Marriott International, Inc. (MAR) Q2 2025 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

The earnings call summary highlights strong financial metrics, including a significant increase in global signings and a robust loyalty program. While RevPAR growth guidance was slightly lowered, the overall financial health remains strong with expected EBITDA growth. The Q&A section reveals positive sentiment towards Marriott's new initiatives and market strategy, despite some macroeconomic uncertainties. The announcement of a potential acquisition (citizenM) and a focus on shareholder returns further support a positive outlook. Given these factors, the stock is likely to see a positive movement in the short term.

Key Financial Performance

Global RevPAR Increased 1.5% year-over-year, driven by nearly 2% ADR growth, offsetting a 30 basis point decline in occupancy. The decline in occupancy largely reflects declines in U.S. and Canada select service hotels.

Total Gross Fee Revenues Increased 4% year-over-year to $1.4 billion. This was due to rooms growth, higher RevPAR, and co-branded credit card fees, partially offset by an $8 million decline in residential branding fees related to the timing of unit sales.

Incentive Management Fees (IMF) Rose 3% to $200 million, with roughly 2/3 earned by international hotels. Higher IMFs in all international regions were partially offset by declines in the U.S. and Canada, primarily due to some large hotels undergoing renovation.

Owned, Leased, and Other Revenue Net of Expenses Rose 14% year-over-year, driven by contributions from the Sheraton Grand Chicago, improved performance at other hotels in the portfolio, and favorable currency impacts.

General and Administrative (G&A) Expenses Declined 1% year-over-year, primarily due to lower compensation costs as a result of enhanced efficiency and productivity measures implemented last year.

Adjusted EBITDA Increased 7% year-over-year to $1.42 billion, reflecting strong operational performance.

You have reached the limit Upgrade to access full content

Get started

Operating Highlights

Series by Marriott: Launched a new collection brand in the mid-scale to upscale segment to bring established quality regional hotels into the portfolio. Announced a founding deal to affiliate over 100 hotels in India with Series by Marriott.

citizenM acquisition: Acquired the innovative Tech Forward lifestyle brand, citizenM, with plans for global growth.

Luxury portfolio expansion: Plans to open 27 additional luxury properties in 2025, with 270 projects in the pipeline. Recent openings include W Punta Cana and JW Marriott Creek Resort and Spa.

Ritz-Carlton Yacht Collection: Launched Luminara, the third addition to the Ritz-Carlton Yacht Collection.

Global pipeline growth: Pipeline grew to a record of over 590,000 rooms, with 40% under construction. Deal signings rose 35% year-over-year.

Mid-scale brand growth: Existing mid-scale brands like City Express by Marriott, Four Points Flex, and StudioRes are attracting significant interest, with around 200 open hotels and nearly 200 in the pipeline.

RevPAR performance: Global RevPAR rose 1.5%, with notable growth in APAC (9%) and EMEA (7%). U.S. and Canada RevPAR was flat, with luxury RevPAR up 4%.

Marriott Bonvoy growth: Loyalty program grew to nearly 248 million members, with member penetration reaching 69% globally and 74% in the U.S. and Canada.

Marriott Media Network: Introduced a media network to help brands connect with guests using insights from traveler behavior and preferences.

Leadership transition: CFO Leeny Oberg to retire in March 2026, with Jen Mason and Shawn Hill succeeding her roles.

Efficiency initiatives: Enterprise-wide initiatives to enhance efficiency and productivity, resulting in an 8%-10% decline in G&A expenses for 2025.

You have reached the limit Upgrade to access full content

Get started

Risk or Challenges

Macroeconomic Uncertainty: The company highlighted ongoing macroeconomic uncertainty, which could impact RevPAR growth and overall financial performance. This uncertainty is reflected in the lower end of their RevPAR growth estimates for the year.

Weaker Demand in U.S. and Canada: RevPAR in the U.S. and Canada was flat year-over-year, with select service and extended stay segments experiencing a 1.5% decline due to weaker government and small business demand.

Decline in Business Transient RevPAR: Business transient RevPAR declined 2% globally and in the U.S. and Canada, partly due to the shift in Easter timing and ongoing economic uncertainty.

Weaker Government Demand: Government-related demand in the U.S. and Canada declined 16% year-over-year, significantly impacting select service hotels.

Group RevPAR Challenges: Group RevPAR in the U.S. and Canada was softer than anticipated due to fewer near-term bookings and elevated attrition rates.

Weaker Performance in Greater China: RevPAR in Greater China declined 0.5% year-over-year due to a weaker macroeconomic environment and lower business and group results.

Higher Construction Costs and Financing Challenges: The company noted higher construction costs and a challenging financing environment in the U.S. and Europe, which could impact future development projects.

Renovation-Related Revenue Declines: Incentive management fees in the U.S. and Canada were impacted by large hotels undergoing renovations, leading to revenue declines.

Residential Branding Fee Declines: Residential branding fees declined $8 million in Q2 and are expected to decline around 30% for the full year, impacting overall revenue.

Timing of Residential Sales: The timing of residential sales has shifted, leading to a significant year-over-year decline in residential branding fees for Q3.

You have reached the limit Upgrade to access full content

Get started

Guidance & Outlook

Full Year RevPAR Growth: Global RevPAR growth is expected to be in the range of 1.5% to 2.5% for the full year 2025, with stronger growth internationally compared to the U.S. and Canada. Luxury and full-service segments are expected to outperform lower-end chain scales.

Third Quarter RevPAR Growth: Global RevPAR is expected to be flat to up 1% in the third quarter of 2025.

Fourth Quarter RevPAR Growth: RevPAR growth is anticipated to accelerate in the fourth quarter of 2025 due to holiday shifts and large events such as the Paris Olympics and the Euro Cup.

Group Revenue Pacing: Group revenues for 2026 are pacing up 8% in the U.S. and Canada and globally, up from 7% a quarter ago. Full year 2025 group revenues are pacing up 3%.

Net Rooms Growth: Net rooms growth for 2025 is anticipated to approach 5%, with long-term global net rooms growth expected in the mid-single-digit range.

Capital Returns to Shareholders: Full year capital returns to shareholders are expected to be around $4 billion while maintaining leverage in the lower part of the net debt-to-EBITDA range of 3 to 3.5x.

Investment Spending: Total investment spending for 2025 is expected to be $1.36 billion to $1.46 billion, or $1 billion to $1.1 billion excluding the $355 million for the citizenM transaction.

Adjusted EBITDA: Full year adjusted EBITDA is expected to increase between 7% and 8% to $5.3 billion to $5.4 billion.

Adjusted Diluted EPS: Full year adjusted diluted EPS is expected to total $9.85 to $10.08.

You have reached the limit Upgrade to access full content

Get started

Shareholder Return Plan

Cash Dividend: The company has a modest cash dividend policy, which has risen meaningfully over time.

Share Repurchase: The company plans to return excess capital to shareholders through share repurchases. Full-year capital returns to shareholders are expected to be around $4 billion.

You have reached the limit Upgrade to access full content

Get started

Key Q&A

Q:Given all the advances in technology, particularly around AI, where is Marriott in the technology transformation project as it relates to timing and spend, and what are some of the major changes both owners and travelers can expect to see over the next few years?

A:Marriott is in the midst of a multiyear transformation of its three main systems: loyalty, reservations, and PMS. The new cloud-based central reservations and PMS will start deployment in U.S. and Canada select service hotels later this year. The transformation aims to enhance training ease, improve guest experience, and drive operational efficiency and revenue opportunities for owners. Marriott has also launched an AI incubator working on projects like reimagining the concierge function, customer engagement center pilots, and AI integration into the Homes and Villas platform. The heaviest tech spend will occur in 2024-2026, with an additional $100 million annually compared to typical tech spend.

Q:What are the implications of the 'big beautiful bill' on renovation capital, development, and Marriott corporate?

A:The bill reduces uncertainty for consumers and owners, which is a net positive. While owners are long-term investors, uncertainty around tariffs may still cause hesitation. Construction starts have increased but are not at pre-pandemic levels. Conversion traction is strong, with the global mid-scale pipeline doubling in Q2. On the corporate side, factors like depreciation and economic stability are encouraging, and Marriott is optimistic about opportunities to recycle capital through asset renovations.

Q:Can you provide insights into the group business trends, including lead volumes, deferrals, and customer types?

A:Group business for 2026 is tracking 8% higher, up from 7% last quarter. Distribution across corporate (45%) and association (25%) sources remains consistent. There is no abnormal volume of cancellations, though there has been a slight uptick in attrition in Q2 and late 2025. The drop in Q2 group performance was due to attrition and weaker in-the-quarter bookings. Food and beverage spend for group business remains robust, particularly in the luxury tier.

Q:What is the potential of the Marriott media opportunity, and how does it compare to other revenue streams like co-branded credit cards?

A:The Marriott Media Network connects brands with audiences throughout the guest journey, leveraging traveler insights for bespoke campaigns. While still in early stages, interest from advertisers has been strong. The network is expected to generate returns for both Marriott and its owners, similar to other high-ROI adjacent businesses like co-branded credit cards.

Q:What is Marriott's commitment to the residential branded fees business, and what is the long-term outlook?

A:Marriott is committed to the branded residential business, which is a leader in the sector. While fees from this segment are volatile, they are not a significant part of overall revenue. Residential branding fees are expected to be down 30% this year, an improvement from the 50% decline expected earlier. The business provides high ROI and enhances the perception of Marriott's luxury brands.

Q:What are the trends in business transient (BT) travel, excluding government travel?

A:Excluding government travel, global business transient RevPAR was down 1% in Q2. Government transient RevPAR was down 17%, contributing to overall softness. Most corporate travel restrictions have been lifted, and return-to-office trends are supporting BT travel. However, macroeconomic uncertainty is the primary driver of softness in the segment.

Q:What is the outlook for Marriott's pipeline and unit growth, particularly in conversions?

A:Conversions have been about 30% of signings for several years and are expected to remain strong. Marriott's pipeline is over 5% higher than a year ago, with conversions playing a significant role. The company is confident in achieving mid-single-digit net rooms growth over the next several years, supported by new initiatives like the Series brand and portfolio conversions.

Q:What are the expected drivers of improvement from Q3 to Q4, and how does business transient (BT) fit into this?

A:Improvement from Q3 to Q4 is expected due to easier comps in China, stronger group business, and seasonality in BT travel. While BT is not expected to see a fundamental shift, seasonal factors and economic stability may support modest improvement.

Q:What are the trends in leisure transient travel, and how does it compare to other segments?

A:Leisure transient travel has been a strong performer, particularly in the luxury and premium segments. Resorts have performed well, driven by high employment levels and a preference for experiences over goods. Booking windows are short, but underlying trends remain solid.

Q:What is Marriott's strategy for expanding into other channels like residential, yachts, and media?

A:Marriott's strategy focuses on keeping loyal guests within its ecosystem by offering a wide range of travel opportunities. Initiatives like residential branding, yachts, and the Marriott Media Network aim to enhance the Bonvoy ecosystem and provide high-ROI adjacent businesses. These efforts are designed to meet evolving traveler preferences and generate economic benefits for both Marriott and its owners.

Q:What are the trends in conversions and the use of key money in the current environment?

A:Conversions remain a significant opportunity, particularly with soft brands like Luxury Collection and Autograph. Key money usage has not changed significantly year-over-year but is more prevalent in lower chain scales. Nearly 40% of Marriott's pipeline rooms are in luxury and full-service segments, which typically require more key money but generate higher fees.

Q:What are the development trends in China, and how do they align with Marriott's global strategy?

A:Development in China remains strong, with room signings up nearly 20% year-over-year in the first half of 2025. About 70% of rooms signed this year are in select service brands, reflecting lower risk and solid returns. Marriott's high single-digit rooms growth in China aligns with its global strategy of leveraging select service brands for expansion.

Q:Review of Unclear Management Responses

A:Management avoided providing specific economic projections for the Marriott Media Network, citing its early stage. Additionally, while discussing business transient trends, they did not offer detailed insights into how macroeconomic factors might evolve to impact the segment. Similarly, the response to the question about group business pace in 2026 lacked clarity on the potential risks of cancellations or deferrals.

You have reached the limit Upgrade to access full content

Get started

Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

MAR Transcript

Marriott International, Inc. (MAR) Presents at Barclays 11th Annual Eat, Sleep, Play, Shop Conference 2025 Transcript

Neutral12-4

Marriott International, Inc. (MAR) Q3 2025 Earnings Call Transcript

Positive11-4

The earnings call highlights strong financial performance, with significant growth in membership and co-brand accounts, and a healthy franchise. Investment in tech transformation and optimism for RevPAR growth, especially in international markets, are positive indicators. Despite some uncertainties in credit card negotiations and competition, the overall outlook, including strong shareholder returns and strategic expansions, suggests a positive market reaction.

Caleres, Inc. (CAL) Q2 2025 Earnings Call Transcript

Unknown9-4

The earnings call reveals a decline in key financial metrics, with EPS and sales down year-over-year, and gross margins under pressure due to tariffs and promotions. The Q&A section highlights uncertainties around the Stuart Weitzman acquisition and lack of guidance on its impact. While there are some positive signs, like improved traffic and conversion in Famous Footwear, the overall sentiment is negative due to financial declines and uncertainties, leading to a likely negative stock price reaction.

Marriott International, Inc. (MAR) Presents At Bank Of American Gaming And Lodging Conference (Transcript)

Neutral9-4

MAR Report

MARRIOTT INTERNATIONAL INC /MD/ 10-K

10-K

2025-02-11

MARRIOTT INTERNATIONAL INC /MD/ 10-Q

10-Q

2024-11-04

MARRIOTT INTERNATIONAL INC /MD/ 10-Q

10-Q

2024-07-31

MARRIOTT INTERNATIONAL INC /MD/ 10-Q

10-Q

2024-05-01

Frequently Asked Questions

Where does this earnings call transcript come from?

All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.

How soon is the transcript available after the earnings call ends?

Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.

Is the transcript edited or altered in any way?

No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.

Why do some answers appear as “Unclear” or “Inaudible”?

When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.

Who creates the AI Summary and Key Q&A highlights shown above the transcript?

They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.