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01/11 16:21
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
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.
Global RevPAR Increased by 0.5% year-over-year, driven by nearly 1% ADR growth, offsetting a 30 basis point decline in occupancy. The modest growth reflects ongoing global macroeconomic uncertainty.
International RevPAR Grew by 2.6% year-over-year, outperforming the U.S. & Canada. Growth was driven by strong performance in regions like APEC and EMEA.
U.S. & Canada RevPAR Decreased by 0.4% year-over-year, driven by declines in select service brands and calendar shifts impacting group bookings.
APEC RevPAR Increased nearly 5% year-over-year, driven by robust ADR growth and higher demand from international travelers, particularly from Greater China and Europe.
EMEA RevPAR Rose 2.5% year-over-year, led by strong regional demand and increases in both ADR and occupancy. Excluding the impact of the Olympics in France and the Euro 2024 in Germany last year, EMEA RevPAR would have been up 5%.
CALA RevPAR Increased nearly 3% year-over-year, with gains in both ADR and occupancy, supported by citywide events in Puerto Rico and Rio.
Greater China RevPAR Flat year-over-year, with stabilization in demand offset by weaker macro conditions and the impact of multiple typhoons. Leisure demand was solid, offsetting a decline in business transient demand.
Luxury RevPAR Increased by 4% year-over-year, driven by resilience among high-end consumers to macroeconomic uncertainties.
Adjusted EBITDA Increased by 10% year-over-year to $1.35 billion, driven by strong growth in gross fee revenues, owned, leased and other net revenues, and a decline in G&A expenses.
Adjusted EPS Grew by 9% year-over-year, reflecting the overall strong financial performance.
Total Gross Fee Revenues Increased by 4% year-over-year to $1.34 billion, primarily due to rooms growth and strong co-branded credit card fee growth.
Co-branded Credit Card Fees Rose by 13% year-over-year, driven by robust card acquisitions, higher global card spending, and timing of point transfer promotions.
Incentive Management Fees (IMF) Decreased by 7% year-over-year to $148 million, primarily due to declines in the U.S. & Canada, reflecting large hotel renovations and insurance proceeds in Florida last year.
Owned, Leased and Other Revenue (Net of Expenses) Increased by 16% year-over-year, driven by contributions from the Sheraton Grand Chicago acquisition and improved performance at other hotels.
G&A Expenses Declined by 15% year-over-year, reflecting timing, lower compensation costs, and benefits from enterprise-wide efficiency initiatives.
Outdoor Collection by Marriott Bonvoy: Launched in September, includes Postcard cabins and Trailborn hotels, offering unique outdoor-focused stays with access to activities like skiing, snowboarding, biking, and hiking.
Series by Marriott: Announced U.S. debut with an agreement to convert 5 select-service hotels in major U.S. cities, less than 3 months after the brand's initial launch.
Global Portfolio Expansion: Grew global portfolio by 4.7% year-over-year to over 1.75 million rooms across more than 9,700 properties.
Pipeline Growth: Pipeline reached a new high of over 596,000 rooms, with over 250,000 under construction. Conversions accounted for 30% of signings and openings in the first 9 months of the year.
Regional RevPAR Performance: APEC showed strongest RevPAR growth at nearly 5%, followed by EMEA at 2.5%, CALA at nearly 3%, and international RevPAR at 2.6%. U.S. & Canada RevPAR declined by 0.4%.
Technology Transformation: Progressing on multiyear evolution of property management, reservations, and loyalty platforms with new cloud-based systems. Initial feedback from hotels transitioning to the new systems has been positive.
AI Integration: Leveraging AI for content creation, augmented business intelligence, and efficient processes to enhance customer experiences.
Cost Efficiency: G&A expenses declined 15% in Q3, reflecting timing, lower compensation costs, and enterprise-wide efficiency initiatives.
Credit Card Partnerships: Active discussions for new U.S. credit card deals, reflecting Marriott Bonvoy's growth and relevance.
Capital Allocation: Full-year capital returns to shareholders expected to be $4 billion, maintaining leverage in the lower part of the net debt-to-EBITDA range of 3 to 3.5x.
Global Macroeconomic Uncertainty: Ongoing global macroeconomic uncertainty is impacting RevPAR growth, with modest increases in the third quarter and anticipated similar trends in the fourth quarter.
Regional Performance Disparities: RevPAR growth is uneven across regions, with challenges in the U.S. & Canada (down 0.4%) and Greater China (flat, impacted by weaker macro conditions and typhoons).
Business Transient Demand: Declines in business transient demand, particularly in Greater China and the U.S. & Canada, are affecting overall performance.
Government RevPAR Decline: Government RevPAR in the U.S. & Canada declined 14%, further impacting business transient performance.
Construction Costs and Financing Environment: Higher construction costs and a challenging financing environment in the U.S. and Europe are creating headwinds for new developments.
Technology Transition Risks: The multiyear evolution of property management, reservations, and loyalty platforms involves risks related to deployment and adoption across the global portfolio.
Incentive Management Fees (IMF) Decline: IMF declined 7% year-over-year in Q3, driven by renovations and insurance proceeds timing, impacting fee revenues.
Residential Branding Fees Volatility: Residential branding fees are expected to decline around 20% for the full year, reflecting volatility in project sales timing.
RevPAR Growth: RevPAR growth is anticipated to accelerate from the third quarter, with RevPAR expected to increase 1% to 2% in Q4 compared to the prior year. Full year 2025 RevPAR is still anticipated to rise between 1.5% and 2.5% year-over-year. Preliminary view for 2026 suggests global RevPAR growth could be similar to the 1.5% to 2.5% growth expected this year. Growth is expected to be higher internationally than in the U.S. & Canada. Next summer's World Cup could contribute around 30 to 35 basis points to full year global RevPAR growth.
Net Rooms Growth: 2025 net rooms growth is still anticipated to approach 5%. Global net rooms growth in the mid-single-digit range is expected over the next few years, supported by strong momentum in global signings and conversions.
Fee Growth: Gross fee growth could be in the 4% to 5% range in Q4. Full year gross fees are expected to increase around 4.5% to 5% year-over-year. Full year co-brand credit card fees are anticipated to grow roughly 9%.
Adjusted EBITDA and EPS: Full year adjusted EBITDA could increase between 7% and 8% to $5.35 billion to $5.38 billion. Full year adjusted EPS could total $9.98 to $10.06.
Capital Allocation: Full year capital returns to shareholders are expected to be roughly $4 billion while maintaining leverage in the lower part of the net debt-to-EBITDA range of 3 to 3.5x.
Cash Dividend: The company has a modest cash dividend policy, which has risen meaningfully over time.
Share Repurchases: The company plans to return excess capital to shareholders through share repurchases. Full year capital returns to shareholders are expected to be roughly $4 billion.
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.
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.
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