Why Marriott International stocks plunged Tuesday

What happened

Actions of the hotel company Marriott international (NASDAQ: MAR) The market fell 8.4% on Tuesday as concerns over the coronavirus, or COVID-19, hit the market. The stocks ended the day down 8% and are now down 13.4% for the week.

So what

The concern about the coronavirus is now more than theoretical for investors, especially in the hotel sector. There are reports that the hotels in Hong Kong are practically empty and the first data from the Asia-Pacific region is not very encouraging. According to research firm STR, the occupancy rate decreased by 11.3% in January 2020 to stand at 57.8% and the income per available room fell by 7.5% to $ 60.15 .

Bell on a reception.

Image source: Getty Images.

Hospitality and consumer goods companies are clearly starting to be affected by fears of coronaviruses. Travel is starting to drop, especially in Asia, and this does not bode well for the hotel industry. What we don’t know yet is the length of the recession.

Now what

We do not yet know what the impact of the coronavirus will be on the hotel industry, but the first data do not seem good. If travel fears last a few months, this could have a significant impact on hotel businesses that have strong operating leverage in their operations. As a result, I don’t see it today as a buying opportunity and would take a cautious approach to the hospitality industry right now.

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