Marriott 2Q13 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

“We were pleased with our results in the second quarter. North American company-operated REVPAR increased 5.3% with 4.3% higher room rates. Occupancy rates and room rates were largely at 2007 peak levels or higher.”

“Fortunately, transient business continues to strengthen, but short-term group has not. Corporations are watching their bottom line and given the economic climate, are cautious about discretionary spending. Not surprisingly, austerity is even more pronounced among government meeting planners. In 2010, government group represented 5% of the Marriott brand group business. In 2013, we anticipate only 2% of our group business will come from Uncle Sam.”

“Occupancy at comparable company-operated Marriott hotels in the U.S. totaled 78% on average in the second quarter”

“We saw particular strength in France and Russia.”

“n the Asia Pacific region, occupancy totaled 72% and constant dollar REVPAR across all brands increased 2.5%. We saw particular REVPAR strength in Indonesia and Thailand. In Greater China, despite slower economic growth, occupancy across all brands totaled 72% in the quarter and REVPAR rose nearly 1% on a constant dollar basis, or nearly 3% using actual currencies.”

“In the last 24 months, our worldwide development pipeline has increased 40%, from 100,000 rooms to more than 140,000 rooms.”

“Development in China, India and Thailand is accelerating and global room openings in 2014 should increase from 2013 levels.”

“To be sure, today’s development environment for full-service hotels in North America remains challenging, but we see some loosening of credit for limited-service development”

“once again this quarter, 1 in 4 hotels under construction in the United States will fly one of our flags. And worldwide, 1 in 8 hotels under construction will be flagged with the Marriott brand.”

“The growth appetite from our partners is as strong as it’s ever been for Fairfield. And so we’ve decided to move that franchise fee up to the same level that Fairfield’s principal competitors are already charging. And again, as we said, this will apply really to new hotels and relicensings of old hotels, meaning, when those old hotels trade, but will not apply to the existing owners”

“The Chinese economy looks to us to be performing. Maybe it’s growing a little bit weaker than it did a year or 2 ago, but still broadly recovering, with really powerful trends in domestic travel, particularly in China. And so we see, even within this quarter, we saw Shanghai for example, I think up about 6% in REVPAR.”

“Folks have asked about supply growth in China, and clearly there has been some supply growth. It varies a little bit market by market. I suspect we’ll continue to see supply growth be fairly high. But we expect we’ll continue to see the Chinese economy produce more and more domestic travel — travelers as well as global inbound travel growth, and still think it’s an extremely exciting market to bet on long term.”

“On the negative side, we’ve got Egypt, which is falling apart. And I probably shouldn’t say it that way, but from a hotel perspective, it’s not looking very good, why don’t I say that.”

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