The paragraph is the introductory section of Marriott International's First Quarter 2025 Earnings Call. The operator welcomes participants and informs them of the listen-only mode, with instructions for the question-and-answer session later. Jackie McConagha, the Senior Vice President of Investor Relations, is introduced, who welcomes everyone to the call and introduces the key speakers: Tony Capuano, the President and CEO, Leeny Oberg, the CFO and Executive Vice President of Development, and Pilar Fernandez, Senior Director of Investor Relations. Jackie highlights that their discussions may include forward-looking statements subject to risks, and refers listeners to their SEC filings for more details. She also mentions that comments are based on system-wide constant currency results for year-over-year changes. The paragraph concludes with Jackie passing the call to Tony Capuano.

The article reports strong first-quarter results despite economic uncertainty, with all regions surpassing expectations. Global RevPAR increased by 4.1%, supported by a 3% rise in ADR and a 1 percentage point increase in occupancy. The U.S. and Canada saw over 3% RevPAR growth, particularly in Luxury and Full-Service hotels. International RevPAR rose nearly 6%, driven by a significant 11% increase in APAC, with India and Japan seeing the highest gains. CALA and EMEA regions also experienced growth. Greater China, however, saw a 2% decline due to a weaker macro environment. Group RevPAR increased by 8% globally, while business and leisure transient segments grew modestly. The U.S. and Canada regions faced softer growth in March, especially in the select service segment.

The article discusses the company's operations amidst current macroeconomic uncertainties in the U.S., leading to a reduction in full-year RevPAR growth guidance by 50 basis points, particularly in the U.S. and Canada. Despite this caution, the company remains focused on long-term growth and continues to see strong net room growth and brand preference among hotel owners. There have been significant increases in global signings, with the first quarter showing a 35% year-over-year rise, and a record pipeline of over 587,000 rooms, with 42% under construction. Conversions contribute significantly to growth, accounting for about one-third of signings and openings. The company also highlights the upcoming addition of the citizenM lifestyle portfolio, underscoring its commitment to expanding its diverse global offerings.

The paragraph discusses Marriott's strategic integration of citizenM, a tech-savvy and design-focused hotel brand, to complement its existing lifestyle brands. With over 8,500 open rooms and 600 in the pipeline, citizenM is expected to grow in global markets. Marriott's Bonvoy loyalty program reached 237 million members, with 68% room night penetration globally, and they launched a new campaign, "You Are The Greatest Souvenir," to highlight their offerings. The company is advancing its digital transformation to enhance operations and customer experience, including new booking functionalities. The paragraph concludes with gratitude to global associates and transitions to Leeny Oberg for financial details.

In the first quarter, global RevPAR increased by just over 4%, with March showing a 2% rise globally. International regions exceeded expectations, particularly when excluding the impact of Ramadan. In the U.S., demand softened in March due to a 10% decline in government RevPAR, though RevPAR for the U.S. and Canada rose by 2%, benefiting from the timing of Easter. The U.S. government segment's involvement seemed influential, and there was a decrease in select service and extended-stay demand due to economic uncertainty. High-end hotels were not negatively affected. Total gross fee revenues rose by 5% to $1.28 billion, driven by higher RevPAR, an 8% increase in credit card fees, and a rise in residential branding fees. Currency fluctuations negatively impacted gross fees by $8 million. Incentive management fees dropped by 2% to $204 million, with international hotels contributing significantly, despite mixed regional performances.

The paragraph discusses the financial and demand outlook for a company, stating that first-quarter general and administrative costs declined 6% due to lower compensation costs, while adjusted EBITDA rose 7% to $1.22 billion. The company anticipates a slight increase in Global Revenue Per Available Room (RevPAR) in the second quarter and throughout the year, notwithstanding projected downturns in the U.S. and Canada due to reduced government and transient demand. International demand, excluding Greater China, remains strong with higher expected RevPAR growth compared to the U.S. and Canada. Despite a softened outlook for all customer segments, the company still forecasts the most substantial growth in the Group segment. The company's predictions assume no recession, and their figures do not yet incorporate the potential impact of an impending transaction with citizenM.

The paragraph discusses financial projections and performance expectations for a group over the year. It indicates an overall growth in group revenue by 6% by the end of March, with potential moderation throughout the year. Business and leisure transient sales show potential for modest growth, while gross fee growth in the second quarter is expected to be 3%-4%. Revenue will be influenced by a significant decline in residential branding fees and slight declines in IMFs due to property renovations in the U.S. and Canada. Adjusted EBITDA is projected to rise by 3%-5%. Gross fees are anticipated to reach between $5.4 billion and $5.5 billion, with a growth of around 5%, supported by weakened FX impact and contributions from citizenM. The IMF outlook remains unchanged due to the impact of international markets. Co-brand credit card fee growth and residential branding fees are expected to be lower, while timeshare fees remain stable. Owned and leased revenue is projected to align with 2024 levels despite more renovations, and G&A expenses are predicted to decline by 8%-10%.

The paragraph discusses a company's financial outlook and plans. It highlights an expected $80 to $90 million in savings from enhanced efficiency initiatives, with potential increases in full year adjusted EBITDA and EPS, despite a higher anticipated tax rate. The projected RevPAR changes for 2025 could significantly affect revenue. Following the citizenM transaction, they anticipate nearly 5% net rooms growth in 2025, with long-term growth in the mid-single digits. Investment spending is projected to range between $1.36 billion and $1.46 billion, excluding the citizenM cost. The company aims to maintain its investment grade rating by prioritizing growth, shareholder value, and capital return through cash dividends and share repurchases. Their first-quarter cash flow was strong, and they maintain a positive outlook.

The company expects to deliver around $4 billion in capital returns to shareholders for the full year, even after accounting for a $355 million transaction, while maintaining leverage within their target range. During a Q&A session, Michael Bellisario asked about weaker select service performance and its causes. Anthony Capuano responded, noting strong performance in early 2023 with some softness in March due to external factors. However, April showed improvement when excluding Easter's impact, and the company maintains an optimistic outlook, expecting steady demand globally, albeit with some softness in the U.S. and Canada. The company is not anticipating a recession scenario.

The paragraph discusses a reduction in guidance by 50 basis points due to limited visibility into the latter half of the year, influenced by a short booking window. Leeny Oberg adds that the impact of Easter accounts for approximately 250 basis points for the month or nearly 1% for the quarter across the U.S. and Canada. When March and April are combined, negating Easter's impact, RevPAR increases by 1% in these regions, with higher international performance. She notes a one-time impact in March from government layoffs and tariff announcements, but anticipates sequential improvement, except for continued reduced government nights affecting U.S. and Canada RevPAR. Michael Bellisario asks about citizenM, and Anthony Capuano highlights the brand's growth potential through a partnership leveraging Domini’s developer network. The operator then cues the next question from Shaun Kelley of Bank of America.

In the paragraph, Shaun Kelley asks Anthony Capuano and Leeny Oberg about the current state of development, particularly in the U.S., and the potential risks and uncertainties impacting it, such as tariffs and slippage. Anthony Capuano responds by highlighting that the company signed more rooms in Q1 than in any previous Q1, indicating strong growth and confidence among owners and franchisees despite short-term challenges. He mentions the excitement around low additions to supply in the U.S. and Canada, though there is some frustration regarding the availability of debt financing. Leeny Oberg adds that signings increased globally in all continents except one, which had an unusually large deal the previous year.

The paragraph discusses the current state of new construction signings and starts for Marriott in the U.S. and Canada. There is a noted year-over-year increase in signings by over 30%, indicating strong momentum and consistent conversion rates. Despite concerns about construction costs, the pace of new construction starts remains steady, although still below 2019 levels. Marriott is pleased with the number of new starts in 2024. It is also noted that the fallout in the pipeline is about half of the typical quarterly average, suggesting a strong pipeline. Shaun Kelley raises a concern about U.S. brands operating in China due to trade tensions, and Anthony Capuano acknowledges this ongoing discussion.

The paragraph discusses the strong positioning of a hotel company in China, which is its second largest market. The company has over 600 operating hotels and more than 400 in the pipeline, with almost all being Chinese-owned and primarily staffed by local Chinese associates. This integration into the local economy makes the company appear less like a foreign entity and more like a Chinese business. The Chinese domestic market drives demand, reflecting the acceptance of the company’s portfolio by local travelers. The conversation then shifts to discuss the company's net unit growth (NUG) guidance of 4% to 5%, with citizenM contributing 50 basis points to potential growth. There is an indication that the company is confident in achieving a 5% growth with no substantial changes to their outlook.

In the paragraph, Leeny Oberg discusses factors affecting their company's EPS and EBITDA. Despite a slight reduction in RevPAR, the EPS remains at the $10 midpoint primarily due to reduced negative FX impact, potential citizenM fees, and consistent IMF contributions. Other areas like owned and leased structures and G&A remain unchanged. Although the EBITDA midpoint slightly decreased by $10 million due to adjustments in add-backs, overall, there is no significant change. David Katz acknowledges the explanation before the conversation shifts to Stephen Grambling, who asks about the company's pipeline and related financial considerations.

In the discussion between Anthony Capuano and Leeny Oberg, they address the trajectory of fees per room and the role of key money in the hospitality industry. Capuano notes that while key money usage is increasing, especially for luxury and upper upscale properties due to the rise in conversions, the average key money per deal decreased slightly in 2024. This is attributed to their disciplined approach in using capital for deals that offer high fees. Oberg adds that fees per room are rising with RevPAR (Revenue per Available Room) and notes that international and full-service hotel growth is driving further increases in fees. Non-RevPAR related fees are also growing at a pace faster than RevPAR, contributing to overall fee growth.

The paragraph discusses trends in travel and credit card spending. Leeny Oberg highlights a strong interest in travel, despite some weaker demand for lower-priced leisure options. However, there is no significant change observed in co-brand credit card spending patterns, suggesting consistent consumer behavior. Anthony Capuano notes that inbound international travel to the U.S. is slightly above pre-pandemic levels, with international room nights in Q1 of the current year showing an increase compared to the previous year, despite some impact on Canadian inbound travel.

In the paragraph, there is a discussion about the impact of government-related business and travel. Although there was a 5% decline in Q1, strong international demand offset the decrease. Ari Klein inquires about the stabilization of government-related business in April, and Leeny Oberg responds that, while detailed data for April RevPAR isn't complete, government business seemed stable. Oberg notes a positive uptick in business from big consulting firms, which had lagged since 2019. The segment of government-related travel in the U.S. and Canada accounts for 4% of nights and saw a 10% decline in RevPAR. There is also a question from Conor Cunningham regarding the booking trends into 2026, particularly for group bookings, reflecting concerns about potential hesitations in that area. Anthony Capuano acknowledges the question.

The paragraph discusses the current state and future outlook of a company’s bookings and revenue performance. Bookings for 2026 are up 7%, with an increase in both occupancy and average daily rate (ADR), while 2025 bookings are up 6%. The slight decline in RevPAR is attributed largely to government factors, with a minimal decline in U.S. group bookings for the year. Conor Cunningham asks about the company's strategy in the event of a market slowdown. Anthony Capuano responds that the focus is on executing growth strategies across nearly 150 countries, regardless of economic conditions, emphasizing the company's commitment to long-term asset growth.

In this discussion, Anthony Capuano and Leeny Oberg address Patrick Scholes' inquiry about group pace tracking and potential attrition impacts on revenue. Anthony notes that, although Ryman Gaylord has reported an uptick in attrition, this trend isn't observed across their broader group estate. Leeny adds that their group bookings, predominantly for larger groups, often exhibit variations, but any change in pace is more related to booking timing rather than attrition. They reassure Patrick that their 6% growth in group pace isn't currently affected by attrition issues.

The paragraph discusses the relationship between economic cycles and real estate conversions. Historically, during economic downturns, new construction slows while conversion activity increases. Anthony Capuano expresses optimism about continued conversion activity, even with the current low new supply growth in the U.S. He highlights that certain brands in their portfolio, especially soft brands like Delta, are ideally suited for conversions. Additionally, the company has a team focused on conversion strategies, including both individual and portfolio conversions, which has been successful and is expected to persist.

The paragraph discusses the organization's positive outlook on conversion volume, highlighting its agility and creativity in maintaining quality and standards while efficiently evaluating and executing conversions. Leeny Oberg adds that globally, there is increasing comfort with conversions, a trend that began in the U.S., with more hotels joining the Bonvoy system for improved performance. This trend is expected to continue rather than being cyclical. The focus then shifts to China, where 10% of existing rooms and 18% of the pipeline are located. Greater China has seen significant growth in signings, especially in select service brands, broadening the range across segments.

The paragraph discusses investment strategies in the hotel industry, focusing on the benefits of investing in select service hotels as a way to diversify risk. It highlights China's unique construction approach, which includes new builds, complete conversions, and adaptive reuse projects, with the latter taking longer in the pipeline. The conversation then shifts to a discussion with Anthony Capuano and Duane Pfenningwerth about the potential for different hotel market segments to accelerate if economic conditions improve. Capuano suggests that increased consumer confidence could lead to a rise in leisure demand.

The paragraph discusses the challenges of business planning amid uncertainty and the lack of "trade down" in high-end markets despite economic fluctuations. Leeny Oberg highlights demographic changes, specifically an increase in the older population in the U.S., which is contributing to stable travel demand. This shift is impacting household net worth, with those 55 and over holding a larger share. Anthony Capuano adds that in the first quarter, the luxury tier experienced the highest occupancy growth, highlighting the continued strength and demand in this segment despite potential economic uncertainties.

The paragraph discusses the growth and strategy in the luxury hotel tier, mentioning that luxury accommodations constitute 10% of existing and pipeline rooms for the company. There is a continued focus on luxury for Bonvoy members. The conversation shifts to questions about changes in measurement of rooms under construction year-over-year, accounting for conversions in the metrics. Leeny Oberg explains that the definition reflects the company's expectations of which rooms will open soon. Robin Farley inquires about Incentive Management Fees (IMS) in the U.S. and Canada, questioning the percentage of fee-paying hotels. Oberg notes that in the first quarter, 60% of hotels worldwide paid incentive fees, a slight decrease from 61% the previous year.

The paragraph discusses financial metrics and strategic progress in a business context. In the U.S. and Canada, there is a slight increase in full and limited service space earnings, with full service and limited service earnings both increasing by one percentage point. Internationally, earnings incentive fees in Asia are in the low 80% range, slightly lower in the rest of the world due to contractual constructs, with the overall international portfolio at about 75%. U.S. earnings remain at 21%. Robin Farley highlights the strength of luxury and full service, with significant fee contributions from premium and luxury. Anthony Capuano provides an update on their digital transformation led by Drew Pinto, stating they are testing and expect to begin rolling out to select brand hotels later in the year, expressing optimism about the positive impact on their business.

In the paragraph, the speaker discusses a recent event in Nashville where 5,000 select brand GMs were introduced to prototypes of new systems, generating high enthusiasm for their potential operational efficiencies, recruitment advantages, and merchandising opportunities, especially in premium and luxury tiers. The conversation shifts to discussing non-RevPAR revenue, acknowledging current pressure due to residential project timing but expressing optimism for a rebound by 2026. Growth in residential signings is strong, though the revenue can be inconsistent due to the timing of project closings. Despite a projected $40 million decrease in revenue this year, long-term growth is anticipated. The session concludes with closing remarks from Anthony Capuano.

The paragraph concludes the Marriott International First Quarter 2025 Earnings Conference Call by thanking participants for their interest and questions. It encourages listeners to start booking their Memorial Day and summer travel on Marriott.com and expresses anticipation of welcoming guests globally. The operator then officially closes the call, wishing everyone a great day.

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