Marriott Grows Conversion Pipeline in Latin America
Skift Take
- Hilton and Marriott are expected to report strong 2Q23 results with international strength as a key driver.
- Various hotels in different regions are undergoing significant expansions, renovations, and acquisitions, with Hilton announcing a new property in Cancun and Scandic Hotels Group expanding its portfolio in Sweden.
- Accor is in exclusive negotiations to acquire a majority stake in Potel & Chabot, potentially becoming the sole shareholder of the company.
The DJIA ended Friday up 3 points, but Nasdaq was down 31, the S&P 500 was up a point, and the 10-year treasury yield was down .02 to 3.84%. Lodging stocks were mixed. MAR traded up to a new all-time high, while ABNB hit a new 52-week high.
Baird said they expect good 2Q23 reports from Hilton and Marriott with an upward bias to earnings estimates. They believe international strength and favorable operating leverage should be the upside drivers this earnings season, particularly for MAR, despite softer domestic RevPAR trends that materialized during the quarter. They expect continued positive commentary and updates from both companies.
Wells Fargo upped its target price on Hilton to $160 from $151 and on Hyatt to $127 from $113. They lowered their target price on Choice Hotels to $113 from $122.
According to data from Lodging Econometrics, the pipeline of brand conversions in Latin America jumped by 22% in the first quarter of 2023 compared to the first quarter of 2022, totaling 67 projects and 9,464 rooms. Marriott’s data parallel global trends, with the first quarter of conversion activity accounting for 29% of rooms signed and 25% of rooms opened by the company globally. Marriott International has been boosting its organic growth with increased conversion activity. The company added nearly 17,500 conversion rooms in 2022 and signed 20,500 rooms, approximately 20% of rooms signed globally last year. In the Caribbean and Latin America, more than 50% of Marriott’s room signings were conversions in 2022. As of the first quarter of the year, the region had more than 3,000 conversion rooms in the pipeline, building on the success of the company’s strategy. Examples of recent Marriott conversions in CALA include the JW Marriott Hotel Sao Paulo in Brazil; The Westin Porto de Galinhas, an All-Inclusive Resort, also in Brazil; and The Sanctuary Cap Cana, a Luxury Collection Adult All-Inclusive Resort, in the Dominican Republic.
The 123-room Courtyard by Marriott North Charleston Airport/Coliseum in Charleston, South Carolina, has so
