Marriott International Inc (MAR)’s Peculiar Growth Model for 2017

Arne Sorenson, president and CEO of Marriott International Inc (NASDAQ:MAR), discussed the company’s  growth objectives on an interview with CNBC‘s Andrew Ross Sorkin.  Just ahead of today’s Conference at Washington DC, where the hospitality company is set to brag about its new Wasington DC Marquee, Sorenson revealed to Sorkin that Marriott International Inc (NASDAQ:MAR) is set to build 1,300 new hotels with about 200,000 to 230,000 rooms worldwide by 2017.

When asked about the growth model, Sorenson responded:

“We will own almost nothing. We think from 2014 to 2017 we will invest a couple of billion dollars in our business, close to half of that, we will recycle, so the Miami edition, for example, which will open later this fall, we are building on balance sheet but we already got it under contractor’s sale.”

Under this particular business model, investors of Marriott International Inc (NASDAQ:MAR) might be concerned if the company all of a sudden finds itself in a situation where it can’t find buyers for its hotels. Sorenson pacified these concerns by confirming that Marriott International Inc (NASDAQ:MAR) already has a signed pipeline of 200,000 rooms, and hence there is a high predictability factor in the sales figure it has forecasted for 2017.

Furthermore, according to Sorenson Marriott International Inc (NASDAQ:MAR)’s EPS is expected to grow by 19% to 23% translating into an increase in EBIDTA of 12%-14%. The company will continue to target customers all the way from the middle to the luxury class rather than focusing on one particular segment of society.

Marriott International Inc (NASDAQ:MAR), which is the largest hotel company in Africa, and with over 4,000 hotels which span 79 countries has benefitted from the recovery of the global economy. In fact, Sorenson pointed out that as the recovery of the US economy this time around was more moderate than in the past, he expects the economy to grow for a longer period as well. This would of course mean prolonged growth for Marriott International Inc (NASDAQ:MAR).

Disclosure: none