Despite an uncertain macroeconomic environment, the travel industry is expected to remain robust this year. With the current travel boom driving demand, quality travel stocks Marriott International, Inc. (MAR), Playa Hotels & Resorts N.V. (PLYA), and Bluegreen Vacations Holding Corporation (BVH) could be wise investments.
According to the World Travel & Tourism Council’s (WTTC) most recent “Economic Trends 2022” research, the United States continues to be the world’s largest and most powerful travel and tourism market.
The online travel booking platform market is estimated to increase at a CAGR of 14.9% until 2027. The increasing consolidation of online travel companies is fueling industry growth, escalating competition, and higher mergers and acquisitions.
Furthermore, the worldwide travel & tourism market is predicted to increase at a 4.4% CAGR to $1.02 trillion by 2027. Hotels are the market’s largest category, with a forecast market volume of $408.80 billion in 2023.
Let us look deeper into the fundamentals of the featured stocks.
Marriott International, Inc. (MAR)
MAR operates, franchises, and licenses hotel, residential, timeshare, and other lodging properties worldwide. It operates its properties under JW Marriott, The Ritz-Carlton, Ritz-Carlton Reserve, W Hotels, The Luxury Collection, St. Regis, EDITION, Bvlgari, Renaissance, Le Méridien, Marriott, Sheraton, and Westin, etc.
On May 24, 2023, MAR has announced an industry-first agreement with Rappi, Inc., a multilatina technology company. The partnership seeks to boost daily earning possibilities and provide an enhanced travel experience for both Marriott Bonvoy members and Rappi users.
On June 6, 2023, MAR has announced a partnership with Hiap Hoe Limited via HH Properties Pte. Ltd, to introduce the design-forward Aloft Hotels brand to Singapore. Following a strategic conversion, the 785-room hotel is expected to open in third quarter of 2023, marking the Aloft brand’s debut in Singapore and the world’s largest Aloft hotel.
Mr. Teo Ho Beng, Chief Executive Officer Hiap Hoe Limited, said, “We are thrilled to announce our third collaboration with Marriott International as we venture and introduce the first Aloft hotel in Singapore. Aloft Singapore Novena expects to feature a contemporary and dynamic space that caters to the needs of design-savvy, next-generation travelers and locals.”
MAR’s trailing-12-month levered FCF margin of 41.46% is significantly higher than the industry average of 3.49%. Its trailing-12-month ROCE of 286.40% is significantly higher than the industry average of 10.18%.
MAR’s total revenues increased 33.7% year-over-year to $5.62 billion in the first quarter that ended March 31, 2023. The company’s adjusted net income and EPS increased 56.9% and 67.2% from the prior-year quarter to $648 million and $2.09, respectively. Also, its adjusted EBITDA increased 44.7% from the year-ago value to $1.09 billion.
The consensus revenue estimate of $23.54 billion for the year ending December 2023 represents a 13.3% increase year-over-year. Its EPS is expected to grow 25% year-over-year to $8.36 for the same period. It surpassed EPS estimates in all four trailing quarters. MAR’s shares have gained 12% over the past nine months to close the last trading session at $178.48.
MAR’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
MAR has a B for Sentiment, Momentum, and Quality. It is ranked #6 out of 22 stocks in the B-rated Travel - Hotels/Resorts industry. Click here for the additional POWR Ratings for Value, Stability, and Growth for MAR.
Playa Hotels & Resorts N.V. (PLYA)
PLYA owns, develops, and operates resorts in prime beachfront locations in Mexico and the Caribbean. It also organizes weddings, lodging, dining, entertainment, meetings, events, and other hospitality services in its hotels.
PLYA’s forward EV/EBIT multiple of 11.48 is 13.5% lower than the industry average of 13.27. Its forward Price/Book multiple of 2.18 is 17.1% lower than the industry average of 2.63.
PLYA’s trailing-12-month levered FCF margin and EBITDA margins of 12.62% and 24.69% are 251.6% and 126.6% higher than the industry averages of 3.59% and 10.90%, respectively.
For the first quarter that ended March 31, 2023, PLYA’s revenue increased 24.7% year-over-year to $273.80 billion. Also, its adjusted EBITDA increased 28% from the year-ago value to $98.49 million.
The company’s adjusted net income amounted to $49.02 million and $0.31 per share, representing an increase of 54.1% and 63.2% from the prior-year period, respectively.
Street expects PLYA’s revenue to increase 11.1% year-over-year to $951.02 million for the year ending December 2023. Its EPS is expected to increase marginally year-over-year to $0.51 for the same period. It surpassed EPS estimates in three of four trailing quarters. Over the past six months, the stock has gained 60.6% to close the last trading session at $9.25.
It’s no surprise that PLYA has an overall B rating, equating to a Buy in our POWR Ratings system. It has a B grade for Momentum and Quality. It is ranked #3 in the same industry.
Beyond what is stated above, we’ve also rated PLYA for Stability, Growth, Value, and Sentiment. Get all PLYA ratings here.
Bluegreen Vacations Holding Corporation (BVH)
BVH is a vacation ownership organization that manages resorts in both leisure and urban regions and advertises and sells vacation ownership interests (VOI). It also provides financing to qualified VOI buyers and management services for vacation clubs and homeowners’ associations.
On May 15, 2024, BVH is excited to announce its expansion into the Nashville, Tennessee, market through its acquisition of two properties in the historic Printers Alley district.
Ray Lopez, Chief Operating Officer and Chief Financial Officer of BVH, said, “We are pleased to add Nashville to the list of Bluegreen destinations. This acquisition is part of our overall strategy to offer our owners a diverse range of vacation experiences in some of the most desirable locations in the country.”
BVH’s forward EV/EBIT multiple of 8.38 is 36.9% lower than the industry average of 13.27. Its forward Price/Sales multiple of 0.60 is 31.2% lower than the industry average of 0.87.
BVH’s trailing-12-month EBIT margin of 27.71% is 278.2% higher than the industry average of 7.33%. Its trailing-12-month EBITDA margin of 29.90% is 174.4% higher than the industry average of 10.90%.
In the first quarter that ended March 31, 2023, BVH’s total revenue increased 12.3% year-over-year to $219.08 million. Its system-wide sales of VOIs came in at $166.95 million, up 10% year-over-year.
Also, its total assets came in at $1.40 billion for the period that ended March 31, 2023, compared to $1.39 billion for the period that ended December 31, 2022. Its total liabilities came in at $1.14 billion, compared to $1.15 billion for the same period.
Analysts expect BVH’s revenue to increase 3.6% year-over-year to $952.65 million for the year ending December 2023. Its EPS is expected to grow 20.4% year-over-year to $4.21 for the same period. The stock has gained 69.6% over the past nine months to close the last trading session at $33.42.
BVH’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
It is ranked first in the same industry. It has an A grade for Sentiment and a B for Value, Momentum and Quality. To see additional BVH’s ratings for Growth, and Stability, click here.
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MAR shares were trading at $178.90 per share on Friday morning, up $0.42 (+0.24%). Year-to-date, MAR has gained 20.81%, versus a 12.74% rise in the benchmark S&P 500 index during the same period.
About the Author: Rashmi Kumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions.
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