J.W. Marriott, Jr., chairman and chief executive officer of Marriott International, Inc. (MAR/NYSE), said today that his company plans to accelerate its worldwide presence by adding 1,000 hotels and 175,000 new rooms across its global portfolio of brands by 2003.
“We expect to manage or franchise a hotel in every gateway city in the world and in 70 countries within the next five years,” said Mr. Marriott, “bringing our systemwide total to 2,600 hotels and 480,000 rooms by 2003.” He noted that hotel owners and franchisees currently have nearly 400 hotels to be flagged under Marriott brands under development worldwide.
At a meeting in New York for security analysts, Mr. Marriott spoke of his company`s brand leadership and growth. “Marriott`s 14 powerful lodging brands, each with tremendous growth and profit potential, work together to make the company stronger, benefiting from economies of scale and customer preference,” said Mr. Marriott. The company`s management and franchise strategy protect it from the cyclical fluctuations of the economy and the industry, he said.
Mr. Marriott noted that frequent “quality-tier” business travelers prefer Marriott by a 3-to-1 margin over other lodging brands, according to Business Development Research Consultants. He also pointed to research from Lodging Econometrics showing that nearly one quarter of all hotel rooms under construction in the U.S. is committed to Marriott brands.
Asserting that such strong growth would enable the company to capture a larger market share while driving the new systemwide revenue growth to the bottom line, Mr. Marriott said, “We have the brands, systems, and people to increase significantly shareholder value into the next century. Although we are a large company, we expect to grow earnings per share in the mid-teens over the next five years.”
Mr. Marriott also urged investors to compare the company to other global brands. “Marriott has the customer preference, growing distribution, and the predictable income to be viewed by investors like McDonalds, Coke, and Pepsi,” he contended. He noted that of Marriott`s more than 1,800 hotels worldwide, the company owns only 15, and that the company realizes 75 percent of its profits through fee income from stable, long-term management and franchise contracts.
Mr. Marriott predicted that the global lodging industry would continue to consolidate into a handful of companies over the next 10 years. “Marriott will maintain its leadership position in this changing competitive environment by leveraging its 14 powerful lodging brands` collective strengths and advantages,” he said. “Marriott`s share of the 14 million hotel rooms available around the world is just about 2 percent - so the growth opportunities for us are enormous,” he concluded.