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% [15][21] - Global REVPAR increased by 0.5%, with nearly 1% ADR growth offsetting a 30 basis point decline in occupancy [15][17] - Total gross fee revenues increased 4% year-over-year to $1.34 billion, driven by rooms growth and strong co-branded credit card fee growth [15][16] 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 [8][9] - Incentive management fees (IMFs) totaled $148 million, down 7% year-over-year, primarily due to declines in the US and Canada [16] - Owned lease and other revenue net of expenses rose 16% compared to the prior year, driven by contributions from newly acquired properties [16] Market Data and Key Metrics Changes - International REVPAR grew 2.6%, outperforming the US and Canada, where REVPAR was down 0.4% [5][6] - APEC region saw nearly 5% REVPAR growth, driven by robust ADR growth and higher demand from international travelers [6][7] - Greater China faced challenges with flat REVPAR, impacted by macro conditions and multiple typhoons, although market share continued to grow [7][8] Company Strategy and Development Direction - The company aims to drive growth through technology transformation and expansion of its global portfolio, with a focus on high-end segments [10][12] - The launch of new brands like Outdoor Collection by Marriott Bonvoy reflects the company's strategy to diversify offerings and enhance guest experiences [10][11] - The company remains committed to maintaining an investment-grade rating while returning excess capital to shareholders through dividends and share repurchases [22] 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 [17][18] - The preliminary outlook for 2026 suggests similar REVPAR growth of 1.5%-2.5%, with the World Cup expected to contribute positively [18][19] - Management expressed optimism about the future, citing strong cash flow performance and a robust pipeline of new hotel signings [21][22] Other Important Information - Membership in the Marriott Bonvoy loyalty program grew to nearly 260 million, up 18% year-over-year, enhancing guest engagement and value for owners [11] - The company is leveraging AI to improve customer experiences and operational efficiency [14][12] - The pipeline of new rooms reached a record high of over 596,000, with significant contributions from conversions [9][10] Q&A Session Summary Question: Credit card program and renewal parameters - Management acknowledged ongoing negotiations and highlighted the growth of the Bonvoy program, which has doubled in membership since 2017 [26][28] Question: Health of franchisee and owner requests - Management noted record signings and efforts to enhance top-line performance, indicating strong owner engagement [36][38] Question: Investment spending trends - Management clarified that increased investment spending is related to tech transformation and existing portfolio improvements, not a change in key money philosophy [44][45] Question: 2026 outlook and business transient trends - Management expects leisure to outperform business transient, with group pace showing positive signs for next year [46][49] Question: Development environment in APAC and China - Management reported strong growth in signings and room growth in APAC, particularly in Greater China, despite macro challenges [60][62] Question: Changes in underlying seasonality - Management observed an extension of peak seasonality into fall, with no significant shifts in customer mix from the US [78][81]