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

Financial Data and Key Metrics Changes - Third quarter adjusted EBITDA rose 10% to $1.35 billion, exceeding expectations, while adjusted EPS grew 9% [13][15] - Global REVPAR increased by 0.5%, driven by nearly 1% ADR growth, offsetting a 30 basis point decline in occupancy [13][15] - Total gross fee revenues increased 4% year-over-year to $1.34 billion, primarily due to rooms growth and strong co-branded credit card fee growth [13][14] Business Line Data and Key Metrics Changes - REVPAR growth was strongest in the luxury segment, which rose 4%, while select service brands in the US and Canada saw declines [6][7] - Incentive management fees (IMFs) totaled $148 million, down 7% year-over-year, primarily due to declines in the US and Canada [14] - Owned lease and other revenue net of expenses rose 16% compared to the prior year, driven by contributions from newly acquired properties [14] Market Data and Key Metrics Changes - International REVPAR grew 2.6%, outperforming the US and Canada, where REVPAR was down 0.4% [4][5] - APEC region saw nearly 5% REVPAR growth, driven by robust ADR growth and higher demand from international travelers [4][5] - Greater China faced challenges with flat REVPAR due to weaker macro conditions, although market share continued to grow [5][6] Company Strategy and Development Direction - The company aims for strong net rooms growth in 2025 and beyond, with a pipeline of over 596,000 rooms, including 250,000 under construction [8][18] - The launch of new brands like Outdoor Collection by Marriott Bonvoy reflects the company's strategy to diversify offerings and enhance guest experiences [9][10] - Continued focus on technology transformation and AI integration to improve operational efficiency and customer experience [11][12] Management's Comments on Operating Environment and Future Outlook - Management anticipates global REVPAR growth of 1-2% in Q4, with stronger growth expected internationally compared to the US and Canada [15][16] - The company expects full-year 2025 REVPAR to rise between 1.5% and 2.5% year-over-year, with a positive impact from next summer's World Cup [16][18] - Management remains optimistic about the future, citing strong cash flow performance and a commitment to shareholder returns [19] Other Important Information - Membership in the Marriott Bonvoy loyalty program grew to nearly 260 million, up 18% year-over-year, enhancing customer engagement [10] - The company is committed to maintaining an investment-grade rating while returning excess capital to shareholders through dividends and share repurchases [19] Q&A Session Summary Question: Can you provide details on the credit card program and renewal? - Management acknowledged ongoing negotiations and highlighted the growth of the Bonvoy program, which has doubled in membership since 2017, indicating strong potential for future credit card fees [22][25][26] Question: What are the trends in franchisee health and owner requests? - Management noted record signings and efforts to enhance top-line performance, indicating strong franchisee health despite macroeconomic challenges [33][34] Question: Can you elaborate on investment spending trends? - Management clarified that increased investment spending is related to non-development expenditures and technology transformation, not a change in key money philosophy [37][38] Question: What is the outlook for business transient travel? - Business transient REVPAR was flat, with government transient down 15%, but larger corporate clients showed encouraging strength [57][58] Question: How is the development environment in APAC and China? - Management reported strong rooms growth and signings in Asia, particularly in Greater China, with a 24% year-over-year increase in room signings [51][56] Question: Are there any changes in underlying seasonality? - Management observed an extension of peak seasonality into the fall, with no significant shifts in the mix of U.S. customers in Europe [65][67]