MARRIOTT INTERNATIONAL INC /MD/ Q4 FY2024 earnings call

• 2024 was excellent with net rooms growth 6.8%, global RevPAR up over 4%, Q4 worldwide RevPAR up 5%.
• Development in 2024 had net rooms growth 6.8%, over 38,000 rooms from MGM and 9,000 from Sander, conversions contributing 1/3 of signings and over half of openings. Global portfolio over 1.7 million rooms in 144 countries/territories, over 577,000 rooms in pipeline.
• Marriott Bonvoy loyalty program added 31 million new members, reaching nearly 228 million at year-end; app downloads up nearly 30% in 2024; multiyear digital transformation underway to enhance customer experience.

For the fourth quarter, leisure, comprising 44% of global room nights, had 6% RevPAR growth. Business transient, 33% of global room nights, saw 3% RevPAR growth. Group, 23% of room nights, rose 3%. Full year 2024: group RevPAR increased 8%, leisure and business transient rose 3% each. In Q4, U.S. and Canada had over 4% RevPAR growth driven by higher ADR; international RevPAR rose over 7% with 4% ADR rise and 2% occupancy gain; APAP RevPAR increased 12.5% led by Japan, India, and Thailand; EMEA RevPAR rose 8% due to broad-based growth; Greater China RevPAR declined 2% but improved from prior expectations.

• 2025 net rooms growth expected 4%-5%; global RevPAR 2%-4%.
• Gross fees expected to rise 4%-6% to around $5.4B-$5.5B.
• Co-brand credit card fee growth lower than 2024's nearly 10% due to international normalization.
• Residential branding fees likely decline nearly 50% due to timing of unit sales.
• FX expected to negatively impact gross fees by ~$25M.
• Owned, leased and other revenues net of expenses expected $345M-$355M.
• G&A expense anticipated to decline 8%-10% to $965M-$985M.
• Adjusted EBITDA could increase 6%-9% to ~$5.3B-$5.4B; full year adjusted diluted EPS $9.82-$10.19.

• FX could negatively impact gross fees by roughly $25M.
• Macroeconomic uncertainties affecting various segments, such as potential impacts on leisure demand and business transient recovery.
• Regulatory issues and challenges in the lending environment affecting new construction financing in the U.S.

Q: Update on cost transformation and efficiency program, areas focused, and response from ownership community.

A: Anthony Capuano said internal energy about streamlined decision-making, and ownership community is enthusiastic about empowered continents.

Q: Follow-up on investment spending buckets, differences from before, and when tech spending might level off.

A: Kathleen Oberg explained investment buckets, with owned/leased spending higher due to renovations, and tech transformation to roll out over several quarters.

Q: Appetite for additional tuck-in acquisitions, organic growth vs acquisitions.

A: Anthony Capuano said will consider tuck-in acquisitions if gaps in brand or geographic footprint, but vast majority of growth will be organic.

Q: Impact of Canadian and Mexican travelers canceling due to political tensions.

A: Kathleen Oberg said it's too soon to see notable impact as these markets make up a very small part of Marriott's U.S. business.

Q: Tech migration implementation, impact on business.

A: Anthony Capuano said elements will roll out later this year, benefiting associates, guests, and owners. Kathleen Oberg added it will take several quarters to roll out globally.

Q: Bridge to gross fee growth of 5% given RevPAR plus net unit growth 7.5%.

A: Kathleen Oberg cited FX headwind of ~$25M, lower residential brand fees, and IMS impacts from Greater China and U.S. renovations.

Q: Unit growth guide breakdown by conversions vs new construction.

A: Kathleen Oberg said conversions could be 30%-40% of openings in 2025.

Q: Key money terms, contract length, competitiveness.

A: Anthony Capuano said Marriott aims for long-term stable contracts, Kathleen Oberg added key money investment in 2025 not materially different from 2024 with good returns on invested capital.

Q: Leisure commentary, why full year guide is flat to up leaning.

A: Anthony Capuano said booking windows are short, but Q4 leisure results were encouraging; Kathleen Oberg noted luxury and resort hotel RevPAR growth in Q4.

Q: Availability of capital for new construction, factors alleviating issues.

A: Anthony Capuano said regulatory elements and lenders' focus on brand and developer track record are factors, with slow improvement expected.

Q: Business transient recovery, geographic and industry vertical insights.

A: Kathleen Oberg said business transient has recovered to 2019 levels, with some large corporates not fully recovered but expected to continue recovering in 2025.

Q: Elegant portfolio in Barbados, selling timeline, challenges.

A: Kathleen Oberg said plans are in place to complete renovations in 2025 and sell, performance of hotels has been excellent.

Q: Purchase of Chicago Sheraton, inclusion in owned and leased outlook.

A: Anthony Capuano said they did purchase it and it will be a good cash flow generator in the owned leased line.

Q: Aggressiveness on key money given accretive to growth.

A: Anthony Capuano said key money is a valuable tool but used with discipline, evaluating value creation of each transaction.

Q: Bonvoy member growth, regions and age focus, MGM deal impact.

A: Anthony Capuano said growth seen everywhere, mid-scale tier offers opportunity to bring in younger members, and MGM deal contributed.

Q: China recovery curve, lower tier provinces, stimulus impact.

A: Anthony Capuano said Tier 1 cities were positive, sequentially weakness in some areas improving, but stimulus to date not materially impacting demand; long-term bullish on Greater China.

Q: International RevPAR higher than U.S., color on Middle East, Europe.

A: Kathleen Oberg said factors like faster GDP growth in some markets, strong dollar encouraging cross-border travel, and higher cross-border guests than pre-COVID in Europe and Japan.