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
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.
Closing remarks
There is no doubt that The Walt Disney Company (NYSE:DIS) remains a great buy moving forward based on the fact that all segments of the company (and not just the parks) are just beginning to build momentum. Further upside for the segment can be expected based on the recent acquisition of Lucasfilm and the Star Wars brand, the MyMagic Plus initiative, and plans to build a 963 acre $3.66 billion resort in Shanghai. Groundbreaking was in 2011 with an opening expected in 2016, according to Wikipedia.
On another note, it is great to see that these leisure companies are reporting record business, as it gives a glimpse in to the positive and improving nature of the macro and micro economic environment.
The article Leisure Stocks That Will Help You Sleep at Night originally appeared on Fool.com and is written by Jayson Derrick.
Jayson is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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