Marriott expands with Sonder licensing deal

BETHESDA, Md. - Marriott International, Inc. (NASDAQ: NASDAQ:MAR) has entered into a long-term licensing agreement with Sonder Holdings Inc. (NASDAQ: SOND), indicating a significant expansion of its portfolio. The collaboration, named "Sonder by Marriott Bonvoy," is set to incorporate over 9,000 rooms from Sonder's current and upcoming properties into Marriott's offerings by the end of this year, with an additional 1,500 rooms in the pipeline.

This strategic move is projected to bolster Marriott's full year 2024 net rooms growth to between 6 to 6.5 percent. Sonder, known for its apartment-style urban lodgings, aligns with Marriott's commitment to providing diverse accommodation options catering to various traveler needs, including extended stays.

Tim Grisius, Global Officer for M&A, Business Development, and Real Estate at Marriott International, expressed enthusiasm about the integration of Sonder's assets, which are expected to enhance Marriott's extended-stay options in key global markets. Sonder's digital-first approach and appeal to younger demographics complement Marriott's existing portfolio.

Marriott Bonvoy members can look forward to earning and redeeming points at approximately 200 Sonder by Marriott Bonvoy properties starting later this year. Full integration of Sonder's properties into Marriott's digital platforms, including Marriott.com and the Marriott Bonvoy app, is anticipated by 2025.

The announcement contains forward-looking statements regarding the expected outcomes of the agreement and should be considered with caution due to potential risks and uncertainties.

Marriott International, a hospitality leader with a vast array of brands in its portfolio, continues to expand its global presence through strategic partnerships and a focus on innovation in the travel industry. This information is based on a press release statement.

In other recent news, Marriott International Inc. issued $1.5 billion in new debt securities, with net proceeds totaling approximately $1.48 billion, intended for general corporate purposes. This move aligns with Marriott's broader financial strategy and follows the filing of a Prospectus and Prospectus Supplement with the Securities and Exchange Commission. Marriott also reported significant growth in net rooms and global revenue per available room (RevPAR) in the second quarter of 2024. Despite a dip in Greater China's RevPAR due to macroeconomic factors, Marriott recorded substantial international growth, particularly in the Asia Pacific region, excluding China.

Analyst firm Mizuho maintained a neutral stance on Marriott's stock, despite the company surpassing expectations in its second-quarter financial performance. Mizuho adjusted its outlook on Marriott's shares, reducing the price target due to concerns including a slowdown in China, deceleration in hotel leisure spending, and questions regarding the sustainability of Marriott's earnings algorithm.

Marriott's second-quarter performance in 2024 showcased resilience in the face of global economic pressures. The company's net rooms increased by 6% year-over-year, and global RevPAR rose nearly 5%, driven by a 3% increase in average daily rates and occupancy levels reaching 73%. Despite a decline in Greater China's RevPAR due to macroeconomic challenges, Marriott adjusted its full-year RevPAR growth outlook to 3-4% and expects to return approximately $4.3 billion to shareholders.

InvestingPro Insights

Marriott International (NASDAQ: MAR) has been making headlines with its recent licensing agreement with Sonder Holdings, and the financial metrics from InvestingPro provide a deeper insight into the company's performance and market position. As of the last twelve months leading up to Q2 2024, Marriott boasts a substantial market capitalization of $62.09 billion, underscoring its significant presence in the hospitality industry.

The company's gross profit margin is particularly impressive, standing at 81.77%, which reflects its ability to maintain profitability despite the costs associated with its vast hotel operations. This financial efficiency is a testament to Marriott's business model and operational excellence, aligning with the InvestingPro Tip that highlights the company's impressive gross profit margins.

However, it's important to note that Marriott is trading at a high P/E ratio of 21.95, which could suggest that the stock is priced at a premium relative to near-term earnings growth. This aligns with the InvestingPro Tip that points out the company's high P/E ratio in relation to its earnings growth. Investors may want to consider this when evaluating the company's stock for their portfolios.

For those interested in further insights, there are additional InvestingPro Tips available, which can be accessed for Marriott at https://www.investing.com/pro/MAR. These tips provide valuable information that could help investors make more informed decisions.

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