Marriott (NYSE:MAR), Starwood (NYSE:HOT) Expect Multyear RevPAR Growth

After their investor days, Marriott (NYSE:MAR) and Starwood (NYSE:HOT) recently said their multiyear RevPAR growth rates will be in the mid to high single digits.

FBR said, "In the wake of Marriott’s (Market Perform) and Starwood’s (Market Perform) recent bullish investor days, where management teams outlined multiyear RevPAR growth expectations in the mid to high single digits, rather than just take it as blind faith that these rates of growth will happen, we felt it prudent to examine the underlying economic drivers that we believe will ultimately drive a sustained recovery. As we look out at the forward reservations that the industry has on its books, we note that after 3Q11, the number of reservations is statistically insignificant and therefore, investing in lodging stocks requires that investors believe economic conditions will continue to improve in order to assume these RevPAR growth rates will come to fruition. In this regard, we examine the impact that GDP, corporate profits, inflation, and unemployment will have on RevPAR, occupancy, and ADR growth.

"Our analysis gives us confidence that 2011 and 2012 will be years of high-single-digit RevPAR growth, and as long as the economy continues to grow at even a moderate pace (+2%), lodging companies should be able to maintain pricing power (pricing power being an important driver in investor sentiment). We believe that a scenario of high-single-digit RevPAR growth will continue to fuel the up-cycle in lodging stock price appreciation."

Marriott closed Thursday at $41.26, up $0.35, or 0.86 percent. Starwood closed at $59.63, up $1.72, or 2.97 percent.