Ritz-Carlton to Reopen Rancho Mirage Resort - Analyst Blog

In a bid to cash in on the improving economy, Ritz-Carlton Hotel Company, LLC — a fully owned subsidiary of Marriott International, Inc. (MAR) — is set to reopen a property in Rancho Mirage in May 2014. The luxury resort had closed for the purpose of renovation almost 7 years back. However, the renovation stopped 5 years ago when the primary investor went bankrupt.

Rancho Mirage, a resort city, is located about a couple of hours from Los Angeles and San Diego in Southern California. The 244-room resort is surrounded by the scenic Santa Rosa Mountain range. The resort will offer amenities such as cliff-side swimming, pools, spa, hiking and biking trails, polo grounds, golf courses and tennis courts. In our view, a high-end luxury resort along with the scenic destination will act as a major crowd-puller for Ritz-Carlton.

Ritz-Carlton’s return to Rancho Mirage reflects the area's increasing popularity as a year-round getaway. With the Californian economy recovering steadily, tourism has also picked up in the recent past.

Ritz-Carlton has aggressive plans to expand its presence. Notably, the company announced a major expansion and development initiative in September last year aiming to bring the total number of hotels and resorts around the world to 100 by 2016. Under the initiative, the company announced hotel openings in Japan and Israel. We believe the reopening of the Rancho Mirage resort will be a step toward achieving its goal.

Currently, Marriott International carries a Zacks Rank #2 (Buy). A better-ranked stock in the hotel industry is Huazhu Hotels Group Ltd (HTHT), which carries a Zacks Rank #1 (Strong Buy). However, in the broader leisure services sector, other gaming stocks like Wynn Resorts Ltd. (WYNN) and MGM Resorts International (MGM) can also be considered. While Wynn Resorts carries a Zacks Rank #1, MGM Resorts sports a Zacks Rank #2.

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