Marriott International announced to investors this week its bold plan to open as many as 1,700 new hotels worldwide. The company, which owns other hotel chains such as the Ritz-Carlton, Starwood, St. Regis, and Le Meridian, also revealed that it aims to return up to US$11 billion to shareholders by 2021. Marriott hopes to achieve this via its three-year growth strategy. Following its announcement, stock prices rose by as much as 3 percent. Marriott shares have so far climbed to more than 12.7 percent in the past three months.
The hospitality company, originally founded by J. Willard Marriott, also announced some ambitious forecasts for its performance in the coming years. According to Marriott, it should have an annual profit of around US$7.65 to US$8.50 per share by 2021. The company's target profits are slightly higher than analysts' average estimates, which is around US$7.72 per share.
Marriott's plan to open hundreds of hotels in the next few years has been met with criticism from some investors, who generally think that the company should focus on its profitable brands. Activist investor Jonathan Litt mentioned in an interview that he thinks Marriott should close down its other brands to focus on its profitable ones, similar to what its main competitor, Hilton Worldwide Holdings Inc, is doing. However, some analysts are somewhat feeling positive about the company's plans saying that its recent acquisition of Starwood and its medium-term outlook could further improve investor confidence.
If the company aims to achieve its ambitious goal, Marriott would have to open at least 500 new hotels per year up until 2021. This would mean that the firm would need to add around 300,000 rooms in the next three years. If this is achieved, it would add hundreds of millions of dollars to the company's already substantial yearly revenue. According to Marriott, part of their plan over the next three years would be to buy back shares amounting to US$9 billion. The firm also plans to pay around US$2 billion in dividends to shareholders.
Marriott recently came under scrutiny after a massive breach had occurred in its Starwood hotel reservation system. The data breach involved close to 400 million guests. The company's CEO, Arne Sorenson, was even asked to stand in front of a United States Senate panel just recently to explain how they allowed such an attack to happen. Sorenson apologized to victims of the breach and vowed to ramp up their digital security to prevent any future attacks.
