Analyst Note| Dan Wasiolek |
We plan to increase our $159 fair value estimate for narrow-moat Marriott by a low-single-digit percentage after its first quarter showcased a new pandemic recovery high in demand, as travel broadened from leisure excursions to business and international trips, echoing recent reports from peers. First-quarter revenue per available room, or revPAR, recovered to 91% of 2019 levels (83% for Hilton), up nicely from 81% last quarter (83%), with robust demand trends continuing in April. Globally, Marriott expects leisure to remain strong, with business and cross-border improving throughout the rest of this year. To this point, U.S. and Canada business room nights returned to 85%-90% of 2019 levels in the quarter, up from about 70% in the prior three months, with group size and length of stay above prepandemic marks. Further, Marriott saw notable demand improvement in international markets except China, which remains hindered by COVID-19 restrictions. Europe demand has not been impacted by the humanitarian crisis in Ukraine, with an acceleration in spring and summer demand bookings. As a result, we expect to increase our 2022 revPAR toward a mid-90% rebound rate versus about 90%.