Marriott International said on Monday that it plans to open more than 1,700 hotels in the next three years.
Marriott expects to add 275,000 to 295,000 rooms by 2021, which is expected to generate $400 million in fee income. Marriott said its plan assumes a 1% to 3% annual increase in hotel revenue per available room. The company said that by 2021, full-year earnings per share could be between $7.65 and $8.50. The company said it could buy back $7.6 billion to $9 billion in stock over the next three years.
The Wall Street Journal reported last week that Land & Buildings Investment Management intends to enter the Marriott board of directors. The radical investor holds a small stake in Marriott and is dissatisfied with the company’s acquisition of Starwood Hotels & Resorts International.
According to people familiar with the matter, Land & Buildings believes that there are too many brands in Marriott’s portfolio and does not effectively combine Starwood and Marriott’s reward programs.
Marriott, the parent company of the hotel brands such as Sheraton, Weston and St. Regis, acquired Starwood in 2016.
The company said it expects 44% of the net new rooms to be in North America, and the remaining 56% will be split equally between the Asia Pacific region and Europe, the Middle East and Africa, and the Caribbean and Latin America.
The company expects that by the end of 2021, the proportion of total room rooms in North America will fall to 63%, compared with 67% at the end of 2018. Marriott expects that by the end of 2021, the total number of hotel rooms will increase from 1.3 million at the end of 2018 to nearly 1.6 million.
“Our new three-year plan, with Starwood fully integrated, demonstrates how our fee-based, asset-light business model generates even stronger and more sustainable cash flows. This allows us to invest profitably in our core business at high rates of return and also return significant amounts of capital to shareholders,” said Leeny Oberg, Marriott’s executive vice president and chief financial officer.
“Our proven business model combined with opportunities to leverage our significant scale from the Starwood acquisition uniquely position us for additional shareholder value creation,” Oberg added.Fortune