 through 2014, not including the planned Gaylord acquisition.

In presentations at its first meeting in China for security analysts and institutional investors, Marriott also said it expects to have more than 100 hotels across nine brands and nearly 40 markets in China by 2014.

Assuming 6% to 8% compound growth in worldwide system-wide Revenue per Available Room (RevPAR) for 2012 through 2014, diluted earnings per share (EPS) could reach USD$2.45 to USD$2.85 in 2014, according to Marriott.

Marriott International’s President and Chief Executive Officer, Arne Sorenson, said: “China is a fitting place to present our tremendous global growth story and discuss our outstanding financial prospects. Even today, China is our second most important market after North America, representing roughly 5% of total fees. On average we expect to open a hotel a month in this country over the next three years.

“Beyond our major expansion here, China also represents extraordinary opportunities for the travel sector globally. The country is now the third largest source market for international travel behind the U.S. and Germany, with 70 million travelers annually, fueled by a dramatically growing middle class. Chinese arrivals in the U.S. were one million in 2011 and are expected to grow to three million by 2016. We are working with our industry to smooth the visa process in the U.S. and we look forward to welcoming more visitors from around the world,” Sorenson said.

Discussing its operating model, the company said it could generate between USD$1.8 billion and $1.9 billion in worldwide fee revenue through 2014, assuming compound worldwide systemwide RevPAR growth of 6% to 8%.

With strong cash flow expected, Marriott said it assumes investment spending of USD$2.6 billion to USD$2.8 billion from 2012 through 2014. The company expects to recycle USD$800 million to USD$1 billion of capital during the period. Assuming this level of net investment, a 6% to 8% RevPAR growth scenario and new debt issuances, the company could have USD$4 billion to USD$4.7 billion to return to investors or deploy in additional opportunistic investments over the next three years.

Highlighting its commitment to and focus on the China market, Marriott said it plans to hire 30,000 employees in the country by the end of 2015. The company now has one million Chinese members in its 38 million member guest loyalty program, Marriott Rewards, and has also established a fresh water conservation initiative, ‘Nobility of Nature’, in partnership with local communities in Sichuan Province.

“We are excited about our future, here in China, elsewhere in Asia and around the world. Our core values are led by putting people first. That, combined with a strong brand portfolio, hotels in outstanding locations, and operations and development closely aligned with local markets, will enable us to grow market share, enhance guest loyalty and drive long-term profitability for both our hotel owners and shareholders,” Sorenson said.

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