Marriott International(MAR) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Third quarter adjusted EBITDA rose 10% to $1,350 million, exceeding expectations [17] - Adjusted EPS grew 9% year over year [17] - Global RevPAR increased by 0.5%, driven by nearly 1% ADR growth, offsetting a 30 basis point decline in occupancy [17] - Total gross fee revenues increased 4% year over year to $1,340 million, primarily due to rooms growth and strong co-branded credit card fee growth [17][18] Business Line Data and Key Metrics Changes - RevPAR growth was strongest in the luxury segment, which rose 4%, while select service brands in the U.S. and Canada saw declines [8][9] - Incentive management fees (IMFs) totaled $148 million, down 7% year over year, primarily due to declines in the U.S. and Canada [18] - Owned, leased, and other revenue, net of expenses, rose 16% compared to the prior year, driven by contributions from the Sheraton Grand Chicago and improved performance at other hotels [18] Market Data and Key Metrics Changes - International RevPAR grew 2.6%, outperforming the U.S. and Canada, where RevPAR was down 0.4% [5] - RevPAR in the Asia-Pacific (APAC) region increased nearly 5%, driven by robust ADR growth and higher demand from international travelers [6] - The operating environment in Greater China remains challenged, with RevPAR flat year over year, impacted by multiple typhoons [7] Company Strategy and Development Direction - The company aims to drive growth by expanding its global portfolio, which grew by 4.7% year over year to over 1.75 million rooms [4] - The launch of new brands, such as Outdoor Collection by Marriott Bonvoy and Series by Marriott, reflects the company's strategy to diversify offerings [12][13] - The company continues to focus on technology transformation to enhance customer experience and operational efficiency [15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future RevPAR growth, expecting an increase of 1% to 2% in Q4 and 1.5% to 2.5% for the full year 2025 [20][22] - The impact of the upcoming World Cup is anticipated to contribute around 30 to 35 basis points to full year global RevPAR growth [21] - Management acknowledged ongoing macroeconomic uncertainties but highlighted strong demand in the luxury segment and resilience among high-end consumers [8][9] Other Important Information - Membership in the Marriott Bonvoy loyalty program grew to nearly 260 million, up 18% year over year [13] - The company expects full year capital returns to shareholders to be roughly $4 billion while maintaining leverage in the lower part of the net debt to EBITDA range [26] Q&A Session Summary Question: Credit card program and renewal conversation - Management discussed ongoing negotiations with credit card partners, emphasizing the growth of the Bonvoy program and its attractiveness to financial services partners [32][33] Question: Health of franchisee and RevPAR trends - Management noted record signings globally, indicating strong franchisee interest despite RevPAR slowing [41][42] Question: Investment spending trends - Management clarified that increased investment spending is related to non-development expenditures and tech transformation investments [45][47] Question: Business transient trends - Management reported flat global business transient RevPAR, with government transient down 15% year over year, but larger corporate clients showed strength [76][78] Question: Development environment in APAC and China - Management highlighted strong rooms growth and signings in APAC, particularly in India and Indonesia, while noting challenges in Greater China [70][73] Question: Changes in underlying seasonality - Management observed an extension of peak seasonality in Europe, with no significant shifts in U.S. customer demand [90][94]