Is Marriott International (MAR) A Worthy Long-Term Investment?

LRT Capital Management, an investment management firm, published its third-quarter 2021 investor letter – a copy of which can be downloaded here. A return of +18.39% was recorded by the LRT Economic Moat strategy year-to-date, extending its 12-month returns to +35.34%. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.

LRT Capital Management, in its Q3 2021 investor letter, mentioned Marriott International, Inc. (NYSE: MAR) and discussed its stance on the firm. Marriott International, Inc. is a Bethesda, Maryland-based multinational company with a $48 billion market capitalization. MAR delivered an 11.76% return since the beginning of the year, while its 12-month returns are up by 14.10%. The stock closed at $147.44 per share on November 26, 2021.

Here is what LRT Capital Management has to say about Marriott International, Inc.  in its Q3 2021 investor letter:

“Marriott is the world’s largest hotel company followed closely by Hilton (HLT) and Intercontinental Hotels Group plc (IHG). The company owns a portfolio of brands from the low end (Courtyard, SpringHill Suites, Aloft), through the mid-tier (Marriott, Sheraton, Westin, Renaissance Hotels), to the luxury high end (JW Marriot, Ritz-Carlton, St. Regis). In total the company had 7,642 properties with over 1.4 million rooms as of the end of Q1 2021.55

The majority (85%) of Marriott’s revenue comes from hotels in the United States, with the rest almost evenly split between Asia Pacific and Europe. Like it’s smaller peer, Hilton, the company today is almost exclusively a manager and franchisor of hotels, not a hotel owner. The company owns 66 hotels, manages 2,083 and franchises 5,493. Like all franchise-based businesses Marriott requires very little capital to grow as it utilizes the investment capital of its hotel-owners/partners to expand. Marriott currently faces a difficult operating environment due to the Covid-19 pandemic and uncertainty about the future of business travel. However, the company is an excellent operator with a somewhat leveraged capital structure (the company acquired Starwood Properties in late 2016) – if pent-up demand for travel materializes post-Covid, as we expect it will, the company will quickly go from losing money to raking in profits. Shares are +17.6% year-to-date and +62.88% over the past twelve months.”

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Based on our calculations, Marriott International, Inc. (NYSE: MAR) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. MAR was in 39 hedge fund portfolios at the end of the third quarter of 2021, compared to 49 funds in the previous quarter. Marriott International, Inc. (NYSE: MAR) delivered a 10.30% return in the past 3 months.

Disclosure: None. This article is originally published at Insider Monkey.