Wyndham Worldwide Corporation (WYN), Marriott International Inc (MAR): Catch the “Wynd” of Increasing Travel

Analysts also believe the company is in for growth. This year 34 analysts covering the stock collectively expect a 17% increase in EPS, followed by another 17% increase next year. These targets are in line with mine.

Starwood likely to suffer from franchise focus

Starwood Hotels & Resorts Worldwide, Inc (NYSE:HOT) is not as attractive as the other two hotels in this analysis. While the company is expanding worldwide, many of its hotels are franchised, and there is uncertainty about the duration those locations will remain open. Furthermore, many of its properties are timeshares, which are cyclical.

The company has said it is interested in growing its franchised positions, but this creates too much uncertainty. While it could increase growth with minimal startup costs, I am wary about owning a company that isn’t in full control of its operations. The firm has sold over 100 hotels to franchisees since 2000.

Analysts are also uncertain about the company. Morningstar said the firm’s franchised businesses and timeshares give it a “very high” uncertainty rating. The company is expected to increase EPS by 10% this year and 3% next year. That’s well below the expected boom other companies in the industry are expected to experience.

This one is the best

As an investor who is very bullish on the developing world, I give Wyndham Worldwide Corporation (NYSE:WYN) a Buy rating. Its continued progress, and assertion that it will increase exposure to Latin America, allows it to gain growth that has likely already peaked in the developed world. Marriott International Inc (NYSE:MAR) is too exposed to Europe for me to invest in the company now, but any sign of a European recovery will have me reevaluating this stock. I give it a hold rating. Starwood is growing, but where Wyndham Worldwide Corporation (NYSE:WYN) is putting up bricks and mortar, Starwood is using play dough. That’s what happens when you grow a company by franchising and using timeshares. This stock is a sell.

The article Catch the “Wynd” of Increasing Travel originally appeared on Fool.com and is written by Phillip Woolgar.

Phillip Woolgar has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Phillip is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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