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Solid Contract Sales Boosts Marriott Vacations (VAC) Prospects

·5-min read

Marriott Vacations Worldwide Corporation VAC is likely to benefit from solid contract sales, digital initiatives and vacation ownership business. Also, focus on Owner benefit and exchange program bode well.

Shares of Marriott Vacations have gained 3.2% in the past three months compared with the industry’s 0.2% growth. The upside was backed by a solid earnings surprise history. Marriott Vacations earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and matched once. Earnings estimates for full-year 2022 and 2023 have moved up 1% and 4.9%, respectively, in the past 30 days. This positive trend signifies bullish analysts’ sentiments and justifies the company’s Zacks Rank #1 (Strong Buy). This indicates robust fundamentals and the expectation of outperformance in the near term. You can see the complete list of today’s Zacks #1 Rank stocks here.

Zacks Investment Research
Zacks Investment Research


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Major Growth Drivers

Marriott Vacations continues to witness robust recovery during second-quarter 2022. While both occupancies and tours are witnessing growth in the second quarter, VPGs remain well above the 2019 levels. The company reported benefits from its development and rental businesses. VAC reported contract sales of $506 million in the second quarter of 2022, up 40% from $362 million reported in the prior-year quarter. For the second half of 2022, VAC anticipates contract sales to grow double-digits (on a year-over-year basis), backed by an increase in tours and strength in VPGs.

VAC emphasizes on increasing the use of digital tools to strengthen its infrastructure, grow online package sales, enable self-service bookings, make real-time offerings to enhance the overall customer experience and drive back-office efficiencies. Also, the company is making good progress on the technology needed to link Marriott, Westin and Sheraton products into a single points-based offering. The initiative brings the respective vacation ownership products together, thereby allowing users with more destinations and flexible usage options across the Marriott-branded portfolio. During the second quarter of 2022, the company initiated the rollout of its newly-unified product and reported positive owner feedback on account of the same.

Marriott Vacations focuses on high vacation ownership business to drive growth. In April 2022, the company rebranded Welk's points program as the Hyatt Vacation Club Platinum program and allowed the conversion of Welk sales centers to sell Hyatt-branded vacation ownership products. The Platinum program includes expanded vacation benefits and access to a collection of upscale resorts. It stated that initiatives concerning Welk owners with the ability to trade their points for World of Hyatt points are in the pipeline. During the second quarter of 2022, the company launched a new Owner benefit and exchange program - Abound by Marriott Vacations. The program focuses on unifying Marriott branded vacation ownership products by providing access to more than 90 branded resorts (including Marriott Vacation Club, Sheraton Vacation Club and Westin Vacation Club) using a common points currency. It also offers access to more than 8,000 Marriott Bonvoy hotels, 2,000 vacation homes, and 2,000 unique experiences (like cruises, guided and culinary tours, premiere events and outdoor adventures). The company intends to leverage the program with technological investments to drive growth in the upcoming periods.

Marriott Vacations have been witnessing improvement in occupancy rates, thereby highlighting people’s willingness to go on vacations. During the second quarter of 2022, the company reported solid occupancies with respect to its Aqua-Aston business. The company reported year-over-year growth in occupancies and RevPAR. Also, it reported a solid recovery in domestic markets (Hawaii) and Asia-Pacific. Going forward, much optimism prevails as the company noted increasing willingness among customers to resume travel.

3 Picks You Can’t Miss Out On

Some better-ranked stocks in the Zacks Consumer Discretionary sector are Playa Hotels & Resorts N.V. PLYA, Marriott International, Inc. MAR and Choice Hotels International, Inc. CHH.

Playa Hotels sports a Zacks Rank #1. PLYA has a trailing four-quarter earnings surprise of negative 8.8%, on average. The stock has gained 8.8% in the past year.

The Zacks Consensus Estimate for PLYA’s current financial year sales and EPS indicates an increase of 54.2% and 195.8%, respectively, from the year-ago period’s reported levels.

Marriott carries a Zacks Rank #2 (Buy). MAR has a trailing four-quarter earnings surprise of 18.6%, on average. The stock has increased 19.9% in the past year.

The Zacks Consensus Estimate for MAR’s current financial year sales and EPS indicates growth of 46.1% and 101.3%, respectively, from the year-ago period’s reported levels.

Choice Hotels carries a Zacks Rank #2. CHH has a trailing four-quarter earnings surprise of 11.2%, on average. The stock has declined 0.4% in the past year.

The Zacks Consensus Estimate for CHH’s current financial year sales and EPS indicates growth of 21.2% and 19.4%, respectively, from the year-ago period’s reported levels.


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