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Marriott Vacations (VAC) Benefits From Robust Occupancy

The Hotels and Motels industry is gradually coming out of the woods. In the past year, the industry has gained 18.4%. Marriott Vacations Worldwide Corporation VAC, which belongs to the same industry, has gained 25.8% in the same time frame. The company has been benefiting from strong occupancies (for most of its North America resorts) and solid contract sales.

Let’s take a look at the estimate revision trend in order to get a clear picture of what analysts are thinking about the company. The Zacks Consensus Estimate for earnings for2022 is pegged at $9.71 per share, up from $9.33 in the past 60 days. This indicates an improvement of 132.9% from the year-ago period. The consensus mark for revenues stands at $4.52 billion, suggesting growth of 15.6% year over year. Let’s delve deeper and analyze the factors that are pushing the stock higher.

Factors Driving Growth

Marriott Vacations have been witnessing sequential improvement in occupancy rates, which reflects people’s willingness to go on vacations. During third-quarter 2021, the company reported sequential improvements in occupancy at its European locations. The company reported solid improvements in urban locations such as San Diego and Boston with occupancy rates of approximately 85% and 95%, respectively. The company remains optimistic about a growing willingness among customers to resume travel. Meanwhile, owner and preview reservations for the first half of 2022 were up 10% from 2019 levels.

Hoteliers are adopting aggressive technological ways to sustain competition and meet the changing nature of consumer demand. Marriott Vacations has been focusing on digital expansion and innovation of the latest techniques. The company has been pursuing opportunities in other social media and digital advertising platforms. Management is optimistic about integrating data analytics into its marketing strategy. It continues to utilize technology to lower back-office costs and improve associates' experience by leveraging artificial intelligence to augment and automate several high-volume internal transactional processes.

During the third quarter of 2021, the company’s Vacation Ownership business launched a new digital reservation technology to boost marketing efficiency and improve customer service. It is making good progress on the technology needed to link Marriott, Westin and Sheraton products into a single points-based offering by early 2022. The company will increase the use of digital tools to strengthen its infrastructure, grow online package sales, enable self-service bookings, make real-time offerings to enhance the overall customer experience and drive back-office efficiencies.

The Zacks Rank #1 (Strong Buy) company has sufficient liquidity to temporarily survive the current scenario of unpredictability. As of Sep 30, 2021, cash and cash equivalents were $0.4 billion compared with $1.3 billion as of Jun 30, 2021. The company stated availability of funds under the Warehouse Credit Facility and the Revolving Corporate Credit Facility with a borrowing capacity of $600 million. Marriott Vacations had $4.4 billion in debt outstanding (net of unamortized debt issuance costs) at the end of the third quarter, down from $5.3 billion at the end of second-quarter 2021. The company stated that it has no corporate debt maturities before late 2022. The times-interest-earned ratio at the end of the third quarter came in at 1.2x compared with 0.4x in the previous quarter. This indicates that the company is well-poised to meet debt obligations.

Image Source: Zacks Investment Research

Other Key Picks

Other top-ranked stocks, which warrant a look in the Consumer Discretionary sector include Hilton Grand Vacations Inc. HGV, Bluegreen Vacations Holding Corporation BVH and RCI Hospitality Holdings, Inc. RICK. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Hilton Grand Vacations sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 411.1%, on average. Shares of the company have increased 67.8% in the past year.

The Zacks Consensus Estimate for Hilton Grand Vacations’ 2022 sales and earnings per share (EPS) suggests growth of 27.7% and 154.4%, respectively, from the year-ago period’s levels.

Bluegreen Vacations sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 695%, on average. Shares of the company have surged 166.1% in the past year.

The Zacks Consensus Estimate for Bluegreen Vacations’ 2022 sales and EPS indicates a rise of 7.6% and 0.4%, respectively, from the year-ago period’s levels.

RCI Hospitality flaunts a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 67.7%, on average. Shares of the company have surged 144.7% in the past year.

The Zacks Consensus Estimate for RCI Hospitality’s 2022 sales and EPS suggests growth of 34.9% and 22.1%, respectively, from the year-ago period’s levels.

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Marriot Vacations Worldwide Corporation (VAC): Free Stock Analysis Report
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