The paragraph introduces the Marriott International First Quarter 2024 Earnings Conference Call and the speakers, including the President and CEO, CFO, and VP of Investor Relations. The operator reminds participants that the call will be recorded and there will be a question-and-answer session. The Senior Vice President of Investor Relations then gives a disclaimer about forward-looking statements and refers listeners to the company's SEC filings for more information. The President and CEO then begins his remarks.

In the first quarter of 2024, Marriott saw a 4.2% increase in global RevPAR, with growth across all three customer segments (group, leisure transient, and business transient). Group was the strongest segment, with a 6% increase in RevPAR. Leisure demand and ADR remained resilient, leading to a 4% increase in leisure RevPAR. There was a 1% increase in business transient RevPAR. Marriott is also making progress on its digital and technology transformation, which is expected to unlock new revenue opportunities and enhance the customer experience. The new systems will be rolled out next year, but in the meantime, the company is focusing on improving the digital booking process for customers.

Marriott Bonvoy, the loyalty program of Marriott International, has reached record highs in member penetration and continues to grow with the addition of new members and partnerships. In the first quarter, the company added 46,000 net rooms and saw strong momentum in global signings, particularly in Greater China and APEC. The recent launch of the MGM collection with Marriott Bonvoy has also exceeded expectations. Despite challenges in the financing environment, the company remains optimistic for the full year.

The paragraph discusses the growth and success of conversions and new midscale brands in the first quarter, with a focus on the CALA region and the US and Canada. The company has also raised their full year 2024 earnings and capital returns guidance due to the strength of their global portfolio and steady demand for travel. The financial review will be discussed further by Leeny, who mentions a 4.2% increase in global RevPAR and strong growth in the US and Canada, particularly in large corporate business.

In the first quarter, leisure RevPAR was flat in the US and Canada due to customers seeking warmer weather abroad. However, international RevPAR increased by 11%, with APEC and CALA leading the growth. Total gross fee revenues rose by 7% due to higher RevPAR and rooms growth, as well as an increase in co-brand credit card fees. Incentive management fees also saw a 4% increase. Adjusted EBITDA for the quarter grew by 4%. The outlook for the full year assumes strong travel demand and continued macroeconomic trends.

The global RevPAR is expected to grow by 4% to 5% in the second quarter and 3% to 5% for the full year. This growth will be driven by strong group revenue, improvement in business transient revenues, and slower but still growing leisure revenues. The RevPAR growth is expected to be higher in international markets compared to the US and Canada. As a result, the company has raised its full year adjusted EBITDA and adjusted EPS expectations. In the second quarter, fee growth is expected to be in the 7% to 8% range, while owned, leased, and other revenues net of expenses are anticipated to be lower than the previous year. For the full year, gross fees are expected to rise by 7% to 9%, with non-RevPAR-related fees driven by credit card and residential branding growth. The company expects a 1% change in 2024 RevPAR versus 2023 to have a sensitivity of $50 million to $60 million in RevPAR-related fees. G&A expense is expected to rise by 1% to 3% year-over-year, and adjusted EBITDA is expected to increase by 7% to 9%. The effective tax rate for 2024 is expected to be just above 25%, and adjusted EPS is expected to be between $9.31 and $9.65.

The company is expecting net rooms growth of 5.5% to 6% for the year and a 5% to 5.5% compound annual growth rate from 2022 to 2025. They will maintain their investment-grade rating and use excess capital for shareholder returns. For 2024, they anticipate capital returns of $4.2 billion to $4.4 billion, with $1 billion to $1.2 billion in investment spending. This includes technology investments and the purchase and renovation of the Sheraton Grand Chicago. They plan to recycle assets and sign long-term management contracts. The floor is now open for questions.

The speaker is interested in China and asks Leeny and Tony about the slowdown they have seen in the country. Leeny explains that there has been no impact on development, and Q1 was a mix of strong and weak months. Hainan saw a decline in RevPAR, while Hong Kong and Macau saw a 30% increase. The Tier 1 cities, such as Shenzhen, Shanghai, and Beijing, performed well.

In the paragraph, the speaker discusses the increase in guidance for the company and clarifies that the fee increase applies to all IMFs. They also mention that there are some changes on the owned and lease side, but do not provide specific details.

In the first quarter, Marriott saw an increase in fees, primarily due to international markets and strong IMF performance. The remaining growth came from non-RevPAR-related fees, such as food and beverage sales and new hotel ramp-ups. 75% of the increase came from IMFs, and the remaining 25% came from other sources. The company expects slow but positive RevPAR growth for leisure customers globally, with the US market also seeing growth for the rest of the year.

In the paragraph, Leeny Oberg and Tony Capuano discuss the growth and performance of different segments in the hotel industry. They mention that leisure is seeing positive growth, but at a lower rate compared to other segments. They also mention that their international owned/leased hotel portfolio is performing well, leading to an increase in guidance. When asked about the MGM licensing deal, Tony says it is too early to provide specific details, but they are pleased with its performance so far.

The speaker, Tony Capuano, discusses the expectations and performance of recent deals made by Marriott. He also provides insight into the company's group revenue pace for 2025 and mentions an increase in the construction pipeline, possibly due to the Federal Reserve's potential decision to hold off on rate hikes.

The speaker discusses the pipeline and its encouraging trends, with a 9% increase year-over-year. They attribute this to a more stable economic environment and increased confidence in the market. Construction starts have also increased by 25% in the US. The company added 31,000 rooms to their pipeline in the first quarter and have seen strong developer interest across all brands. The speaker also mentions gaining RevPAR index and attributes it to various factors, without specifying which brands, regions, or segments are taking the most share.

Marriott executives discuss the strength of their luxury footprint and the success of their RevPAR index. They note that as their scale continues to grow, RPI may not be as relevant due to their own distribution. They are pleased with the strong RevPAR indices globally and within continents, and attribute this to the power of Bonvoy and their brands. They also mention the strong outbound travel from the US and China and whether these travelers stay in Marriott hotels.

The speakers discuss the impact of domestic travel picking up again on their business. They mention that Bonvoy penetration has reached all-time records, creating a potential tailwind for the company. They also note that cross-border penetration is back to pre-pandemic levels and that their global distribution is helpful for customers finding places to travel. The speakers also mention that while having the largest loyalty platform is important, size is not the only metric they focus on.

Engagement is a crucial aspect of the program, and the company is focused on driving engagement through its credit card portfolio and various experiences offered to members. While the penetration rate is important, it may not accurately reflect the program's true value. The company has revised its expectations for the US market due to a decrease in leisure travel, but business travel and group bookings are still strong.

The speaker discusses the change in RevPAR (revenue per available room) in the US and internationally, noting that they are roughly the same. They also mention that all tiers of their segments in the US are expected to be up for the year in terms of RevPAR. The speaker also mentions a "conversion-friendly brand" that is being targeted globally. During the Q&A portion, a question is asked about the Fortune 100 group and the speaker states that they saw the strongest quarter-over-quarter growth in a while, but does not provide further details or comparison to small and medium-sized business customers. The speaker also mentions that typically one leads the other within the cycle, but does not specify which one.

In the first quarter, there was a slight decline in small and medium-sized business travel, but larger companies showed strong recovery. Finance, manufacturing, and communications industries saw the most growth, while accounting, consulting, and technology are still down compared to 2019. It is too early to determine a trend as there were calendar issues and January tends to be an outlier. Non-RevPAR fees were up 6%, with credit card fees also increasing. It is unclear if there was a shift in fees within the residence and timeshare category or if there were other factors at play.

The speaker, Leeny Oberg, discusses the fluctuations in residential branding fees and how they are one-time fees that can vary greatly from quarter to quarter. She also mentions that there are no changes expected for the full year. Another speaker, Tony Capuano, responds to a question about the normalization of US demand and expresses confidence in the 1.5% increase in RevPAR for the quarter. He also highlights the strength in leisure and group segments, including the success of the Gaylord Pacific project.

The paragraph discusses the recent growth in business transient and the expectation for continued growth in the US and international markets. The speakers mention a shift towards a more normalized pattern in travel demand and express optimism about the different types of travel demand. They also mention the potential impact of inbound and outbound travel on demand, particularly in the summer, and the effect of the strong dollar on international travel.

The question asked by the interviewer was about the impact of US travel staying domestic versus international. Tony Capuano mentioned the strength of the dollar as a relevant factor and shared his conversation with the Japanese ambassador about driving Japanese visitation to the US. Leeny Oberg added that the strength in international markets is reflected in the overall RevPAR guidance and that China's opening up for cross-border travel is also contributing to the growth. The proportion of US travelers has remained consistent at 95%, and the US business is not suffering from a decrease in domestic travelers. Another analyst, David Katz, then asked a question.

Tony and Leeny discuss the decision to launch a new midscale brand under the Marriott portfolio. This decision was based on market research and conversations with owners and franchisees, and it aligns with the company's growth strategy to offer the right product for every trip purpose. The brand will cater to those seeking a mid-priced option and will also allow for conversions in markets that have changed over time. The company believes there will be high demand for this brand.

During a Q&A session with investors, a question was asked about the algorithm for top-line growth, which typically involves unit growth and RevPAR growth. The company responded by saying that while the algorithm works over time, it should not be looked at on a quarter-to-quarter basis. They also mentioned that their current guidance for rooms and RevPAR is in line with the algorithm. The company also discussed their plans for increasing conversions as a percentage of unit growth, particularly in the midscale segment.

The speaker is responding to a question about the upcoming presidential election and its potential impact on the company's performance. They mention that in the past, there was some softness in DC during the election, but they do not expect it to have a significant effect this year. They also note that travel and tourism generally do better in times of stability, so they hope for a smooth transition after the election.

The speaker discusses the potential impact of the election on Marriott and the travel industry, noting that there may not be significant changes due to potential division in Congress. They also mention a dip in government travel during election week. In response to a question about owned assets, the speaker mentions that the Sheraton Grand Chicago has undergone recent renovations and there are no major CapEx plans for it in the near future. They also mention plans to work with a partner to sell the hotel and potentially make further improvements.

The speaker discusses owned and leased assets, mentioning the ongoing capital improvement program for the Elegant portfolio in the Caribbean and Latin America. They also mention the renovation of the W Union Square and their excitement about the W brand in North America. They plan to determine the right time and price for selling these assets, and hope for more stability in the market and interest rates in the second half of the year. The last question comes from an analyst with Evercore ISI.

The speaker follows up on the SMB commentary at the lower-end chain scales and asks about the drivers or industries that may drive business travel. The speaker mentions government-related business as a relevant demand source in that tier. The operator then concludes the call with closing remarks from Tony Capuano.

This summary was generated with AI and may contain some inaccuracies.