Marriott outlines plans for 1,700 new hotels over next three years
Marriott International has presented a three-year growth plan, which includes the opening more than 1,700 hotels around the world.
At a meeting with institutional investors and security analysts at the New York Marriott Marquis, the company said it planned plan to add between 275,000 and 295,000 rooms by 2021, supported by the strength of its record 478,000-room pipeline, including roughly 214,000 rooms already under construction.
Marriott argued its new room openings during this period could contribute $400 million in fee revenue in 2021 and $700 million annually when stabilised.
The company’s three-year growth plan assumes, but does not forecast, comparable hotel revenue per available room growth of one and three percent, compounded annually.
“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 International 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.”
Given the assumptions for its three-year plan, the company said it hoped to report diluted earnings per share of $7.65 to $8.50 by 2021.
This is a compound growth rate of 11 to 15 per cent over 2018 adjusted results.
Shareholders could see $1.9 to $2 billion in dividends, assuming a continued 30 per cent pay-out ratio, and $7.6 to $9 billion in share repurchases over the three-year period, Marriott added.
“Our new three-year plan, with Starwood fully integrated, demonstrates how our fee-based, asset-light business model generates even stronger and more sustainable cash flows.
“This allows us to invest profitably in our core business at high rates of return and also return significant amounts of capital to shareholders,” said Leeny Oberg, Marriott International executive vice president and chief financial officer.
“Our proven business model combined with opportunities to leverage our significant scale from the Starwood acquisition uniquely position us for additional shareholder value creation.”