Leisure companies have come a long way since their lows in 2008/2009 when leisure spending, and tourism came to an almost complete halt. As the economy turned around for the better, three companies have benefited from an improved environment.
No negotiating here
Priceline.com Inc (NASDAQ:PCLN) reported first quarter earnings that grew 34% to the delight of shareholders, but second quarter guidance was a cause of concern. Second quarter earning guidance of $8.87-$9.45 came in below the consensus of $9.58, sending the stock as low as $705 per share. The stock was up over $50 the next morning, and investors better understood that the lower second quarter guidance simply reflects caution in a somewhat risky macro environment, as well as higher ad spending to continue driving growth.
Long-term prospects remain very favorable for the company based on continued growth in international markets which recorded 43% gross bookings and according to the company’s CFO “saw solid growth rates in all key markets.” The company is also focused on improving the international footprint for rentalcars.com, and has officially welcomed KAYAK to the Priceline.com Inc (NASDAQ:PCLN) family on May 21, all of which will contribute to a continued growth. William Shatner, a.k.a. the Priceline Negotiator, won’t be able to negotiate a lower price for this stock, although there are great deals on 5 Star hotels in Manhattan still available.
Great quarterly results, hike in dividends
Marriott International Inc (NYSE:MAR) reported very strong first quarter results on May 1. Revenue of $3.13 billion came in substantially higher than the $2.81 billion consensus with average daily rate up 5.3%. The key metric is revenue per available room (REVPAR), which accounts for both the price of rooms and how full properties are each night. REVPAR rose 5.8% in the quarter in North American operations, while REVPAR rose 4.6% internationally. Looking forward to the very important REVPAR metric, the company expects full year 2013 REVPAR to increase 4.5%-7% in North America, 3%-5% outside North America, and 4%-7% worldwide.
As if positive guidance wasn’t enough reason to own the stock, the company confirmed plans to return $800 million to $1 billion to investors in the form of share repurchases and dividends. On May 10, the company increased the dividend by $0.04 per share to $0.17, which represents a 30% increase over the previous quarterly dividend.
New attendance records at Disney
The Walt Disney Company (NYSE:DIS) is more than theme parks. It’s movies, merchandising, the ABC Network and cable networks, including the ESPN franchise. But it’s the parks that drive the profit train.
The Walt Disney Company (NYSE:DIS) announced during their second quarter conference call on May 7 that they saw an 8% attendance growth in both of their domestic parks (Disney World and Disneyland). The parks and resorts segment reported higher revenues and operating income, up 14% and 73% respectively. Total segment margins were up almost 400 basis points compared to the prior year. Overall, total revenue for the company’s parks and resorts rose 14% to $3.3 billion, with profit rising 73% to $383 million.
The Walt Disney Company (NYSE:DIS) also plans to implement a plan called ‘MyMagic Plus’ this year, which is usually code for customers spending more money. Magic Plus is essentially a RFID wrist band that will allow guests to purchase food, souvenirs, and pay for upgraded services by having their band scanned. A smartphone app will also allow users to view wait times for rides, or make dining reservations in real time. These advances seem certain to deliver more business per guest.