Marriott (MAR) Reopens All Hotels in China, Stock Surges 7.4%
Given a rebound in travel business, Marriott International, Inc. MAR recently reopened all of its hotels in China. The company also announced that it is witnessing steady recovery in the U.S. markets. Following the news, investor sentiments received a boost as shares of the company rallied more than 7% during the trading session on Jun 1.
Notably, occupancy rates in China have risen from a low of 7% in February to approximately 40% in late May, while occupancy rates in the United States have crossed 20%. Earlier in April, the company had an occupancy rate of about 12% in North America, out of which 16% of its hotels were temporarily closed.
Even though the occupancy rates are improving, CEO Arne Sorenson stated that it might take a while for the company to reach its 2019 global occupancy levels of 71%.
Shares of Marriott have lost 16.8% in the past three months compared with the industry’s decline of 12.1%.
Strategic Measures
Marriott has taken certain strategic measures to protect business in this crisis, which include suspension of dividend and stock buyback programs. Notably, the decision is in line with its motive to preserve cash and maintain ample liquidity to avoid a possible recession due to the coronavirus outbreak.
Moreover, to help customers navigate through this crisis, the company has extended the transient reservation cancellation window until Jun 30. It is allowing cancellations without charge until 24 hours before the scheduled arrival for new reservations made between Mar 13 and Jun 30.
Despite the virus triggering a catastrophe in terms of lives lost and financial impact, the company appears resilient enough to navigate through these uncertain times. We believe that it will continue to monitor the COVID-19 crisis and adjust its contingency plans in accordance to it.
Marriott — which shares space with Choice Hotels International, Inc. CHH, Extended Stay America, Inc. STAY and Hyatt Hotels Corporation H in the Zacks Hotels and Motels industry — has a Zacks Rank #5 (Strong Sell) at present.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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