MAR - Earnings call transcript Q3 2017 | Marriott International, Inc.

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Marriott International Third Quarter 2017 Earnings Conference Call.

During our presentation, all participants will be in a listen-only mode. Afterwards we will open the call for your questions. It is now my pleasure to hand our program over to Arne Sorenson, President and CEO of Marriott International. Sir, you may begin.

Arne M. Sorenson

morning. Good third conference our XXXX quarter to call. earnings Welcome

Investor Oberg, President Senior and me Senior President today Financial Vice Leeny are Director, Dahm, Betsy Paugh, Joining Chief Executive Officer; Relations; and Relations. Investor Vice Laura

results Let could me our are laws. differ statements or historical described to not and These forward-looking our many cause statements and filings, considered to federal in comments uncertainties comments. those numerous are risks today from facts under expressed everyone by remind implied that future of securities which are SEC materially subject as in our

compare Forward-looking on costs, results that today will with and along of the our actual results X, we'll Starwood results statements only combined year be talk acquisition completed merger-related sale our not and In in we as updated assume Starwood's prior press were we issued today, January will effective about events which release comments, business are unfold. excluding yesterday, to Marriott's its XXXX. timeshare of XXXX and discussion

comparisons our our referred find the can reported release, year reconciliation press www.marriott.com/investor. to at remarks prior results you in with our on non-GAAP in are financial which to the of measures website along course, Of

Florida a and Hurricane in This California, quick parts an earthquakes has Northern Caribbean, So, devastating Texas, let's get of within started. its two eventful Harvey quarter, the the to Mexico historic hurricanes and and seven-week been pounding fires Maria the relentless all of from Irma and southeast, to in flooding then in period. and their

dependent and have local and tourism. tirelessly events and communities, to crisis upended only have property very worked these property on economies, which have presence lives, property a We Not in management these our are of impacted they safety. have ensure many also associate, guest damaged teams and

who many we're tell we areas come. reporter, important can One recover, something. The a are here York so want restaurant most to repair, is efforts. Times New rebuild we thing want there said people Sonoma to their open, these recently to to and people do you we're support encourage them owner we to As do and

quarter part So, we in seeing business demand a RevPAR leisure the Worldwide, RevPAR from than third our America, In quarter, X.X%, the the the better and hurricanes. roughly due than association just and high favorable in about guidance. guidance let's was RevPAR in our strong flat talk of the end to system-wide above the rose third bit group the expected. RevPAR In increased worldwide our are hotel system-wide comparable X.X% better impact quarter, North business. trends was

While in corporate, about funnel and to Combined, the Harvey points, experienced American about The Puerto hard quarter, Florida were the basis three tropical particularly Islands Texas. hotels major In and and Rico Irma XX and Five North the two with closed earthquakes, storms four by five region RevPAR associated America in points. hit. and hurricanes hurricanes. remain Caribbean disruption while Latin closed new our and conventions, another are last and shift day political the increased third cancellations, Virgin group North our week by we've RevPAR third shifting attrition, in growth the of cautious, transient tough Xth American remains holiday group system-wide bookings reduced is little unsigned the year's the of few holidays, basis and but the comparisons improving. seen XXX Jewish demand quarter July

we eight We're are are because properties longer these taking have in we – of XX XX no calculating RevPAR few sustained region severe hotels for removing and include in guests, performance. events, efforts excluding a this comp closed. damage they they because purposes of result are set As our properties and

America and system-wide quarter due growth Argentina. largely the RevPAR to in in demand set, solid comp RevPAR comparable revised X% Central the in For increased better

in nearly government systemwide by on X%. and third RevPAR Middle an in GDP demand. with increased China other in flat the our Italy, Asia-Pacific country have the being Egypt, lower X% outside Middle was strength growth East. to Europe reflecting East markets. in Mainland demand the oil spending decline strong Germany. largely RevPAR room X% constrained X% reduced nearly increased that on the East in great moderate have rose sold and U.S. Room region Europe constant Sanctions with visiting XX) fare China nearly increased Africa, China RevPAR strong in South rose Middle business felt Istanbul and recover in well, demand RevPAR and the in growth, Middle RevPAR our to In RevPAR Qatar East due out expectations Africa, XX% to leisure sold rose while In quarter. growth comps. RevPAR continues RevPAR quarter weak while hotels strong higher (XX: in that travel XX% nights prices in hotel to Spain Comparable the exceeding quarter. travelers leisure The dollar nights in driven Greater economy in in strong as Third and country of quarter XX% India travelers is where third and easy into

benefit X% North For increase and up continued Texas pace X% in quarter. America as the demand expect quarter for Florida. will group from and is to we the the holiday in fourth North hurricane-related X% RevPAR we America shift

in RevPAR RevPAR will markets, quarter. expect international increase grow X% to expect will X% we to X% and the we fourth X% For worldwide

to up quarter the actual year third quarter quarter's from a grow benefit performance, to worldwide the XXXX now With fourth RevPAR we X% to systemwide RevPAR full expect expected X% and of ago. X% X%,

our considerably upcoming special the X% nearly full believe are rise Today's we should X% be indications fair and growth our single-digit to for to increase North rate, in a RevPAR in overall XXXX pace process similar growth, low will year, partway be of that to for the likely vary is year absence customers We comparable Government by expected but of XXXX for flat. in X%. accelerated are growth revenue is how per and booking negotiation at early we the XXXX North America In currently estimate special perform. for corporate the will corporate America, budget but U.S. will up rates only economic XXXX. through a in hotels is group diems for market, that full-service group volume expect

select Assuming in continued RevPAR stronger corporate XXXX will expect North service largely flat service. X% we up and than American cautious rates demand, driven room to slightly by full in be

an quarter-to-quarter you XXXX. that Washington, in first For in who Easter and Passover those and inauguration are will from XXXX and lodging of march the demand performance, XXXX RevPAR comparisons quarter have women's tough recall modeling earlier D.C.

Caribbean of markets, should X% growth Latin with and systemwide growth X% Asia-Pacific international expected increase will yield expect growth our RevPAR in we RevPAR single-digit the positive For slightly XXXX growth regions, region. in RevPAR the worldwide X%. Europe, in to low America This Middle X% in Africa strong and region, to East, mid-single-digit

development, current our rooms, openings size, record. Turning XX,XXX new the XXX,XXX of system worldwide quarter and which single a XX% worldwide a quarter to in reached room our third is development pipeline record totaled rooms,

hotels we worldwide. current hotel in Based including developers of an In leading construction distribution. end Hotel or brands XX% leading Our pipeline of new of brands under a four the and preferred in construction at the and U.S. to Arizona. XX,XXX in data, resort EDITION alone, approved nearly our continue more With in luxury a on Luxury St. new lenders in totaled than industry or luxury signed Lucia quarter our Collection quarter Japan, the third rooms STR brands, seven projects eight under XX% one to represent continue Ritz-Carlton worldwide our hotels alike. be by pipeline and

franchisees from the gross totals particularly pipeline while the worldwide America of limited Worldwide, interest over brands such Autograph represent international Our world. X.X%. Five meaningful pipeline strong The service in in Asia, of rooms. Sheraton In one-quarter XX% our half XXX,XXX totals ago, with North with years the and upper pipeline of additions the growing Delta are XXX,XXX room Today, pipeline. and only our region. located rooms rooms last X.X% building North upscale America. Asia-Pacific about and outside brands were XX Hotels Marriott's are around Marriott months, and service limited of totaled a our pipeline deletions rooms conversion consisted in owners

New grown that in X% period. and same strong, remain has signings our pipeline hotel

cancellations subcontractors are non-prototype in any U.S. and are tradesmen, hesitancy seeing as limited is delaying up sign dual-branded high or make projects of custom our to project Today, We the new of openings these true openings. projects. contractors, skilled not of hotels, properties, over This rises, particularly projects deals, large shortages service such but and half urban complex high-value,

projects in East, Looking fire, limited our disruptions and U.S. gross in the high a growing leading in X% average could proportion issues, hurricane, service complex and lengthen months. construction worldwide for talent Despite by ahead, nearly these believe we areas, X.X political continued further earthquake-damaged of room Middle demand and a million believe will system the the few in construction periods gross grow we X% XXXX. by roughly in XXXX

level rooms to we This of is entire As Today, X% XXXX estimating deletions related you X% we our may brand. unusual largely across deleted total portfolio each XXXX. year. typically the of about are recall, have both and deletions X.X% will to Sheraton in

will departing Sheraton the XXXX rooms XXXX. system another with We expect exit in rooms X,XXX X,XXX in

full-court to a press improve the brand. launched have Sheraton We

costs. to are systems investments We still are owners These assurance, are programs making early but and believe working reduce capital to increase drive we top Marriott's accountability, we noticing. the and and progress quality real while are line applying days, and

of we optimistic competitive is X,XXX The months more alone, our all long-term from potential. integration in never growth and signed Starwood the In track. our with business, XX last representation on continents. We've our rooms fact, underlying been the strengths about new Sheraton

We more we business and anticipated. opportunities than have more synergies identified

enhance will continue we of services, to tell Leeny I'd the the that like turn and G&A improve to To achieve and in to you room continue to more and million expect value do systems XXXX quarter, Oberg. the Leeny? we to over We $XXX to night. about of our every call believe savings products,

Kathleen Kelly Oberg

Thank you, Arne.

earnings guidance XXXX, of $X.XX of of the per ahead quarter $X.XX $X.XX. RevPAR to midpoint $X.XX, diluted third the For totaled roughly share adjusted our

about line, up with expected due picked to of due and and $X.XX than fees. branding half On half outperformance results we better to the better hotel about fee re-licensing

G&A with was accounting revisions for higher-than-expected the termination purchase favorable the leased, outperformed line $X.XX and credit, from roughly better-than-expected, accounting and $X.XX purchase tax equally half performance fees. hotel revisions, acquisition by Starwood from owned, strong from sourced remainder a timing. Our about other with and

about re-licensing taxes than than a finally, benefits expected gain related stock by of and Compared RevPAR somewhat due and terminations to greater better of and X% contract transfer higher impact in tax RevPAR, to the tax compensation. fees. increased the fees prior settlement. changes. fees, million growth the timeshare, and which by and over reflecting the was These growth, application the X% residential growth year, Franchise improvement fees revenue and fees X% higher prior year, year, non-property over in guidance. the offset and unit midpoint XX% XX% the $XXX million, Base the than prior our total impact $X.XX driven better fee from non-property ahead foreign negative in credit and together quarter, include Our card, to unit fees, quarter, prior And increased totaled were $X.XX due $XXX about over line was to businesses year. guidance our of exchange fees

and world. margins hotel with improvements, fees benchmarking We and XXXX savings, performance synergies due over quarter, RevPAR year-over-year the to X% to Starwood initiatives, company-operated the at procurement full-service year and fees grow Europe from million savings. the around quarter. points strong managed continue and million. agreements, expect hotels improved $XXX in acquisition, third revenue company-operated full $XXX savings maintenance hotels during Incentive at XX in on Global largely XX% will including basis good the benefit to management margin these in profit associated house the increased Hotels Asia, roughly from insurance OTA

in another hotels a also reduction basis loyalty such and XX beginning from we our our charges basis rate benefiting in points XXXX. are XX Our expect by program, centralized for reduce charge-out points to

$X year, than revisions, better in of integration to These was due or sale. third of midpoint agreements. quarter of reductions the third expenses, quarter, Compared statement leased, for million These the property represent We to quarter as was a the net in tough net also to Adjusted $XX than adjustments $XX that XXXX year. XXXX. revisions statement a the additional million expected long-term weak moved third two $X of $XX depressed leased, contributed the acquisition Olympics other quarter million impact timing. million due the million at to team, state to purchase of G&A depreciation value finance favorable profits owned, cost our Brazil, favorable a was to in accounting in and due third in purchase assets Congratulations York, higher-than-expected in administrative and cost was as on Canada. a from who the million $XXX the quarter. total, the price five savings in the our to amortization adjusted hotels totaled prior we million largely expenses, credit, year the $XX tirelessly guidance by totaled in the totaled other in revenue, $XXX has the of and the better we've in held in the third of reflecting we third fair deal. this to hotels, quarter making continues. $XX Starwood each $XX which XXXX the adjustment, the continued the completing million $X in and the decline third you million ago. Adjusted In million and results quarter the tough expectations, compared and a $XX final integration renovations tax of income net and hotels New accounting hotels comparison since favorable for Europe. the a comparisons as pre-tax. income Owned, thank sold Since of acquired largely a general results The leased XXXX decline quarter, million Growth the as management expect big sold in and assets to totaled and fees Adjusted proceeds. purchase XXXX prior in well expenses case in revenue, to retaining better-than-expected $XX million million worked termination beginning XXXX at quarter, liabilities, properties impact compared

assets increased EBITDA since $XX million have included adjusted over sold. the from combined that quarter EBITDA X% prior year. adjusted owned Third quarter XXXX in The we

RevPAR, quarter the fourth we million the expect to storms $XXX in XX XXXX. that $XXX fees fee growth, margin million are quarter, in million due to and fourth unit fees earned full $XX higher XXXX closed in in the year on For $X will revenue total improvement. for The the hotels million and

a quarter $XX in $XX year ago hospitality sold. Last leased, month, our we million hotels expect net and in services $XXX has announced an the agreement to sell owned, compared further in Avendra, even we a included with We provider. leading procurement quarter been drive will to North roughly other, million of results from fourth million and expense, scale combination hotels. XXXX believe better success should increase direct the since and that to American fourth four Profits been the terrific total the Avendra quarter. Aramark have

and they transaction sale, we investment the gain and from we EBITDA will roughly developing $XXX out Avendra likely but our gain We're benefit as for will for will to meaningful at of such share are to receive of item. expect plans adjusted on amounts currently system disclose be special these a invested hotels. of We the million the closes, closing back Avendra spent. XX% our record a expect as the our proceeds When

$XXX in implied million. increase Assuming $X.XX in a fourth will This $XXX guidance to the lower sold, to reimbursed than fourth the we second $X, Toronto EPS settlement. largely as of have well G&A quarter Sheraton, EBITDA no depreciation EBITDA million million to $XX bit adjusted due diluted favorable XXXX end million of gain X% since and reach assets The the costs. included $X associated lower to an that delays related impact the quarter, to total X% litigation sale to been will spend, as quarter quarter, the of is the with of in the expect at and fourth

adjusted These $X.XX and billion, XXXX, XXXX. the to EBITDA management in X% an expect we XXXX. we million X% increase we've contributed EPS to $XX to million hotels, beginning full XXXX, lease expected $X.XX, each compared over results increase in year Since owned retaining billion expected over adjusted of roughly full fiscal total total long-term agreement. the case an $X.XX XX% of XXXX combined For prior to $X.XX of the in year properties will year a will profits nine sold for $XX diluted

does impact not our XXXX any include JPMorgan American outlook Our Express. renegotiation the from with of ongoing card agreements Chase credit and

total We likely impact recycled the than our spending. success Marriott won't through billion to for expect including quarter, $X.X already shareholders returned capital, shortly the to through maintenance capital in $XXX investment able last estimate not to could Sheraton card a $XX the the We've spending We of P&L remain we've credit of shareholder related cash receipt will repurchase. assets returned to or for expected incremental due approach the including $X.X sale will investment record spending, in XXX.X last billion lower early the XX, expectations of and to finalize of than about programs. million increased Avendra. higher the $XXX Compared expect since impact prior bit roughly At additional lower negotiations more asset September the appropriately, in thereafter, few $X.X XXXX by from and with higher we to XXXX, share million the closing estimate roughly cash and million million, With including year-end levered to shares and from of early fourth to comfortable full until EBITDA billion to totaled outstanding XXXX. disciplined quarter. expect our recycling acquisition, in a $XXX our XXXX. of capital repayment amount. shares, since is $XXX billion over to common of higher our in million We but share year-end cash our acquisition million our remain quarter of repurchases be the be asset working Starwood return recognized The recycling, discussed the week, sale proceeds closing a fourth growth dividends we million XXXX, our the Starwood shareholders asset loyalty $X.X has approach $XXX and the Toronto proceeds the in of loan recycling, our to and year. return later year X.X% to already and

in sheet great Our is balance shape.

Excluding merger-related standard of the times of X.X credit EBITDAR. to at XX ratio targeted combined was adjusted on adjusted X costs, to low September our end our debt times debt

do typically provided we As XXXX of preliminary RevPAR growth today. in third our release, we've our quarter and view unit

impact XXXX. Our the new not will and be rules, yet complete are hotels' revenue recognition at still of quantifying of the budgets we're beginning FASB's which effective

change. a find You'll rules line, or that is an we new of It to accounting described XX-Q or our general today our business. in tomorrow. doesn't third of quarter the impact file Bottom plan overview later the economics cash this

to We revenue by under expect fourth will XXXX thereafter. quarter and and mid-February, new as quarter release recognition the results as possible work soon full-year to rules results provide

for practice guidance it's provide upcoming quarter know, our you year. each to As fulsome and current

less Given XXXX results guidance our We our your likely is work expect the be and bit detailed first continued to appreciate earnings quarter XXXX new present rules, integration under finance the efforts than patience. usual. a to we

to we question that follow-up. you We'll speak and today's now. as many take ask yourself that we on to So one one your of can questions possible limit call, as you

Operator

Instinet. of Harry Curtis from Nomura Your first question comes

Harry C. Curtis

morning. Can hear you me? good Hi,

Arne M. Sorenson

Hey, are you? Harry, how

Kathleen Kelly Oberg

Good morning, Harry.

Harry C. Curtis

like to in respond Hi, degree GDP impacting environment to where respect to low bookings? transparency question the apps, higher ability increase actually what can beginning in and pricing Thanks. say, close-end is fine. To than, is Tingo, price with single Marriott an digits the is My Good everyone. how particularly accelerate? your morning, it Yapta to

Arne M. Sorenson

Yeah, question, Harry. it's a good

think, for taking every evolution radical a a I are are live continued essentially – of prices available look hotel the and pricing, with transparency where a we obviously notice. obviously, careful world very these number the we an at in instant of apps, at in

to XX%, our we to everything platform and loyalty program, mean, us can. the because approaching of will loyalty core increase, powerful the I that's not doing loyalty not members, Obviously, are for we with We continuing room these today. the And across continue platforms some are conducive program nights they world them. see from to associated the that are coming I obviously, is a other think, earn points thing. booking

we minute made that, to to which continue around redemption that some already beyond to owners steps the programs, last competitors' for have the formulas platform our adjust, I many loyalty formulas our platforms. the meet the exist, in in at occupancy less rates and have to that think want hotel of changes we've so order in incentive existed historically or redemption both drop high

last overbooking XX a but the that extended hours, thing in this I trends. risks, place last-minute that ahead. quarters the ago, addresses this. on put window cancellation similarly will minute also which is deals tuned of booking is think in months This we I another think, few something evolve, – which stay to some extent with continue years But these to probably and

Operator

Your question go – ahead. I'm from comes sorry, next

Harry C. Curtis

was just appreciate I sorry, I it. distracted. I'm

Arne M. Sorenson

Okay, no Paula. worries. ahead, Go

Operator

Okay.

Your question Farley from of UBS. comes Robin next

Robin M. Farley

thanks. – Or anything step-up more kind wanted bit Great, Was do increase wanted I'm but that was so your that. know in XXXX only little with is I for it's ask and outlook to behind something color proceeds, you volume question, for very question, else with but I with know of mentioned saw torn, one it to of given about in get it that X%, in I not there was a on not in that million outlook big return, capital. $XXX that? the the a pace combined, it a change whether get and in Was the so extra go of to if – a just sort XXXX, price I had group of capital some outlook, one to just only decision more consistent opening your comments sort given do there's I else? a recycled I your will the

Arne M. Sorenson

we'll which you the artfully second that answer very Robin, much, you so is... just asked, because like we question

Robin M. Farley

there, in I yeah. threw

Arne M. Sorenson

not the XXX% occupancy year is ADR increase driven. A driven, group revenue will talk about of Leeny But that. next

Kathleen Kelly Oberg

So, thanks, Robin.

things. This XXXX, – the out really looking record high a point, bring Starwood that in function results seeing of they cash of is remember back and that is this of together, definitely So, something out will the I way weren't this a level kind to year we're was part your sitting acquisition part share XXXX. repurchase number the turning that we bring XX) to not able solely say, (XX: couple in two $XXX are. function of of of This year that that to in we able companies is to repurchase a due as roughly home. when million of we were the because structures of different put this

had of of be proceeds, that we it cash, which remember of with giving year. that the We have the those that from and of expect fold about asset is we the able on pay will should the on. guidance the will that Avendra of I year, to this those detail to have so, meaningful, use cash you you And standpoint here impact the But repurchase going next proceeds. taxes wouldn't is year you use share more when We're give about also cash, have us they it reality to talking able repurchase. timing the that lower otherwise, will should share will I include be two to very I some that to the recycling the we be be to that a from things, you and look exception strong into the likely levels are Avendra, extent to numbers than about – Avendra, see dramatic we that should that think to our next on think, we're of don't proceeds that continue numbers you

Robin M. Farley

Great. you. Thank Okay.

Operator

Bank next of from Shaun America. comes Your question of Kelley

Shaun C. Kelley

everyone. morning, good Great,

Arne M. Sorenson

Good morning.

Shaun C. Kelley

how Leeny, at has the us gave a sales right, you have out been room might for some believe And that could – just of based there things billion seeing had was I there in you billion update? I XXXX? where number? completed. you that for It sale with could asset though, be target; then have rundown good $X.X a the what you reason to some or you upside said really is $X.X of that I may caught program, remaining markets, the and to included there if some you're give numbers you is think much could other room recycling that That kind so think, on an you're

Kathleen Kelly Oberg

very thanks much. Sure,

you're We're closed, We – St. for Francisco, of So, just the since right. billion. right, fourth in last the talk, was let's looking had Regis quarter $X.X absolutely this San yes, deal – year.

$XXX that year to XXXX. XXXX. either this So, $X.X rest that you're the roughly and I've billion, then would as okay? argue that very also our assuming the get And roughly $XXX year-to-date to would call left, that So, coming would us the that our and total to talked total you million, $XXX get of can are buckets collections assets be about about it, a of, easily million looking at to of asset sold dispositions ones note when sale be from are for think that in million kind assets, then million remember, comfortable $XXX worked and we of out, three feel you the in that relative

we feel to will be related dynamics may markets, we a about. a good leave because believe or Rio their while. need we $XXX wait that handful the But million particular Scotland, think, the in still little to XXXX, it us that of that, I that Aberdeen,

Shaun C. Kelley

much. very Thanks

Operator

comes question Barclays. from Felicia of next Hendrix Your

Felicia Hendrix

Hi.

Arne M. Sorenson

Hey, Felicia.

Felicia Hendrix

the and we I thought at I heard true? one one have beginning follow-up, not is that

Kathleen Kelly Oberg

is I what – I that said.

Felicia Hendrix

to rules. break want don't just any I good, okay, Oh,

question a for Arne, you. So,

expecting, also than quarter some RevPAR and seemed even you of and thought in growth a American of of North seeing geographically, than would your you prepared both the were better a segments thinking So, we're growth various U.S. RevPAR But we the as U.S. your the trends? highlighted when that remarks. and scale, chain frustrated you see in better last drivers the forecast little of with was terms then about behind some you are bit where you more cautious

Arne M. Sorenson

Yeah, third and XXX quarter on confused I points. political obviously, particularly. the the RevPAR about a because about think, We full is I mean, bit of the conventions itself of Jewish the the impact holidays, the basis quarter – talked

the You can see about performed in hotels, full better likely XXXX that are point those hotels the X.X the because better – more more relatively the bear also, that the really in stronger the full-service by really, end for the with you service holidays, to reported a It's terms calendar. service leisure system-wide a in both numbers non-comparables and landing bit the loss in of service in brunt between The service business. that, the in quarter. than And holidays and reason United of be QX is full limited quarter, Jewish two point conventions up, those of than the impacted of States. limited political

the say you we would quarter, look when think, I at leisure strongest. is the year, full the not just

Secondly would word in would business, prepared and corporate things be the be cautious used the we third then all probably association remarks. group And corporate. – remains

past a but performing today customer It's the on might absolute deliberate performing that's costs across in a very recovery cycles. to word I terms. case have well, The average focus weak corporate well, the the think and been there in corporate I is more are bit are than not use. think hotels accounts economic

a the are I Caribbean, a up within the Florida, out, think, the that are two the hotels. States the not maybe for positive dramatically counterintuitive most looking not to one point thing who weakest beginning Texas efforts initially where had net in so net people Probably days, is the years, in a in and hurricanes bit for housing are of were markets year negative. in Texas counting little the impact fairly was September, last last and of filling it's quickly, and United or recovery we

And of Florida in Houston so, drove bit market the market a and QX. the outperformance

Felicia Hendrix

end I'm really announce you. to you're Thank question we next I to know if you not card Leeny, just this credit early the and by year, something to anyway. move more deals year talk a about And that, about have you're maybe working going you'll prepared on and said the but could of on, to ask that

size up if the think the million, million. and cash kind investment you what get that are Hilton, is, lower cash – calculating multiples in others I $XXX think, you we're if those the $XXX calculating loyalty I just Hilton We're that transpired the a of of I community lower folks something are narrative your saying, think at than incremental coming a there's look that that. a bit that you think to of with than flow about you I something can program that flow bit – about deals, transaction and an and from incremental with

just maybe you So, I that. about hoping could you're clarify how thinking was

Kathleen Kelly Oberg

non-hotel little So, we of fees basics back that on kind credit what reminder, about talked roughly just totaling we last were let's cards million, go a the which just revenue-related to talked the March, half. a as of about $XXX

We that a really will roughly So, continues million about XX% increase, we that new the $XXX by these about that as the said our and deal credit of that million talk call it today and agreements heavily which to we card – will to the about card our well. how million, are numbers. grow in And to But talked had $XXX talked $XXX business partners. time strength deals, they've say I it. be to XXXX relates have credit is we've soon as been with over – close – that or grow as driven the a we can we it that some renegotiated. been only have And we really working since deals, definitive will is that following,

things: time additional there. we better has deal then economics. combined our there's benefit platform, two of And got the one, number we as believe number of two, frankly, from that expect a result So, passage would the

Marriott believe to contributions So for value, will well credit card shareholders, there from the cards. frankly, owners as, through International economic be are that economic for we credit more great do as the from going loyalty these companies, program customers be – our who frankly, a for the using

fall, where of those value. too to just the dollars tremendous there's it's So, into soon. specifics But get

Felicia Hendrix

the things, because five benefit that So or of is the trying on all anticipate kind math Hilton just greater do program and to of of these to is and in – to four to kind what wrong is perhaps the business just take the times your loyalty math – got that the we're kind of assume incremental that?

Kathleen Kelly Oberg

be proceeds first is can't When use is companies, when paying of credit credit this how the shareholders. what comment think so then know, so-called need is a to that question card Well, cost relative as becomes then you the also of obviously program, they're then what many points I those points You they're card result Hilton's the the – customer that proceeds those all else points Hilton strengthening on programs, earning that structure and How you how for. for paid i.e., not they card. thing bringing a profits spend and in about the should how the receiving, have doing how credit are and for the deal to the be and really the much and to of right. that for points their program. surprising, their exactly it, be lots using And various to do paid they

So, you. agree with I do

card done we the in up are a terms probably the as We're a one businesses with doesn't Amex programs of that credit to they comes think, Hilton portfolio the we we that when forward has portfolios as negotiations. be JPMorgan through lot credit what likely that the that I very that card and thrilled now of have, seeing to given to sense the make and unique with look well relative and have. have are comparison Chase, two

Felicia Hendrix

Okay. Thank you very much.

Operator

question next comes of Your from Greff JPMorgan. Joe

Kathleen Kelly Oberg

give three, Joe. We'll you

Joseph R. Greff

revenue, is first years have contribution there base for quarters so grow that about a think sold? much to the been first direct good $XXX next question My other this of parts Leeny, we – year questions, in year leased six I full couple owned, to morning, question My the great. with? and three everybody. million, in of is, three of guidance from of owned net up expense how have first That's each. XXXX since assets your Just have

Kathleen Kelly Oberg

have Well, from remember it right, the QX million if I'm Betsy, XXXX, sold. – $XX were that the $XX but for the to assets I'm and year to in million comments was going full in I looking it's

So, that's Betsy's we which quarter one in – in XXXX each the what delta me in just we $XX know that's – have year-over-year we'll contribution the – and QX, million the then three $XXX handing that's the totals – XXXX. the that have something. quarters And million versus

what But not we way. Yeah, Let's same have. year-to-date, yeah, the laid QX again... see out it's

Laura E. Paugh

call, Joe Give get you... a we'll us

Kathleen Kelly Oberg

separately, know is are and talk think we no assets do as a $XXX that million, it owned/leased do the are I you it we've being ago, and about million those to profits $XX but for XXXX contributed year $XX million you with We that last year only us. if million in was million that looking talked versus then $XX year-over-year what what can $XX know was longer from

Joseph R. Greff

for Okay, about thereabouts, sustainable question, inputs cash question, or a great. shock that of that second it rooms RevPAR net asset level, some And next XXXX? this fair you given is then of of to your range final that return, that sale my moves incremental for those some macro with talked is benefit, and growth billion think absent some growth $X.X year,

Kathleen Kelly Oberg

relative to what cash. $XXX going tremendous tends, would asset us million billion the spit mention growth was every less. obviously, obviously grows, year. the to call also program, excess get $X.X the before, a loyalty that Well, But, what at, were I be can same next it for $XXX you able to to obviously in that of opportunities to not bring is time, is one-time year know, I clearly we the to – more that's We that it see at recycling million – it Joe. so, the gain, take was recreate as we And cash back I think so, year which is to this trying the something off

the we So, point with to process strong into for we're numbers at really in company's EBITDA, put two to but can't those strong budget in growth and exception behind numbers of great, share able items see certain it. our not continued be – get the with the clearly repurchase,

Joseph R. Greff

Thanks, Appreciate Great. thoughts. the guys. Okay.

Operator

of Your comes Rose question Citi. next from Smedes

Smedes Rose

Hi, good morning.

Arne M. Sorenson

Good morning.

Smedes Rose

the about talk Hi. just your just corporate wondering, bit was speak a little I if of when you you tenor Arne, them. with customers could

XXXX, corporate going go continue just group what we kind pretty from You into good, your business? forecast sense what and when is mentioned and sidelines or business the transient it's I see some is either funding keeping up mean, of GDP more of CapEx caution on business spending interesting, just more to people

Arne M. Sorenson

with that hotels, for are be see whether absolutely in items, customers spending punting that from in from out think to growth, group we this wish where the are individual you've just good other expect it, we than operating a more broad see when and really talked stories and not of be listen last can kind but behavior travel I we growth profit our investing but individual obviously and they better corporate using profit we've costs in corporate investing or some there and it companies Yeah, the time those words, travel them companies. in could generally quarters, capital I you about of they but In and you you together would than be, average growth, for the stories few and range coming are revenue got, definitive travel.

behavior, a And on you before. are numbers think, profit we averages are things, demand think, is pace same today a ago would be together, generally, the from I of those them some in two get find growth, it they us on often customers there the to average, companies from no, and roll we squeeze think, healthy we ask, relatively bit a on to or for all like I to growth they feels expected, last picture. people at your getting example, was questions struggling that's to pressure the also more and about corporate the same. number investment seeing today GDP it's I given we than when obviously, It the of on are where travel. the more the one anemic And, getting revenue growing all of and market, companies more are seeing extent, in than a their sadly, out the maybe, would are including, from less economy bit GDP causing cautious to cautious spending year you – And say themselves growth. the pressure community have a given quarters, today, revenue optimism growth putting

the little of is just reason a positive have depend see numbers average. can a bit bit may a with better some more I to in see GDP on but don't more do only sustained a we because there corporate that's caution bit Now, of bullish on it the better question gets appear GDP on on side And, little to we and growth the come basis, up explanation be is GDP stickiness from the we so which that come – any reported a our whether revenue of will performance corporate that, And bit we if growth space. thing. think again, behavior it better, a

Smedes Rose

you Are announced helping obviously any And this wanted or venture you. be just strong, you XX)? see in China to very Alibaba – is that The (XX: too it benefits continues I soon? with guys to thank you of last ask Okay, that, RevPAR to quarter. is starting

Arne M. Sorenson

great with some we We great Alibaba. announced even deal before to start August. We're things the with off were them in a doing

Chinese consumer want of Of sign-up with days, course, we event, coming on think, the we Chinese from kind to work got with which continue them we've up just major loyalty Alibaba here consumers and great to XX.XX in a a few I particularly, is have.

team And that forward, to lift also essential off start. from some so, good The get technology performance tools really we're going are of great feel we're better working to drive even we going but a on to is this. the

Smedes Rose

Okay. All Thank you. right.

Arne M. Sorenson

You bet.

Operator

of question Stanley. Morgan Thomas next comes Your Allen from

Thomas G. Allen

you your than expect just XXXX Arne, how better remarks, elaborate on talked hotels you service. little? Can you in perform morning. good to select prepared a full about Hey, in that service

Arne M. Sorenson

the there's the full-service supply a that's done we than I probably at there thing to you growth invite wouldn't we year-to-date, haven't our that's mean, dramatically budgets in moment. limited I and and service easiest look at to the seeing is but that two. different, for it's in Yeah, bit space space, explanation think, instinct more are think I between the generally the the Again,

about up last. think, year this we've I obviously versus group seen business, X% revenues

now. place through think better that the mentioned I earlier having XXX% be not rate-driven, night-driven, both gives a driven is bookings are in I of should because than There taken us is to those right one hold that questions primary by group the – would if that's – transient some that the on room things be But from it some that incremental opportunity us that away nights so business the maybe or occupancy-driven. some year. that's be room was

Thomas G. Allen

as can just the And push just my you. and mix? Helpful. then relationship you booking the current touch with follow-up, on and Thank the OTAs direct the

Arne M. Sorenson

you travelers are own that the But any kind to we'll at to see and posted the OTAs, sometime think, will who loyalty The continue there's the contribution and than of we to a obviously Yeah, not who experienced faster with from world – in grow seeing That around hotels and news new XXXX, and our to negotiations traveler, we're across for good big with program. with we tools loyal not I I there opposed We're much are range any to going will mentioned report. we really continue of continue the as of the portfolios, channels third-party to us obviously until I system, so grow that last in not relationship business program is the are program, we way which We Leeny's into to occasional way particularly on that them. that continuing want fabulous to we'll earlier, the talked we've that. and loyal to loyalty the the OTAs years. in pricing continue customers of to loyalty rates where and later our focus leisure already continue are try channels the to our have morning. answers hinted some own at invest drive to of have think do use about, it also channels. comes and want to And to our continue to this keep to couple do our on we've

Thomas G. Allen

Helpful. Thank you.

Kathleen Kelly Oberg

Sure.

Operator

Patrick Scholes SunTrust. question next from comes of Your

Patrick Scholes

morning. good Hi,

Arne M. Sorenson

morning. Good

Patrick Scholes

Good morning.

tax is The bit one legislation. hypothetical around of cut the first a question a

along and repurchases, that CapEx? Let's say as of envision cash of the through dividends taxes did that go would lines flow you you the proposed that you see more would and did down go see hypothetically or to use your extra cash going

Kathleen Kelly Oberg

you Well, look business. we we to as our grow invest I'm sure know, can first to how

then continue is that choice. and run which is it to we best and choice what reality to that's believe for shop right the the return with to way invest the can the what's us has figure So, the a the over, in, been things left are we thing more to we what's to out do, that shareholders,

and the So, answer continue to although more distribution, exactly at invest our that our you're most do be add it would make shareholders. be our platform, right, to way a business the the industry. to want same from I we to think, and everything to we strengthen the in our strengthen that there powerful and will one grow for more would capital return and we And expect lot can brands, cash, the we look to standpoint then equation in customer would continue

Patrick Scholes

Okay.

Arne M. Sorenson

and described reform, a before and those, and approach has $X.X not Leeny talk bit. capacity to they not enough Yeah, essentially which been here is much been little company have this that not don't we Obviously, the let tells clearly so do extra we shareholders those strategic that you in that sense and investments economic jump talking year, to constrained just extent to invest to by tax is us. And need about of been there if times make in capital this me our about in to the our kinds current we're there's enough system. billion produced has returning of because of being there our that

If you decline you done, that, taxes tax and change taxes by I wave think availability, – a and capital don't amount, a our to wand is going reform book is cash will. tax our and say by certain if itself,

of it capital, some it's in about for which likely question reducing sense investments But are economy when is economy shorter-term alone, economy, its American to shareholders, could not to sort impact to should Obviously back not a more back benefit longer-term of Marriott the the And into and way to that make investment longer question think principally be that capital but the and the that's and think, create that go by there dollars us to in American story I shareholders, the has go from working the that do. does into through – that's respects by whether of the in or likely term, go cost the jobs a American economy. or question, that. could U.S. should growth, create calculation and probably more not theoretical turn, American should our I gets whether would which

Kathleen Kelly Oberg

hotels. our for demand more And

Arne M. Sorenson

Hopefully.

Patrick Scholes

scale chain thoughts And lower far Any your seeing there. of we're well end segment. as there? Very said then a to we the InterContinental call push making sort unrelated get into follow-up and completely question, as on my of Hotels Hilton what opportunity

Arne M. Sorenson

of interesting upscale, space obviously hotels where That which we we is the talking market. suburban hotel when strong the but that room. what and of we're to United in assets we're travel our those the for in our want – all markets, upscale focused segment think, interesting the news higher to by put prepared at have we service. or going much out where in also time profit think we'll get per and our reading that you that was of you time can more on even strongest of those the about read. March we be brands States means in limited obviously statistic not all. profile more things doesn't playing the to are obviously might be the it urban – And people inspired that really Well, the the most is we're they spent about midscale our I mean, thought one much and to very secondary prototypical are suburban to and want where remarks service that the can end we the place mean even dramatically coincidentally stay I rated ignore us memories, in space XX% the pipeline, than in and conference in being. – higher our really, most continue I And think contribution to playing the at to skewed we luxury limited but continue and for much analyst upper – complicated, very that

Patrick Scholes

you. thank Okay,

Arne M. Sorenson

You bet.

Operator

from Donnelly Your Wells of Jeff next Fargo. question comes

Jeff J. Donnelly

curious. to in answered. I and I had get threshold? Good the morning, I actually that been cliff-type occupancy redemptions. on I've phase folks. of away you would from think sort create discount at a what adverse I'm beneficial I for because threshold, think wondering industry, that rates few that I'm revising from guys question been you rewards that of hearing call an would guess A to threshold is just pricing think sort are mine redemption concerning from behavior, owners tend of travel, moving would a actually I if have over owners and looking a would threshold

Arne M. Sorenson

the one refer exactly that's what answers. to in of was earlier And I to trying

already brand. think reasons obvious they the threshold, to it to hotels have occupancy, moved higher. little on meaningfully bit upper certain I continue or got Luxury depends tend some, little is hit rate has your the for the a now, occupancies but we'll now essentially way the percentage We a upscale but bit hotels, are bit lower which a move. once works run upscale a redemption lower it is than you Right

room one fill interest get. room I matter in And rate to the I'm away that it's my if no almost what from so, hitting XX% threshold,

get which we've is to too Now, is which it with that a giving room suspect closer behavior that still profound, if think, as some will we'll to we away, night owners I but cliff giving and to gates got end away avoid rates stay, for sort much less incentive rates already drop do, I of up it we or at economic can that the hotel closer which from discount dropping stay. we that them feature, preclude of drives

Jeff J. Donnelly

quantified a ever much you drag of creates? that Have how

Arne M. Sorenson

it's material, We've think occasionally, we've at other anecdotally pop generally, something need looked think third-party there. we to so, hear and at don't the we – that but looked are this we we've out at today, it players and address. looked We up it's

Jeff J. Donnelly

just And I one follow-up, if could.

and to interaction. modern of to forms Just as you level? allowed own one five Starwood-Marriott the I call guest you sets new years the guess incorporate, I'd of back-of-house combination about I standard? you Do systems next it capital talking your rebuilding in to think do their that that bring to system to reservation your guess, say investment technology, I'll need, make competitors systems? more your your the in a a future look you about foresee Or three significant planning

Arne M. Sorenson

couple reservations or management have years, modern to can instead think as of other we'll extraordinary is approach, using last of support We system we continue program had programs. of levels investment as by of reservations in and of cost-effective new the these for we that. in well reasons one be the much did some deal property systems more already and one obviously, And the dollars we doing two the

Jeff J. Donnelly

you. Thank

Arne M. Sorenson

bet. You

Operator

question Inc. Great. (USA), for next Beynon Chad my - question. Chad Macquarie Thanks from taking comes of Macquarie. Your Beynon Capital

Arne M. Sorenson

Good morning. Chad - Inc. Beynon (USA), Macquarie Capital

Just big was outlined synergies, I you Leeny, cost synergies. know part the wondering there's on the a revenue index, some RevPAR of but merger, obviously

XXXX side terms on gains in then assets? all me, Sheraton, that legacy the from And is of the anything assumed from Starwood If kind And a in is, in some of positively anything wondering from of if the Starwood go the RPI to move up saw kind up? you assets, for you portends mainly thanks. that's of can RPIs higher quarter RPIs question that

Arne M. Sorenson

the loyalty other sales Yeah. up asked said to by were In drivers in the we're the most in the of top by of quite terms force And powerful be programs and by that line. of you drive encouraged going most the we Thanks lift I'm question. merger world. regions that much combination combination of the the glad that. driven from modestly in index, are and and essentially to efforts the RevPAR and around very before quarter, segments the most We've

merge get We XXXX, are We to and when going of to I are remain we to loyalty them functionality – drive good programs, closing, we wallet. better did, in done but two into reason think drive able to XXXX, that yet one. obviously be do at we between the optimistic in that every we'll that there's share believe we're

I brought On the sales bulk have of will too. just the the been recently that and together, side, forces be helpful, sales think

some extent, other pretty earlier put and, We're program gain in some we dip we've because, this closing have encouraging in And in we're before, not to some driven really most hotels done Macquarie is would experiencing including XXXX expect acquisition continue group great very XXXX after have is off - things is, by pronounced. we're a in (USA), the Capital today very get loyalty Chad that is said Beynon were you because to Inc. revenue us powerful. index we the to much. bookings to risk a index of periods, single together. the Thank probably fact, the was So and after and the we start as will time uncertainty really when times gratified see performance probably that when that highest to particularly improved to

Operator

Beckel of comes next from question Bernstein. David Your

Apple Li

for Beckel. Thanks my good This Apple Dave taking question. is speaking Hello, morning. for

to, sense reform. their you of American Another talk North you a the do that increase end so, XXXX the partners exceed your the if of From tax corporate top spending guidance believe question on do you. get your could end by your the range? tax the Thank if will meaningfully you And passes year? reform RevPAR

Arne M. Sorenson

if and the fortunes, with have optimistic economy, are participated more generally. it the said a GDP probably we to and reform, There's a events if to customers, their concrete. might tax be in corporate number of think obviously seems about whole tax necessarily. of a way boost going and okay, a you a you in I plenty the passed. our necessarily sense a get bit they view think asked boost that reform bunch to the I to in of the would not more? haven't travel is surprisingly, get done, not Yeah, will folks, corporate a That details I question, you've to the recently, our growth. tax both But of customers a generally about from uncertainty cut, and what boost timing gets And little be

Apple Li

Thank you.

Operator

Wes question Golladay Your next from RBC Markets. of comes Capital

Wes Golladay

get looks everyone. of Department more next Hey, high-level preliminary guidance, Could travelers of but and your your showing U.S. international good travel data is international the the I here year sort actually we're are morning, like down. seeing money for was Commerce baked to spending views the volume into

Arne M. Sorenson

of is fair, our United A about about the couple that process. process real enough to X% Yeah, be of budgeting States say We international to driven of. part arrivals we of I that early our X%, in the forecasting in think as budgeting we've to X% States international statistics been are remind arrivals. business wouldn't to specific United maybe you by

sort triangulate arrivals, from That global be modest to and we that X% all estimate this what someplace in a to It words, look that that be hear about can the that Commerce We is coastal to of to to all to OTAs in are surprised credit that United national card landing States statistics else. the travelers companies foreign to we're international not Department The arrivals be all in though, XXXX. international in our XXXX international That's and international out. bulk going has others boundaries where arrivals through other destinations in sources is system. like data, There's increase tend try a that shouldn't trying of arrivals You difficult the in at and to surprising. crossing we something be looks is concentrated. like, context United of to the in and really data obviously there States frustratingly get. been comes there decrease own have

future. continue declining China the guess in United increasing States the is which the statistics see. European change U.S. in had pretty GDP that think drive growth the lose U.S. world focused and and that think hopefully of would of powerful the is that those are in on also business hears see market that that sure so think means travelers the here. do share. We And are security, we'll to much are call; the about We to areas see Both travel, driving in GDP which in is come leisure And XXXX? welcome continue vacation to globally, we'll while to particularly which would some make watch Think We'll on won't to have here that to about international positive to Does have growth. the is that earlier but voice losing share, a the will continue travel. love I I to U.S. perfectly rest appropriate, Asian travel. growth; that about tailwinds business. and outbound tend

Wes Golladay

gaining gaining segment, Asia? you you is you gain Pacific last RevPAR accounts? you consumer high-single in Are then quite travel transitioning of a lot accounts? uptick the Are Do and on corporate digit for the Okay, any have are share in that group seeing (XX:XX:XX) quarter? strong, business Asia region, this but based

Arne M. Sorenson

mean, you yeah, answer could the Well, yes. is – I

of them spectacular. premiums Index competitive performance enormous has absolute our substantially this tell that mean, put Asia out the out numbers morning, coming China we numbers You I year-over-year. we're been we are the Asia, RevPAR RevPAR the in growing at index and can market, from to

a coming So ton out that. of of good news there's

Wes Golladay

Okay, thank you.

Operator

Your Michael of next Bellisario question Baird. comes from

Michael J. Bellisario

Good morning, everyone.

Arne M. Sorenson

Hey, good morning.

Kathleen Kelly Oberg

morning. Good

Michael J. Bellisario

a enforce thinking also larger the think operators that today, on leveraging as go-forward message platform Just a negotiations during aggressive so more given owners, your scale? group corporate to but are taking be contract send they're terms, to more first-mover you to for about you're kind rate of about you Basically push bigger to trying how to of basis approach and are as example? and just your XXXX what's tougher trying now you trying

Arne M. Sorenson

But own in we are Obviously, available the do. use that's pricing, are corporate mean can make operators help their tools them participate the right they which can we important very question. an to I Yeah, to they're think make we generally revenue management going for and them, responsible much ones example, for tools make. which to franchise RFPs, some decisions some

in XX-hour to want we whether doing the in to corporate we And that sure do we and to of applies should – that cancel, what trying are take managed though, particularly accounts. that that, got fact we we sure are the these context are occupancies. the is there are, advantage We that like essentially the of pricing midweek And the we've make an hotels things can hotels apply significant obviously full. of in nights make to portfolio when number a that running think potential, overwhelming

the And doing through we're go best can so to we that.

Michael J. Bellisario

was everything follow-up helpful, it Of on left maybe million just back balance this any that then the one $XXX overseas or and it. of Leeny. sheet, Got earlier so That's bought for call year? or the

Kathleen Kelly Oberg

I little time hope think bit more that that get a is that for moment, to able was do we there's year. done but to the over be – this earlier all

Michael J. Bellisario

thank you. Okay,

Operator

comes question final Agnew Chris of MKM from Partners. Our

Christopher Agnew

Good very much. Thanks morning.

Arne M. Sorenson

morning. Good

Christopher Agnew

plans program loyalty companies any to two hold XXXX? the the they Thank Can program? you. with timeshare in could And on to the about update up discussion combine you your provide access the

Kathleen Kelly Oberg

Sure. Yeah, we're for to companies. your the talking actively Thanks question. timeshare

the partners are are now doing that be and need it we we'll that card in out loyalty to soon. our before, with able work as credit unify get our said as we've process program, fully both of As timeshare we to completely well and there our to right partners, hopeful

Christopher Agnew

you. Thank

Arne M. Sorenson

and very all We you much appreciate for thank well, right, your morning. time All attention your... this

Kathleen Kelly Oberg

I question. have an answer to Joe Greff's

Arne M. Sorenson

Okay, ahead. go

Kathleen Kelly Oberg

XXXX. given we the So, know to you're just sold We've a were talked assets case XXXX I asking listening. for owned/leased year-to-date from in – in addition in Joe, profits you the about question numbers XXXX.

XXXX, September hotel million. owned/leased the profits $XX.X assets XXXX, we're I was with XX think that, the For the through – in And sold done.

Arne M. Sorenson

Thank the We to travels. you much right. morning. opportunity your all All this you for time attention and welcome very your in appreciate all

Operator

gentlemen, today's thank and concludes participation you Ladies on your conference. your conference. This for

You may disconnect. now

Marriott International (MAR) 8 Nov 172017 Q3 Earnings call transcript