MARRIOTT INTERNATIONAL INC /MD/ Q3 FY2024 earnings call

• Net rooms grew nearly 6% y/y, development activity strong with 16,000 net rooms added in Q3, reaching over 1.67 million rooms. - Global RevPAR up 3% driven by 2.5% ADR growth; group was top performing segment with RevPAR up 10% y/y for two quarters. - Marriott Bonvoy had record enrollments; tie-up with Starbucks added value for members. - Development activity strong with over 95,000 organic rooms signed YTD 2024, pipeline at record 585,000 rooms; City Express by Marriott launched in U.S. and Canada. - Enterprise-wide process to enhance effectiveness and efficiency expected to yield $80-90M annual pre-tax G&A cost reductions starting 2025, with $100M charges in Q4 2024.

Gross fee revenues rose 7% in the quarter to $1.28 billion. IMF grew 11% to $159 million. Adjusted EBITDA grew 8% to $1.2 billion. Adjusted EPS increased 7% to $2.26. Globally, RevPAR increased 3%, driven by 2.5% ADR growth. Group RevPAR rose 10% y/y for the second quarter in a row. U.S. and Canada RevPAR rose over 2% driven by average rate growth. EMEA RevPAR grew 9% helped by Paris Olympics and U.S. travelers. APAC excluding China RevPAR up 9%. Greater China RevPAR declined 8% due to macroeconomic pressures. Marriott Bonvoy had a record quarter of enrollments with over 219 million members at end of September.

• Fourth quarter global RevPAR expected to grow 2-3%, full year RevPAR growth 3-4%. - Q4 gross fees expected 4-5% range, full year gross fees anticipated 6-7% to $5.13-$5.15B. - Adjusted EBITDA expected $4.93-$4.96B, adjusted EPS $9.19-$9.27. - Full year investment spending $1.1-$1.2B, expected to return $4.4B to shareholders. - 2024 net rooms growth at top end of 6-6.5% range, 3-year CAGR 5-5.5% from 2022 to 2025.

• Risks from SEC filings including uncertainties in future results. - Election impact in U.S. negatively affected Q4 group revenues. - Macroeconomic pressures in Greater China led to RevPAR decline. - Construction cost and debt availability pose challenges for developers. - Variability in quarterly fee earnings due to factors like hotel renovations and regional performance differences.

Q: Stephen Grambling asked about the impetus for efficiencies and pipeline growth.

A: Anthony Capuano said the impetus was to embrace change and improve efficiency, with Leeny Oberg adding on cost savings. On pipeline, early stages of 2025 budget process with confidence in three-year CAGR.

Q: Shaun Kelley inquired about the fee algorithm and G&A.

A: Leeny Oberg explained quarter-to-quarter fee variability due to factors like IMF, renovations, and FX, and that G&A has one-time reserves but 80-90M savings start in 2025.

Q: Patrick Scholes asked about China stimulus and RevPAR outlook.

A: Anthony Capuano said little impact from stimulus so far, with early 2025 outlook possibly flat; Leeny Oberg noted marginally better Greater China RevPAR than expected.

Q: Richard Clarke asked about IMF and operating reserve.

A: Leeny Oberg clarified operating profit guarantee not related to IMF, with IMF growth in U.S., APAC, but decline in Greater China.

Q: Robin Farley asked about key money and Starwood guarantee.

A: Leeny Oberg said key money trends consistent, Starwood guarantee reserve was a one-time item.

Q: Joe Greff asked about cost savings and investment spending.

A: Leeny Oberg explained $80-90M savings start in 2025, and investment spending includes non-recurring items like Chicago hotel purchase.

Q: Brandt Montour asked about corporate rates and developer mindset.

A: Anthony Capuano said targeting mid-single digit rate increase for 2025, and developers consider multiple variables including interest rates.

Q: David Katz asked about leisure and net unit growth.

A: Leeny Oberg said Q3 leisure transient flat but above 2019 levels; Anthony Capuano discussed NUG evolution with traditional agreements and unique deals like MGM and Sonder.

Q: Dan Politzer asked about leisure and non-RevPAR fees.

A: Leeny Oberg said leisure trends by chain scale, and non-RevPAR fees like residential branding lumpy but full year growth 9-10%.

Q: Michael Bellisario asked about cost savings and deal landscape.

A: Anthony Capuano said growth potential in brands and conversion momentum, with focused resources on conversions.

Q: Duane Pfennigwerth asked about macro demand.

A: Leeny Oberg and Anthony Capuano discussed normalization in U.S. and Canada, strong group demand.

Q: Smedes Rose asked about capital returns and hotel transactions.

A: Leeny Oberg said continued capital return through growth and excess cash, and ongoing evaluation of hotel transactions.

Q: Lizzie Dove asked about consumer spend and fee cadence.

A: Anthony Capuano said ancillary spend mixed, but luxury outlets/lounges strong; Leeny Oberg said fee cadence expected to normalize.

Q: Chad Beynon asked about convention business and City Express.

A: Anthony Capuano said strong convention demand and City Express interest with early openings.

Q: Conor Cunningham asked about corporate travel and Bonvoy members.

A: Anthony Capuano said steady corporate travel grind, and Bonvoy direct bookings low 70% consistent.