Sell Signals Exist in Marriott International (MAR)

November 11, 2013, 10:33 am ET, BY Neal- Contributor| Editor: Thomas H. Kee Jr. (Follow on LinkedIn)

Marriott International Inc (NASDAQ:MAR) continues to benefit from improving occupancy rates and room pricing.  Management is focusing on unit-level improvements as well as global expansion from its franchised properties and management services. The company says its global expansion in Asia will be a major revenue driver over the next two years.  The stock is up 23% YTD and trading at six-year highs.  Is MAR a buy, sell or hold?

Currently, Marriott owns as many as 3,900 hotel properties and 670,507 timeshare resorts. Almost 850 properties with over 144,000 rooms are either under development or already under construction or undergoing conversion to the company’s brands, mostly at international locations.

Ritz-Carlton Hotel, a subsidiary of Marriott International has announced a major expansion and development initiative that will bring the total number of properties in its portfolio to 100 hotels and resorts around the world by 2016.  Including plans to open a luxury sanctuary on Pearl Island, a private island situated 45 miles south of Panama City.

Arne Sorenson, CEO & President, Marriott International said the company plans to more than double in size in Asia in a massive expansion drive, and will soon enter markets like Bangladesh and Sri Lanka. The company expects China to be a major focus during this expansion. 

Shares of Marriott are up 55% in the last two years and trading near long-term resistance, based on the real-time MAR trading report published by Stock Traders Daily.  Marriott recently tightened its earnings guidance for full-year 2013.  Competitors like Starwood Hotels & Resorts Worldwide Inc (NYSE:HOT).  Wyndham Worldwide Corporation (NYSE: WYN) have very similar stock performances in 2013. 

The company has received analyst upgrades based on strong occupancies, pickup in incentive fees and improving group business outlook. Analysts have also highlighted the company’s history of share repurchases and low cost structure.  The spinoff of Marriott’s timeshare operation in October 2011 has also enabled management to focus on its franchise and hotel management businesses. 

Marriott’s stock has run up 75% since the company successfully spun-off its timeshare operation in 2011, and shares are trading at six-year highs.  Now that earnings are our and analyst upgrades have been released, smart money is going to focus on stock price.  Right now, MAR is testing long-term resistance, based on our real-time trading report.  Recent news has been very good but price matters, especially after such a big move up in share price.  According to rule, we are sellers at resistance, and as long as the stock remains below resistance, we expect lower levels and a test of support. That would make MAR a sell/short at resistance, with risk controls in place if resistance breaks higher.

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