Marriott International(MAR)2024-02-13 16:41Financial Data and Key Metrics - Global RevPAR increased by over 7% YoY in Q4 2023, driven by equal gains in ADR and occupancy [6] - Full-year global RevPAR rose nearly 15% in 2023, with net rooms growing by 4.7% [6] - Group revenues rose 9% globally and 7% in the US and Canada in Q4 2023 [7] - Leisure transient revenues in Q4 2023 were nearly 50% above the same quarter in 2019 [7] - Business transient revenues grew 7% globally and 3% in the US and Canada in Q4 2023 [8] - Marriott Bonvoy loyalty program reached over 196 million members by the end of 2023 [9] Business Line Data and Key Metrics - Group segment accounted for 23% of room nights in Q4 2023, with 2024 Group revenues pacing up nearly 13% globally and 11% in the US and Canada [7] - Leisure transient accounted for 44% of global room nights in Q4 2023, with global leisure transient revenues up 6% YoY [7][8] - Business transient contributed 33% of global room nights in Q4 2023, with demand from small and medium-sized corporates remaining robust [8] Market Data and Key Metrics - US and Canada RevPAR increased over 3% YoY in Q4 2023, while international RevPAR rose 17% [14] - Greater China RevPAR rose 81% in Q4 2023, driven by easy comparisons to COVID lockdowns in the year-ago quarter [14] - Asia Pacific RevPAR (excluding China) grew 13% in Q4 2023 [14] Company Strategy and Industry Competition - Marriott signed a record 891 organic management, franchise, and license agreements in 2023, representing approximately 164,000 rooms [10] - The company expects net rooms growth of 5.5% to 6% in 2024, including around 37,000 rooms from MGM [10] - Marriott is making significant progress in the high-growth mid-scale space, with over 300 potential deals under discussion in the US [11][12] - The company's luxury distribution is over 50% larger than its closest competitor, with record luxury signings in 2023 [12] Management Commentary on Operating Environment and Future Outlook - Demand for all types of travel remains strong, with the fundamentals for the industry described as outstanding [13] - For 2024, Marriott anticipates global RevPAR growth of 3% to 5%, with higher growth expected in international markets, particularly in Asia Pacific [19][20] - The company expects gross fees to rise 6% to 8% in 2024, driven by strong credit card and residential branding fee growth [20][21] Other Important Information - Marriott's digital channels, particularly the Marriott Bonvoy app, contributed 22% more room nights in 2023 than in the prior year [9] - The company's co-branded credit cards saw record global card member acquisitions in 2023, with card spend growing 11% [9] - Marriott expects to return between 4.3 billion in capital to shareholders in 2024 [23] Q&A Session Summary Question: MGM Transaction and Fee Contributions [26] - The MGM transaction will contribute modest G&A costs in Q1 2024, with business expected to ramp up over the year [27] Question: Development Environment and Construction Costs [31] - Marriott is seeing strong momentum in new build projects and conversions, with expectations of continued relief on interest rates in the back half of 2024 [32][34] - Construction costs have come down slightly, but the availability of debt for new construction remains a key focus [34] Question: Core Metrics and EPS Outlook [36] - The lower EPS outlook for 2024 is primarily due to a higher book tax rate and the impact of a large termination fee in 2023 [37] Question: Large Corporate Group Bookings [38] - Large corporate transient demand continues to lag pre-pandemic levels, but incremental growth is being seen quarter-over-quarter [39] - Group bookings for 2024 are pacing up 11% in the US and Canada, with 75% of expected group business already on the books [41] Question: SG&A Costs and Bad Debt [43] - Higher SG&A costs in Q4 2023 were due to timing issues, including a litigation reserve and performance-related compensation [44] Question: RevPAR and Unit Growth Guidance [45] - Marriott remains confident in its three-year net rooms CAGR of 5% to 5.5% from 2022 to 2025 [46] Question: Room Growth vs. Fee Growth [51] - The fundamental model of RevPAR plus fees continues to work well, with strong IMF growth expected in 2024 [52] Question: Mid-Scale Development and Owner Profile [69][81] - Marriott is enthusiastic about its mid-scale development, with strong demand and a mix of existing and new franchisees [72][82] Question: Credit Card Fee Growth [88] - Credit card fee growth in 2024 is expected to be driven primarily by new card sign-ups, with overall non-RevPAR fees expected to grow 9% to 10% [89][90] Question: Unit Growth Acceleration [92] - Marriott expects net rooms growth to accelerate in 2024, with conversions accounting for 30% of expected openings [96]