The paragraph discusses the opening of Marriott International's Q4 2024 Earnings Call, led by Jackie McConagha, Senior Vice President of Investor Relations. She introduces other key participants, including CEO Tony Capuano and CFO Leeny Oberg. Jackie notes that the call will cover forward-looking statements subject to risks, with particular emphasis on RevPAR, occupancy, and revenue metrics. The earnings release and non-GAAP financial measures can be found on Marriott's Investor Relations website. Tony Capuano then highlights Marriott's strong 2024 performance, citing a 6.8% net rooms growth and a global RevPAR increase of over 4%.

The fourth quarter ended positively with a 5% increase in worldwide RevPAR, driven by a 3% rise in ADR and a slight occupancy boost. All regions exceeded RevPAR growth expectations, notably in the U.S. and Canada, which experienced a strong 4% increase due to higher ADR. Internationally, RevPAR rose over 7%, with a 4% ADR increase and a 2 percentage point rise in occupancy, while APAP saw a significant 12.5% growth, driven by Japan, India, and Thailand. EMEA's RevPAR increased by 8% due to strong leisure demand. In Greater China, RevPAR decline was better than expected at 2%, with positive growth in key cities but a decline in Hainan, despite a sequential improvement. Leisure segment RevPAR grew globally by 6% and 4% in the U.S. and Canada, fueled by increases in both room nights and ADR across all service tiers.

In the fourth quarter, business transient travel contributed 33% of global room nights, and solid gains in Average Daily Rate (ADR) increased business transient Revenue Per Available Room (RevPAR) by 3% globally and 4% in the U.S. and Canada. Group RevPAR, which comprised 23% of room nights, rose by 3%, despite being the lowest growth quarter of the year due to fewer events around the U.S. election and a decline in Greater China's group RevPAR. For 2024, all customer segments experienced solid RevPAR growth globally, with group RevPAR increasing by 8% and leisure and business transient each rising by 3%. Global group revenues are projected to increase by 6% for 2025 and 10% for 2026. In 2024, net rooms grew by 6.8%, with significant contributions from agreements with MGM and Sander. Marriott's global lodging portfolio now exceeds 1.7 million rooms across 144 countries. With over 1,200 deals signed last year, the pipeline has over 577,000 rooms. Despite the U.S. construction financing challenges, Marriott led in new room additions, with around one-third of new U.S. and Canada rooms under its brands, and maintained a strong share in new build construction starts.

The paragraph outlines Marriott's significant expansion in its portfolio, covering a range of customer tiers from luxury to mid-scale, and traditional to alternative lodging offerings. The company highlights strong interest in its mid-scale brands due to cost-effectiveness and unique branding. It mentions opening more than 300 properties under Four Points Flex, Studio Res, and City Express by Marriott within 1.5 years of entering the mid-scale market. Marriott has also broadened its luxury offerings with new hotels and is launching an outdoor-focused lodging collection with innovative brands. The Ritz-Carlton Yacht collection expanded with a new super yacht, and another is expected to launch soon. The focus on enhancing travel experiences has led to the Marriott Bonvoy loyalty program growing by 31 million new members, reaching 228 million total members. Increased member engagement is supported by collaborations with companies like Uber and Starbucks and the introduction of co-brand credit cards.

The paragraph discusses Marriott's financial performance, highlighting a nearly 10% increase in co-brand credit card fees driven by global card spending. The company's digital channels, especially the Marriott Bonvoy app, saw significant growth, with a 30% increase in downloads year-over-year. Marriott is undergoing a multiyear digital transformation to enhance customer experience. Financial results for the fourth quarter include a 7% growth in total gross fee revenues to $1.3 billion, boosted by higher RevPAR, room additions, and increased credit card fees. Incentive management fees decreased due to declines in Greater China and the U.S./Canada regions, despite strength in APAC. General and administrative expenses declined 12% to $289 million. Adjusted EBITDA grew 7% to $1.29 billion, with profit margins improving at worldwide managed hotels. Customer satisfaction remained strong, with higher intent-to-recommend scores. Overall, gross fees and adjusted EBITDA both increased by 7% for the full year.

The company highlights its strong cash-generating, asset-light business model and disciplined investment strategy, which enabled them to return over $4.4 billion to shareholders via dividends and buybacks. Looking ahead to 2025, they expect net room growth of 4% to 5% and a compound annual growth rate of 5% to 5.5% from 2022 to 2025. Global RevPAR growth is anticipated to be 2% to 4%, with international regions, excluding Greater China, showing stronger growth than the U.S. and Canada. Greater China's RevPAR is expected to remain flat. A change of 1 percentage point in RevPAR for 2025 could impact RevPAR-related fees by $50 million to $60 million and $5 billion in owned leased profits. Gross fees are projected to increase by 4% to 6%, while residential branding fees might drop by nearly 50% due to unit sale timing, and timeshare fees should remain consistent with the previous year's $110 million. FX is expected to negatively impact gross fees by about $25 million.

In the article paragraph, the financial outlook for a company is outlined. Owned and leased revenues are expected to align closely with 2024 results, while 2025 general and administrative expenses are projected to decrease by 8% to 10%, achieving $965 million to $985 million due to company-wide efficiency initiatives. The company plans to reduce loyalty charge-out rates by about 5%. Full-year adjusted EBITDA may rise by 6% to 9% to reach $5.3 billion to $5.4 billion, with adjusted diluted EPS anticipated at $9.82 to $10.19. EPS growth will be influenced by a 26% effective tax rate, up from under 25% in 2024. The first quarter could see global RevPAR increase by 3% to 4% due to external events, while gross fees might grow by 2% to 3.5%. Growth in management and franchise fees is expected, although partially offset by declines in IMS, especially in Greater China and some properties undergoing renovations. Owned, leased, and other revenue is expected to decline year-over-year, with an anticipated $1 billion to $1.1 billion in investment spending for 2025.

The article discusses the expected spending in three key areas, each comprising about one-third of the total. The first area is technology investment, focusing on upgrading property management, reservations, and loyalty systems, mostly to be reimbursed over time. The second area involves spending on the owned lease portfolio, particularly renovating properties in Barbados and other locations, with plans to sell the renovated portfolio while maintaining long-term contracts. The third area involves investments in contracts for new units to expand the global portfolio. The company maintains a capital allocation strategy focused on maintaining an investment-grade rating and ensuring growth that benefits shareholders. Excess capital is returned to shareholders through share repurchases and dividends, with a projected capital return of approximately $4 billion in 2025. Additionally, the company executives are addressing questions about their cost transformation and efficiency programs. Shaun Kelley from Bank of America asked about updates on this initiative, which is unique to Marriott, particularly in select service management areas.

In the paragraph, Anthony Capuano discusses the positive internal and external response to recent changes in organizational structure, emphasizing increased energy and streamlined decision-making. He notes enthusiasm from franchise owners who feel empowered through better engagement with regional teams. Shaun Kelley follows up by asking about increased investment spending compared to prior projections. Kathleen Oberg explains that higher spending is primarily due to significant investments in properties, particularly in Barbados, which are expected to be completed by the end of the year and account for about $100 million. The increased spending also includes larger-than-normal renovations in leased properties.

The paragraph discusses the company's financial expectations and strategic approach going forward. It mentions that the company expects technology investments in 2024 and 2025 to be higher than usual, with a rollout planned for later in 2025. These investments will result in a higher reimbursed depreciation calculation for adjusted EBITDA, reflecting repayment to owners for these expenditures. The company maintains its target levels for long-term financial models. In response to a question about future acquisitions, Anthony Capuano states that their capital allocation strategy remains consistent, and they will continue to pursue tuck-in acquisitions or organic platform development to fill gaps in their brand portfolio or geographic presence.

In the paragraph, a discussion takes place about the company's approach to growth and current travel trends. The company plans to focus predominantly on organic growth with the possibility of tuck-in acquisitions if opportunities arise, applying rigorous economic evaluations. Charles Scholes inquires about potential impacts on reservations from Canadian and Mexican travelers due to political tensions and tariffs. Kathleen Oberg responds that it's too early to see any significant impact as Canadian and Mexican travelers constitute a small portion of their U.S. business, emphasizing the dominance of domestic travelers. The conversation then shifts to Conor Cunningham's question about the company's tech migration, which Anthony Capuano explains will begin implementation later in the year, suggesting anticipated business benefits by 2026.

The paragraph discusses the anticipated impacts of a major transformation at Marriott on various stakeholders. For associates, simplified training is expected to attract top talent, especially from younger generations. For guests, the transformation aims to enhance engagement and support from call agents, improving overall service. Hotel owners are expected to benefit from increased efficiency and potential revenue growth due to the ease of shopping across multiple services on the new reservations platform. Kathleen Oberg notes the large scope of the transformation, involving reservations, property management, and the loyalty program, which will take several quarters to implement globally. Conor Cunningham inquires about the composition of RevPAR, particularly ADRs versus occupancy, with a focus on expectations for 2025.

The paragraph discusses financial projections for the company, focusing on revenue per available room (RevPAR) and fees. For 2025, the company expects RevPAR growth, primarily driven by average daily rate (ADR), with slight occupancy gains. Compared to this year, ADR is expected to have a larger impact on RevPAR. The company anticipates a 7.5% increase in RevPAR plus net unit growth, but gross fee growth is projected at only around 5%. Factors impacting fee growth include foreign exchange headwinds and a significant reduction in residential brand fees, which were notably strong this year. These fees are variable based on construction and sales timing, contributing to the annual variability. Additionally, there will be minor changes in incentive management fees (IMS), influenced by two factors.

In the paragraph, a discussion takes place about the challenges faced by Greater China due to headwinds in RevPAR, leading to expectations of a decline in IMF for 2025. The U.S. and Canada also anticipate impacts on IMFs due to ongoing renovations. Despite strong room growth, overall fee growth may be slightly lower than expected. Richard Clarke inquires about the growth of non-RevPAR fees, noting a prediction of 12% growth through 2024 and 2025, which Kathleen Oberg elaborates on by mentioning reduced growth in credit card and residential branding fees, with timeshare fees remaining flat. Robin Farley follows up with questions about unit growth and the proportion expected from conversions versus new constructions, with Kathleen indicating that 30-40% of growth might come from conversions.

The paragraph discusses the capital spend on contract investments for new units, focusing predominantly on key money as the main financial tool, especially in the U.S. and Canada. Anthony Capuano notes that the competitive landscape has shifted towards key money, now being used across more tiers, including lower chain scales. Despite a decrease in key money used per deal compared to pre-pandemic levels, the overall dollar volume grows with the company's expanding system. Kathleen Oberg adds that most growth investments are through key money, with debt service guarantees and operating profit guarantees forming a smaller portion. Occasionally, recyclable loans are used, but the primary investment remains in key money.

The paragraph discusses the company's outlook for 2025, focusing on the growth in rooms and Revenue Per Available Room (RevPAR). Kathleen Oberg notes that the 2025 guidance of 7.5% to 8% growth aligns well with expectations, despite some fluctuations due to foreign exchange and regional differences in RevPAR. The overall growth strategy, laid out in September 2023, remains effective. Anthony Capuano emphasizes the importance of evaluating net unit growth on a compound annual growth rate (CAGR) basis over multiple years, highlighting the shift in timing for projects like MGM as a reason for this approach. The company remains confident in achieving a 5% to 5.5% CAGR as planned.

Kathleen Oberg discusses an updated effective tax rate of approximately 26% for 2025, differing from the rate discussed in September 2023, due to jurisdictional tax rate changes. She also mentions that the Revenue Per Available Room (RevPAR) has been excellent. In the following discussion, David Katz from Jefferies inquires about market terms related to "key money" in deal-making, questioning if contract lengths are extending. Anthony Capuano responds that despite a slightly more competitive environment, Marriott maintains consistent strategies in deal-making, favoring long-term stable contracts and using the company's balance sheet strategically to drive higher fees without compromising established contract terms.

The paragraph involves a discussion between Kathleen Oberg and Anthony Capuano about the financial strategy involving "key money" for the years 2024 and 2025. Oberg explains that the amount of cash expected to be used for key money in 2025 will be similar to 2024, noting that contracts involving key money continue to yield better returns on investment than those without. Key money is seen as a strategic tool used by owners and franchisees for various purposes, such as fee ramps and renovation participation. Capuano adds that while key money is beginning to appear in lower quality tiers, it is predominantly used in high-value tiers like upper upscale and luxury, which make up 40% of their pipeline. This strategy reflects their focus on high-value opportunities. The operator then transitions to the next question from Brandt Montour of Barclays, who asks about the unexpected strength in leisure performance in the fourth quarter and questions whether the guidance for the full year was conservative due to a lack of business visibility.

The paragraph discusses the current state of the leisure segment in the hospitality industry, highlighting short booking windows of less than three weeks and limited predictability compared to historical trends. Despite predictions that leisure growth might slow, fourth-quarter numbers show continued resilience with significant improvements in revenue per available room (RevPAR) since 2019. Kathleen Oberg adds that luxury and resort hotels saw a 6% RevPAR growth in Q4, driven by room bookings, business travel, and leisure. The macroeconomic environment remains a crucial factor in leisure business trends. Brandt Montour shifts the focus to the challenges in the availability of capital in the industry, noting high interest rates and the lingering impact of post-COVID office loan issues affecting regional banks. He questions whether deregulation or other changes might unlock capital availability.

In the paragraph, Anthony Capuano discusses the regulatory challenges impacting lending for new hospitality construction projects, despite their strong performance in commercial real estate portfolios. Lenders' reluctance to finance new construction is more about potential regulatory changes, such as Basel III, than the fundamentals of hospitality projects. He notes a positive trend in new construction starts, particularly in the U.S. and Canada, where there is a leading share in new builds. This is attributed to lenders maintaining their criteria, focusing on developers' track records and brand affiliations. Capuano is optimistic about gradual improvements in lending, assuming no major regulatory shifts occur. The operator then transitions the conversation to Duane Pfennigwerth from Evercore ISI, who asks about the recovery of business transient travel from both volume and revenue perspectives, seeking more details on its geographic and industry recovery.

The paragraph discusses the recovery of business transient travel to 2019 levels, noting that smaller businesses have rebounded faster than larger corporations, although some large firms in the finance sector have fully recovered. Leisure travel growth has outpaced business travel, and overall occupancy in their global system exceeds pre-COVID levels, except for Monday to Wednesday. Continued recovery in large corporates is expected into 2025. Additionally, the paragraph touches on co-brand relationships, highlighting partnerships with JPMorgan Chase and American Express, which are primarily domestic, while they collaborate with local banks in other countries and are exploring further local partnerships.

The paragraph discusses a company's plans and considerations regarding the potential sale of an all-inclusive hotel portfolio in Barbados. Kathleen Oberg notes that they have multiyear agreements in place and don’t feel pressured to sell quickly, citing the impact of COVID-19 and supply chain challenges but affirming plans for upgrades to be completed mainly by 2025 to ensure a clean sale. They are not actively marketing the sale yet but are continually assessing market opportunities. Anthony Capuano adds that there's a growing trend of institutional investment in the all-inclusive sector, addressing any concerns about unique challenges in selling such properties.

The paragraph discusses Marriott's recent hotel acquisitions and investment strategies. Kathleen Oberg mentions the successful performance of newly acquired hotels in Barbados, enhancing the company's portfolio for global travelers. Anthony Capuano confirms the completion of the Sheraton Chicago purchase, noting it as a strong cash flow generator. In response to Ari Klein's question about potentially increasing key money investments, Capuano explains that Marriott views key money as a strategic tool but remains cautious about overpaying for growth. He emphasizes their disciplined approach to evaluating investment opportunities, considering potential value creation and fee generation.

In the paragraph, Anthony Capuano discusses the positive growth of Bonvoy membership across various regions and age groups, highlighting successful entry into the mid-scale tier that attracts younger members. He emphasizes global opportunities and partnerships, such as with Starbucks and MGM, which are expected to grow the platform further. Regarding China's recovery, especially outside Tier 1 cities, he notes optimism from January's performance but cautions that it may be influenced by the timing of the Chinese New Year, making it too early to determine if a broader recovery is underway.

The paragraph discusses recent observations and future expectations in international hotel performance and economic indicators. It mentions that Tier 1 cities in China show positive signs, and while there are government stimulus efforts, they have not yet materially impacted demand or the property sector. Despite short-term challenges, there was a record level of deal volume in Greater China in 2024, indicating long-term confidence in the region's growth. Additionally, the paragraph touches on international RevPAR being higher than in the U.S., driven by strong GDP growth in countries like India and increased cross-border travel due to a strong dollar. There's notable demand in Europe and Japan, with a higher percentage of international guests at hotels compared to pre-COVID levels.

The paragraph discusses trends indicating that a certain entity might experience higher RevPAR (Revenue Per Available Room) growth compared to the U.S., which might have slightly lower growth. The session for questions has concluded, and Anthony Capuano expresses gratitude for the participants' interest and questions. He highlights the team's enthusiasm about their strong performance in 2024 and their global presence in 144 countries, wishing everyone safe travels. The operator then officially closes the program.

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