Core Viewpoint - Despite being out of favor on Wall Street with a year-to-date decline of nearly 7%, Marriott International is actively repurchasing a significant amount of stock, presenting potential investment opportunities amidst the AI stock momentum [1] Financial Performance - In the second quarter, Marriott reported a 6% year-over-year increase in adjusted revenue, exceeding $1.8 billion, alongside a similar rise in adjusted earnings per share [4] - Revenue per available room (RevPAR) increased by 1.5% globally in Q2, indicating the company's pricing power even in a challenging macroeconomic environment [9] Growth Drivers - Marriott's net rooms growth is projected to approach 5% for the full year, showcasing the company's expansion strategy [5] - The loyalty program, Marriott Bonvoy, has grown to 248 million members, an 18% increase year-over-year, with 69% of rooms booked globally in Q2 coming from these members [6] - Co-branded credit card fees have risen approximately 10% year-over-year, reflecting strong global card spending [7] - Strategic partnerships with companies like Uber and Starbucks are enhancing customer engagement and loyalty [8] Capital Return Program - Marriott plans to return about $4 billion, approximately 6% of its current market capitalization, to shareholders through dividends and share repurchases during 2025 [12] - The company has a history of steadily growing its dividend, making it an attractive option for dividend-seeking investors [10][13] Investment Outlook - With diversified growth drivers, a dividend yield exceeding 1%, and a reasonable valuation, Marriott is positioned as a solid dividend stock for long-term investment [13]

Core Points - Marriott International, Inc. declared a quarterly cash dividend of 67 cents per share, payable on September 30, 2025, to shareholders of record as of August 21, 2025 [1] - The board increased the authorization to repurchase Class A common stock by an additional 25 million shares, in addition to approximately 7.4 million shares remaining from prior authorizations [1] - Year-to-date through July 30, 2025, the company repurchased 6.4 million shares for a total of $1.7 billion [1] Company Overview - Marriott International, Inc. is based in Bethesda, Maryland, and operates a portfolio of over 9,600 properties across more than 30 brands in 143 countries and territories [2] - The company engages in the operation, franchising, and licensing of hotel, residential, timeshare, and other lodging properties globally [2] - Marriott offers the Marriott Bonvoy® travel platform, which is highly awarded [2]

Core Viewpoint - Marriott's brand transformation of its Fairfield Inn in China reflects its commitment to deepening its market presence in the region, which has become a significant growth engine for the company despite facing challenges in the Greater China market [1][3]. Group 1: Financial Performance - In Q2, Marriott reported total revenue of approximately $6.744 billion, a year-on-year increase of 4.73%, while net profit was about $763 million, a decrease of 1.17% [5]. - Adjusted net profit for the same period was approximately $728 million, reflecting a year-on-year growth of 1.68% [5]. - Adjusted EBITDA for Q2 was around $1.415 billion [5]. Group 2: Market Performance - In the Greater China region, RevPAR (Revenue per Available Room) saw a year-on-year decline of 0.5%, amounting to $73.75, while occupancy (OCC) was at 66.9%, showing a slight increase of 0.3 percentage points [6][7]. - For the first half of the year, Greater China's RevPAR decreased by 1% to $73.19, with an OCC of 65.1% [8][9]. - Globally, Marriott's OCC was 72.2%, a decrease of 0.3 percentage points, with the highest OCC in Europe at 75.3% [7]. Group 3: Business Outlook - Marriott's CEO indicated that despite macroeconomic uncertainties, global RevPAR grew by 1.5% in Q2, driven by leisure travel, although demand for select service hotels has declined [11]. - The company anticipates a net room growth of nearly 5% for the year, with a focus on the midscale to upscale market [14][13]. - Marriott has adjusted its revenue growth expectations for 2025 to a range of 1.5% to 2.5%, with adjusted earnings per share projected between $9.85 and $10.08 [15].

Core Viewpoint - Marriott's brand transformation of its Fairfield Inn in China reflects its commitment to deepening its market presence, despite facing challenges in the Greater China region, which is currently the only market under pressure for the company [2][3]. Financial Performance - In Q2, Marriott reported total revenue of approximately $6.744 billion, a year-on-year increase of 4.73%, while net profit was about $763 million, a decrease of 1.17% [3]. - Adjusted net profit for the same period was approximately $728 million, reflecting a year-on-year growth of 1.68% [3]. - Adjusted EBITDA for Q2 was around $1.415 billion [3]. RevPAR and Occupancy Rates - Global RevPAR increased by 1.5% year-on-year, with the U.S. and Canada markets remaining flat, while international markets saw a growth of 5.3% [3]. - In the Greater China region, RevPAR recorded a decline of 0.5% year-on-year, amounting to $80.06 [4]. - The overall occupancy rate for Marriott's global hotels was 72.2%, a decrease of 0.3 percentage points year-on-year, with Greater China's occupancy rate at 66.9%, reflecting a 0.3 percentage point increase [5]. Market Challenges - The Greater China region is experiencing a decline in average daily rate (ADR), which fell by 1.7% to $112.36, marking it as the only region with a decrease [6][7]. - The company noted that the business travel segment is under pressure, with government-related travel contributing to a decline in occupancy rates [9][10]. Future Outlook - Marriott's CEO indicated that despite macroeconomic uncertainties, global RevPAR growth is expected to be between 1.5% and 2.5% for 2025, with adjusted earnings per share projected between $9.85 and $10.08 [12]. - The company aims for a net room growth of approximately 5% for the year, focusing on the midscale to upscale market segments [11][12].

Group 1: Impact of Tariffs on Industries - The impact of President Trump's tariff policy is becoming evident, particularly affecting the industrial, manufacturing, and automotive sectors, with companies like Caterpillar, McDonald's, and Marriott reporting increased raw material costs and decreased demand [1][2] - Global companies are expected to face a profit impact of approximately $15 billion by 2025 due to trade policy, primarily affecting industrial, manufacturing, and automotive industries, while financial and technology sectors are less impacted [2] - Caterpillar reported a 0.7% decline in Q2 revenue, with a 6.5% increase in commodity costs, indicating that tariffs may pose a greater challenge to profitability in the second half of 2025 [2] Group 2: Company-Specific Financial Impacts - Ford Motor Company experienced a 5% increase in Q2 revenue to $50.2 billion, but adjusted EBIT fell to $2.1 billion from $2.8 billion year-over-year, with an estimated net tariff impact of about $2 billion for the fiscal year [2] - Molson Coors anticipates a cost increase of $20 million to $35 million in the second half of the year due to rising aluminum prices from tariffs, which doubled from 25% to 50% [3] - Marriott International lowered its 2025 forecast due to weak travel demand, while Archer Daniels Midland reported its lowest profit in five years [3] Group 3: Market Resilience and Future Outlook - Despite ongoing trade tensions and tariff increases, the market has shown resilience, with the S&P 500 and Nasdaq indices rising over 30% since April [4] - Approximately 80.3% of the 370 companies in the S&P 500 that have reported earnings exceeded analyst expectations, with an earnings growth rate of 11.9% [4] - Analysts suggest that while some industries may be affected by tariffs, a clearer picture will emerge in the coming quarters, with potential for a market pullback of 7% to 15% anticipated in September to October [4][6]

Core Viewpoint - Marriott International has reduced its full-year revenue growth and profit forecasts due to a slowdown in travel demand in the US, particularly affecting its lower-cost hotel segments [1][2][5]. Revenue and Profit Forecast - The company now expects 2025 revenue growth of 1.5% to 2.5%, down from a previous guidance of 1.5% to 3.5% [3]. - Profit guidance has been lowered to $9.82 to $10.08 per share, compared to the previous range of $9.85 to $10.08 [3]. Impact of Economic Factors - The slowdown is attributed to "heightened macro-economic uncertainty" and elevated inflation affecting budget-conscious travelers [4][3]. - A significant decline of 17% in bookings from government workers has also impacted lower-cost hotels [2]. Performance by Segment - Luxury hotel brands, including Ritz-Carlton and JW Marriott, experienced a 4.1% increase in room revenue in the US and Canada during the second quarter [7]. - The average room rate for luxury properties was reported at $417, while budget properties averaged $161 [7]. Overall Revenue Growth - Marriott's total revenue rose by 5% to $6.74 billion, driven by upscale properties and international business [8]. - The company did not comment on international tourism trends but noted a pullback in visitors from Canada and Mexico due to trade policy changes [8]. Legislative Impact - The signing of Trump's "One Big Beautiful Bill" is seen as a factor that reduced uncertainty in the industry, positively impacting consumer and franchisee confidence [10][11].

Core Insights - Marriott International, Inc. (MAR) reported strong second-quarter 2025 results, with adjusted earnings and revenues exceeding the Zacks Consensus Estimate for the third consecutive quarter, leading to a 6.1% surge in stock price during pre-market trading [1][4]. Financial Performance - Adjusted earnings per share (EPS) for Q2 were $2.65, surpassing the consensus estimate of $2.64, and up from $2.50 in the prior-year quarter [4]. - Quarterly revenues reached $6,744 million, exceeding the consensus mark of $6,666 million, reflecting a 5% year-over-year increase [4]. - Base management and franchise fees were $340 million and $860 million, respectively, marking increases of 3% and 5% year over year [5]. - Incentive management fees rose to $200 million, a 3% increase from $195 million in the prior-year quarter [5]. Revenue Metrics - Global revenue per available room (RevPAR) increased by 1.5% year over year, supported by a 1.9% rise in average daily rate (ADR), despite a 0.3% decline in occupancy [6]. - International comparable system-wide RevPAR grew by 5.3% year over year, with occupancy and ADR increasing by 0.9% and 3.9%, respectively [7]. Development and Growth - The company signed nearly 32,000 rooms during the quarter, with over 70% in international markets, ending the quarter with a record pipeline of over 590,000 rooms [3]. - Conversions accounted for approximately 30% of room signings and openings in the first half of the year, with net rooms growth expected to approach 5% for the full year [3]. Future Outlook - For Q3, management anticipates gross fee revenues between $1.310 billion and $1.325 billion, with adjusted EBITDA expected to range from $1.288 billion to $1.318 billion [12]. - The company projects worldwide system-wide RevPAR growth to be flat to 1% in Q3, and for 2025, it expects RevPAR to increase by 1.5-2.5% year over year [13]. - Adjusted EBITDA for 2025 is anticipated to be between $5.310 billion and $5.395 billion, with EPS expected in the range of $9.85-$10.09 [14].

Core Insights - Marriott International reported $6.74 billion in revenue for Q2 2025, a year-over-year increase of 4.7% and an EPS of $2.65 compared to $2.50 a year ago, exceeding the Zacks Consensus Estimate of $6.67 billion by 1.17% and delivering an EPS surprise of 0.38% [1] Financial Performance Metrics - Comparable Systemwide International Properties - Worldwide - REVPAR was reported at 136, slightly below the estimated 138 [4] - Comparable Systemwide International Properties - Worldwide - REVPAR Growth Rate was 1.5%, compared to the estimated 1.8% [4] - Franchised Rooms totaled 1,138,838, exceeding the average estimate of 1,127,367 [4] - Managed Rooms in the US & Canada were 213,382, below the average estimate of 217,370 [4] - Gross fee revenues reached $1.4 billion, surpassing the $1.39 billion estimate, reflecting a 4.2% year-over-year change [4] - Net fee revenues were $1.37 billion, slightly above the estimated $1.36 billion, also showing a 4.2% increase year-over-year [4] - Owned, leased, and other revenue was $441 million, exceeding the estimated $411.32 million, marking an 11.7% year-over-year increase [4] - Franchise fees amounted to $860 million, slightly above the estimated $858.35 million, with a 5.1% year-over-year increase [4] - Incentive management fees were reported at $200 million, exceeding the estimate of $190.56 million, reflecting a 2.6% year-over-year change [4] - Cost reimbursements totaled $4.93 billion, surpassing the estimated $4.89 billion, indicating a 4.3% year-over-year increase [4] - Base management fees were $340 million, slightly below the estimated $341.65 million, with a 3% year-over-year increase [4] Stock Performance - Marriott's shares have returned -6.9% over the past month, contrasting with the Zacks S&P 500 composite's +1% change, and the stock currently holds a Zacks Rank 4 (Sell) [3]

[Part I. Financial Information](index=3&type=section&id=Part%20I.%20Financial%20Information) This section provides Marriott's unaudited condensed consolidated financial statements and management's discussion for the period ended June 30, 2025 [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents Marriott's unaudited condensed consolidated financial statements for the period ended June 30, 2025 [Condensed Consolidated Statements of Income](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) For Q2 2025, total revenues increased to $6.74 billion, while net income slightly decreased to $763 million Q2 & H1 2025 vs 2024 Income Statement Highlights (in millions, except EPS) | Metric | Q2 2025 | Q2 2024 | YoY Change | H1 2025 | H1 2024 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | $6,744 | $6,439 | +4.7% | $13,007 | $12,416 | +4.8% | | **Gross Fee Revenues** | $1,400 | $1,343 | +4.2% | $2,675 | $2,553 | +4.8% | | **Operating Income** | $1,236 | $1,195 | +3.4% | $2,184 | $2,071 | +5.5% | | **Net Income** | $763 | $772 | -1.2% | $1,428 | $1,336 | +6.9% | | **Diluted EPS** | $2.78 | $2.69 | +3.3% | $5.17 | $4.62 | +11.9% | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets increased to $27.34 billion, driven by accounts receivable and intangible assets Balance Sheet Summary (in millions) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and equivalents | $671 | $396 | | Total Assets | $27,342 | $26,182 | | Long-term debt | $14,546 | $13,138 | | Liability for guest loyalty program | $7,775 | $7,519 | | Total Liabilities | $28,342 | $27,829 | | Stockholders' deficit | $(2,964) | $(2,992) | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities decreased to $1.29 billion for the first six months of 2025 Six Months Ended June 30 Cash Flow Summary (in millions) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,290 | $1,551 | | Net cash used in investing activities | $(286) | $(225) | | Net cash used in financing activities | $(737) | $(1,322) | | **Increase in Cash** | **$267** | **$4** | - Major uses of cash in financing activities for H1 2025 included **$1.5 billion** for treasury stock purchases and **$357 million** for dividend payments[19](index=19&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail significant accounting policies, including the citizenM brand acquisition and debt issuance - In Q2 2025, Marriott agreed to acquire the citizenM brand and related intellectual property for **$355 million**, with potential earn-out payments up to **$110 million**[23](index=23&type=chunk) - Regarding the Starwood Data Security Incident, the U.S. Court of Appeals reversed a class certification, holding a class-action waiver enforceable[32](index=32&type=chunk)[33](index=33&type=chunk) - In February 2025, the company issued **$500 million** of Series RR Notes and **$1.5 billion** of Series SS Notes, with net proceeds of approximately **$1.96 billion** used for general corporate purposes[41](index=41&type=chunk) Segment Profit (in millions) | Segment | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | U.S. & Canada | $786 | $787 | $1,430 | $1,412 | | EMEA | $157 | $153 | $231 | $234 | | Greater China | $53 | $47 | $98 | $98 | | APEC | $76 | $62 | $156 | $134 | | **Total Reportable Segment Profit** | **$1,072** | **$1,049** | **$1,915** | **$1,878** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=15&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's performance, highlighting a 1.5% increase in worldwide RevPAR for Q2 2025 [Business and Overview](index=15&type=section&id=Business%20and%20Overview) This section details Marriott's asset-light business model and key performance indicators like RevPAR Systemwide Comparable RevPAR Growth (Constant $) | Region | Q2 2025 vs Q2 2024 | H1 2025 vs H1 2024 | | :--- | :--- | :--- | | U.S. & Canada | 0.0% | +1.6% | | International | +5.3% | +5.7% | | **Worldwide** | **+1.5%** | **+2.8%** | - The development pipeline contained over **590,000 rooms** at the end of Q2 2025, with **40%** under construction or in conversion[65](index=65&type=chunk) - The company expects full-year 2025 net rooms growth to approach **5%**, including rooms from the citizenM brand acquisition[66](index=66&type=chunk) [Consolidated Results](index=18&type=section&id=Consolidated%20Results) Analysis of consolidated results shows a 4% increase in net fee revenues for Q2 2025, driven by franchise fees Fee Revenue Changes (Q2 2025 vs Q2 2024) | Fee Type | Change (in millions) | % Change | | :--- | :--- | :--- | | Base management fees | +$10 | +3% | | Franchise fees | +$42 | +5% | | Incentive management fees | +$5 | +3% | | **Net fee revenues** | **+$55** | **+4%** | - General, administrative, and other expenses decreased in Q2 and H1 2025 primarily due to lower compensation costs[78](index=78&type=chunk) - Interest expense increased by **$30 million (17%)** in Q2 2025 and **$59 million (18%)** in H1 2025, mainly due to higher debt balances[79](index=79&type=chunk) [Liquidity and Capital Resources](index=20&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with a $4.5 billion credit facility and expects to continue returning cash to shareholders - The company's long-term debt had a weighted average interest rate of **4.5%** and a weighted average maturity of approximately **5.6 years** as of Q2 2025[84](index=84&type=chunk) - Capital expenditures and other investments are expected to total approximately **$1.355 billion to $1.455 billion** for the full year 2025, including the **$355 million** citizenM brand acquisition[92](index=92&type=chunk) - In Q2 2025, the company repurchased **2.8 million shares** for **$0.7 billion**; year-to-date through July 30, 2025, **6.4 million shares** were repurchased for **$1.7 billion**[93](index=93&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=22&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company states that its exposure to market risk has not materially changed since the end of the fiscal year 2024 - There have been no material changes in the company's exposure to market risk since December 31, 2024[98](index=98&type=chunk) [Controls and Procedures](index=22&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of the end of the quarter - Based on an evaluation as of the end of Q2 2025, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[99](index=99&type=chunk) - No changes in internal control over financial reporting occurred during Q2 2025 that materially affected these controls[100](index=100&type=chunk) [Part II. Other Information](index=23&type=section&id=Part%20II.%20Other%20Information) This section covers legal proceedings, risk factors, equity sales, and other disclosures [Legal Proceedings](index=23&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 6 for details on the Starwood Data Security Incident litigation and discloses an EPA letter - In Q2 2025, the company received a letter from the EPA regarding alleged violations of the Clean Air Act at a managed hotel, but does not expect the matter to be material[104](index=104&type=chunk) [Risk Factors](index=23&type=section&id=Item%201A.%20Risk%20Factors) The company reports no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K - There are no material changes to the risk factors discussed in the 2024 Form 10-K[106](index=106&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=23&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's share repurchase activity for the second quarter of 2025 Q2 2025 Share Repurchases (in millions, except per share amounts) | Period | Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 1.1 | $223.08 | | May 2025 | 0.8 | $266.95 | | June 2025 | 0.9 | $262.69 | | **Total Q2** | **2.8** | **$248.54** | [Other Information](index=23&type=section&id=Item%205.%20Other%20Information) The company reports that no director or Section 16 officer adopted or terminated any Rule 10b5-1 trading plans during Q2 2025 - No director or Section 16 officer adopted or terminated any Rule 10b5-1 plans or other trading arrangements during Q2 2025[108](index=108&type=chunk) [Exhibits](index=24&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications and various agreements

Financial Data and Key Metrics Changes - Marriott reported strong second quarter financial results, with global RevPAR increasing by 1.5% and net rooms growing by 4.7% year over year [5][10] - Total gross fee revenue rose by 4% year over year to $1.4 billion, driven by rooms growth and higher RevPAR [18] - Adjusted EBITDA increased by 7% to $1.42 billion [19] Business Line Data and Key Metrics Changes - International RevPAR rose over 5%, with APAC experiencing a 9% increase and EMEA a 7% increase [6][7] - RevPAR in the US and Canada was flat year over year, with select service and extended stay RevPAR declining around 1.5% [9] - Luxury RevPAR grew by 4%, while RevPAR in Greater China declined by 0.5% due to a weaker macro environment [8][10] Market Data and Key Metrics Changes - RevPAR in the Middle East rose over 10%, while Europe saw a 4% increase [7] - Government room nights in the US and Canada were down 16% year over year, impacting overall demand [21] - Group revenues for 2026 are pacing up 8% in the US and Canada, indicating a positive outlook for future periods [21] Company Strategy and Development Direction - The company aims to enhance its technology infrastructure through a multi-year transformation project, focusing on loyalty, reservations, and property management systems [33][34] - Marriott is expanding its luxury portfolio and has launched new brands like Series by Marriott to attract value-conscious travelers [12][13] - The company is committed to maintaining its investment-grade rating while returning excess capital to shareholders through dividends and share repurchases [27] Management's Comments on Operating Environment and Future Outlook - Management expects full-year RevPAR growth to be in the lower end of the prior range, between 1.5% to 2.5% [10][20] - The luxury and full-service segments are anticipated to outperform lower-end chain scales, with a positive outlook for the fourth quarter due to holiday shifts and major events [20] - Economic uncertainty remains a concern, but management is optimistic about the long-term growth potential driven by strong demand in luxury and midscale segments [21][22] Other Important Information - The company announced the retirement of CFO Leeny Oberg, with a transition plan in place for her successors [15][16] - Marriott Media Network was introduced to connect brands with guests, leveraging insights into traveler behavior [14][58] Q&A Session Summary Question: Technology transformation project status and expected changes - The company is in the midst of a multi-year transformation of its main systems, with a focus on enhancing guest and owner experiences through new technology [33][34] Question: Implications of recent legislation on development and renovations - The passing of the legislation has reduced uncertainty, potentially driving renovation capital and development optimism among owners [42][43] Question: Group business outlook and lead volumes - Group revenues for 2026 are tracking positively, with no significant cancellations noted, indicating a stable outlook [48][49] Question: Marriott Media Network potential - Early interest from advertisers in the Marriott Media Network has exceeded expectations, indicating a promising future for this initiative [56][58] Question: Residential branding fees volatility - The company remains committed to its residential business, which is a smaller part of the overall fee stream but has high return potential [62][64] Question: Business transient trends and outlook - Business transient RevPAR was down 1% globally, excluding government demand, but corporates are returning to normal travel patterns [68][70]