Why Marriott International Inc's Shares Popped 7% Today

By Travis Hoium Markets Fool.com

What happened

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Shares of hotel chain Marriott International Inc (NASDAQ: MAR) jumped as much as 7.1% on Tuesday after reporting first-quarter earnings results. At 1:30 p.m. EDT shares were holding at a 6.4% gain on the day.

So what

Revenue was up 47% to $5.56 billion and net income jumped 67% to $365 million, or $0.94 per share. On an adjusted basis, which pulls out one-time items, earnings were $1.01 per share compared to the $0.91 per share in earnings analysts were expecting on revenue of $5.29 billion.

Image source: Marriott.

Revenue per available room was up 3.1% and the company added 17,000 rooms to the portfolio in the quarter. It also has another 430,000 rooms in the development pipeline worldwide.

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Now what

Operating conditions are improving and management is using high real estate values to sell assets like the Westin Maui, which sold for $317 million in the quarter. These funds are then expected to be used to return $2 billion to shareholders this year, $1 million of which has already been returned.

The most encouraging sign for investors is that room rates are steadily rising even as the room base grows. That's a recipe for long-term earnings growth and, when combined with the return of capital to shareholders, is a great sign for Marriott International's business and its stock.

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Travis Hoium has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Marriott International. The Motley Fool has a disclosure policy.