Marriott International, Inc. Q2 FY2025 earnings call

• Financial Results: Second quarter total gross fee revenues increased 4% to $1.4 billion, IMF rose 3% to $200 million, owned/leased/other revenue net of expenses was up 14%. - Development: Pipeline reached record 590,000 rooms, net rooms grew 4.7% since 2024 Q2. Mid-scale brands like City Express, Four Points Flex, StudioRes attracting interest; Series by Marriott launched; acquired citizenM; luxury portfolio expanded with 270 projects in pipeline. - Loyalty Program: Marriott Bonvoy loyalty program grew to nearly 248 million members, penetration at 69% globally and 74% in U.S. and Canada. - Leadership Change: Leeny Oberg to retire in March 2025, Jen Mason to become CFO, Shawn Hill to become global head of development.

Second quarter global RevPAR increased 1.5%. Regionally, APAC RevPAR rose 9% driven by strong ADR and international guests; EMEA RevPAR rose 7% with solid ADR and occupancy. Middle East RevPAR rose over 10% despite June conflict, Europe RevPAR rose 4%. Canada's RevPAR was up 3% due to strong ADR at luxury hotels, but Greater China's RevPAR declined 0.5% due to weaker macro environment. In the U.S. and Canada, RevPAR was flat year-over-year, with luxury RevPAR up 4% and select service/extended stay down ~1.5% due to government and smaller business demand. Customer segments: Leisure transient RevPAR grew 3% globally and 1% in U.S. and Canada; group RevPAR up 2% globally and 1% in U.S. and Canada; business transient RevPAR declined 2% globally and in U.S. and Canada.

Full year RevPAR growth expected to be in lower end of prior range, 1.5%-2.5% growth. Third quarter global RevPAR expected to be flat to up 1%, full year RevPAR 1.5%-2.5% growth. Third quarter IMF expected to decline ~15%, fourth quarter mid- to high single-digit increase, full year flattish to slightly down. Third quarter adjusted EBITDA expected to increase 5%-7%, full year 7%-8% to $5.3B-$5.4B. Net rooms growth still anticipated to approach 5% in 2025, long-term mid-single-digit. Capital returns expected to be around $4B while maintaining leverage in 3-3.5x net debt-to-EBITDA range.

• Macroeconomic Uncertainty: Impact on RevPAR and business conditions. - Government Demand: Weak government-related demand affecting select service and extended stay segments in U.S. and Canada. - Residential Branding Fees Volatility: Fluctuations in residential branding fees affecting financial results. - Short Booking Windows: Limited visibility into transient demand due to short booking windows.

Q: Stephen Grambling asks about technology transformation related to AI, timing, spend, and changes for owners and travelers.

A: Anthony Capuano responds about ongoing multiyear transformation of loyalty, reservations, and PMS systems, deployment in U.S. and Canada select service hotels, AI incubator work, and early AI implementations.

Q: Shaun Kelley asks about implications of the big bill on development and corporate side.

A: Anthony Capuano and Leeny Oberg discuss stability from the bill, potential for transaction market opening, and impact on renovations and capital recycling.

Q: Dan Politzer asks about group business tracking and 2026 outlook.

A: Anthony Capuano talks about group pace for 2026 tracking up to 8%, consistent distribution of group sources, and macro environment impact.

Q: Conor Cunningham asks about Marriott media opportunity.

A: Anthony Capuano discusses the Marriott Media Network helping brands connect with guests, early interest from advertisers, and sharing returns with owners.

Q: Richard Clarke asks about residential branded fees volatility and long-term outlook.

A: Leeny Oberg emphasizes excitement about residential business, being a leader in the space, and long-term optimism despite short-term volatility.

Q: Brandt Montour asks about business transient trends and assumptions.

A: Anthony Capuano and Leeny Oberg discuss business transient trends, government impact, and seasonality factors.

Q: Robin Farley asks about pipeline and conversions.

A: Leeny Oberg and Anthony Capuano talk about conversions being ~30% of openings, mid-scale opportunities, and confidence in mid-single-digit net rooms growth.

Q: Duane Pfennigwerth asks about Q4 improvement and BT pickup.

A: Leeny Oberg and Anthony Capuano discuss Q4 improvement factors, seasonality, and limited visibility on BT due to short booking windows.

Q: Smedes Rose asks about group pace confidence.

A: Anthony Capuano and Leeny Oberg talk about group trends, confidence in contracts, and robust F&B in group business.

Q: David Katz asks about other channels and economic intensity.

A: Anthony Capuano and Leeny Oberg discuss strategic focus on keeping guests in Marriott ecosystem, franchise economics, and high return adjacencies.

Q: Steve Pizzella asks about conversions and competitive environment.

A: Leeny Oberg and Anthony Capuano talk about conversion opportunities, key money usage, and addressable market for conversions.

Q: Lizzie Dove asks about China development trends.

A: Leeny Oberg and Anthony Capuano discuss strong room signings in China, particularly in select service brands, and high single-digit rooms growth there.

Q: Kevin Kopelman asks about leisure transient trends after stripping calendar changes.

A: Leeny Oberg talks about leisure transient being an outperformer, particularly in luxury and resorts, with strong underlying trends despite short booking windows