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We recently compiled a list of the 10 Best Leisure Stocks To Buy Now. In this article, we will look at where Marriott International, Inc. (NASDAQ:MAR) stands against the best leisure stocks to buy now.
In recent years, the leisure market has experienced remarkable growth. According to Market Research Intellect, the size of the global leisure market was estimated at $1.46 trillion in 2023 and is projected to expand at a compound annual growth rate of 21.8% from 2024 to 2031, when it will have grown to $8.6 trillion.
Along with growth, according to the YouGov survey, there were also notable changes in the leisure and entertainment industry in 2023 due to changing customer demands and technological breakthroughs. Even though 81% of US and 79% of UK customers recognize the value of museums, more than half of them only occasionally visit them. On the other hand, only 5% of people in the APAC and UAE skip theme parks, compared to 30% in North America.
While out-of-home entertainment expenses are on the rise, 13% of customers intend to spend more. Additionally, 36% of viewers find advertisements entertaining, and 36% of them are using virtual reality. In the United States, 10% prefer to buy movie tickets in advance, while 27% are concerned about how AI breakthroughs may affect professions, notably in information technology and accounting.
In the meantime, gambling is changing; 70% of US gamblers are open to sports betting with AI assistance, and cryptocurrency betting is becoming more popular in the US and the UK. As we have mentioned in our article, “10 Best Sports Betting Stocks to Buy Now,” generative AI is projected to dramatically impact sports betting in the next 12-18 months.
As per YouGov study, with 10% of UK consumers possessing smart devices and 24% looking at second-hand equipment, the fitness industry has also experienced growth. In general, live events such as food and drink festivals remain popular; even with safety concerns, 45% of attendees want to participate in 2024. Lastly, a shift in consumer views is evident in the rise of dynamic pricing, particularly in the US, where 54% of consumers are willing to pay more to support artists.
On the other hand, the size of the global leisure travel market was valued at $340.31 billion in 2022 and is projected to grow at a CAGR of 22.6% from USD 417.3 billion in 2023 to $2129.96 billion by 2031, as per SkyQuest.
Regionally, North America has been the market leader for leisure travel, especially the United States and Canada. However, when it comes to the global leisure travel industry, Asia-Pacific is expanding at the fastest rate. Countries in Southeast Asia, such as China and India, are major destinations for tourists in the area.
Amid the growth, a most recent Longwoods International tracking study of American travelers indicates that 39% of them plan to go abroad for leisure over the next 12 months. Furthermore, 34% of those who plan to travel abroad for leisure say they will travel abroad more this year, 50% plan to take about the same number of such trips, and only 16% say they would travel abroad less.
Amir Eylon, President and CEO of Longwoods International, stated that the expected boost in international travel by Americans is impressive, given lingering concerns about inflation and the financial health of the U.S. consumer. Moreover, he revealed that it is further evidence that American travelers see COVID-19 fading away in their rear-view mirror.
Methodology:
We sifted through holdings of leisure ETFs and online rankings to form an initial list of 20 leisure stocks. Then we selected the 10 stocks that were the most popular among institutional investors. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q2 2024. We have used the stock’s Revenue Growth Rate (year-over-year) as a tie-breaker in case two or more stocks have the same number of hedge funds invested.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here)
Marriott International, Inc. (NASDAQ:MAR)
Number of Hedge Fund Holders: 54
Revenue Growth Rate (year-over-year): 17.63%
Almost thirty different brands are managed by Marriott International, Inc. (NASDAQ:MAR) with 1.7 million rooms. As of the end of 2023, 10% of all rooms fell into the luxury category, 42% into premium, 46% into select service, 1% into midscale, and 1% into other categories.
The most well-known lifestyle brands are Sheraton, Marriott, and Courtyard; the more recent brands are Autograph, Tribute, Moxy, Aloft, and Element. As of December 31, 2023, managed or franchised accommodations accounted for 97% of all rooms. North America makes up 63% of all the rooms. The majority of the company’s revenue and profits come from management, franchise, and incentive fees. Overall, in 2023, the revenue grew by 17.63% since demand for travel increased, and its industry-leading portfolio grew.
Analysts have high hopes for this stock and believe that Marriott’s strong intangible asset, which is the foundation of its broad moat and is well-liked by both hotel owners and customers, will increase the company’s worldwide market share over the coming years. Since 2019, Marriott has debuted a number of new brands and renovated a sizable amount of its main Marriott and Courtyard locations.
These actions strengthen the positive posture and position well for next-generation travels. In fact, the company’s newest brands, StudioRes, City Express, and Four Points, have the potential to grow the company’s footprint into the midscale and extended-stay segments, as well as build several hundred properties annually over the next few years. Additionally, the partnership it enters into with Sonder in August 2024 adds around 10,000 rooms to its already growing inventory of homes, villas, and apartments.
Furthermore, with 210 million members (as of June 30, 2024), the company’s loyalty program is deemed the best in the hospitality industry by Morningstar analysts, who also believe that it encourages independent hotel owners to affiliate with the company’s brands.
Marriott International, Inc. (NASDAQ:MAR) has strengthened its long-term brand advantage through the acquisition of Starwood in 2016 and its 2023 alliance with MGM’s portfolio of casinos. This is because Starwood’s worldwide luxury portfolio and MGM’s leading position in the gambling industry complement Marriott’s dominant upper-scale position in North America.
Terry Smith’s Fundsmith LLP is the shareholder in the company, with 4,264,511 shares worth $1.03 billion.
Overall MAR ranks 6th on our list of the best leisure stocks to buy now. While we acknowledge the potential of MAR as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than MAR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This post was originally published on Insider Monkey.
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