Marriott 4Q16 Earnings Call Notes

Arne M. Sorenson

Continue to expect steady as she goes in NA

“Looking ahead to 2017, we continue to expect a steady-as-she-goes economy in North America. For the 2017 full year, North America group revenue pace for company-operated full-service hotels across the combined portfolio is currently up about 3%. Roughly 80% of special corporate business for 2017 is already priced at a low-single digit rate increase for comparable customers, but we are also signing up more accounts. We continue to aggressively market to leisure guests, and we’re adding contract business at attractive rates. At the same time, we continue to see modest levels of corporate transient demand and somewhat hesitant short-term group bookings. Therefore, for 2017, we still expect North America RevPAR for the combined portfolio will be flat to up 2%”

Definitely feel more optimistic but data does not reflect stronger confidence yet

“The obvious first question, of course, is do we feel more optimistic about 2017 than we did a quarter ago? The short answer is yes. There is considerable data that shows broad expectations for stronger GDP growth in 2017. We have also completed our budget since our last quarterly call, giving us greater confidence in our range than we had before. A somewhat longer answer to the question starts with our data. Looking at group booking trends and special corporate negotiations, and of course at Marriott and industry RevPAR data, we do not yet have clear enough proof that GDP is in fact growing at a higher rate, or that the greater prevailing optimism is impacting our business. For this reason, we have left our guidance for North American RevPAR at 0% to 2% for 2017, consistent with the budgets that roll up from our properties.”

Planning to keep all of our brands

“Thanks, Harry. Basically, the short answer is, we’re going to keep them all. We do have a – it’s obviously a big portfolio of brands. I think we would acknowledge that if we were starting with a plain piece of paper, we wouldn’t necessarily start 30 brands. But having 30 brands that already have distribution with strong owner investment in hotels that carry those flags, and recognizing that our principal tool for going to market is the portfolio and the loyalty programs. We think offering more choices and in some respects more brands is a positive, not a negative.”

Greater optimsm in Energy and finance

“Yeah, I think, there might be one place where the greater optimism would hopefully come to pass. You look at energy and finance, I think there is some optimism that the energy patch bottomed and that while we may not be seeing strong signs of a rapid recovery out of that level that we’re not necessarily seeing further decline. I think we did see further softness in Q4, but the anecdotes and the comments that are coming out now are a bit more encouraging. I think secondly with respect to finance, matters are changing so quickly, almost on a day-to-day basis, but it’s really the first of the year where you start to get this building momentum that there will be strong regulatory relief in the financial world and the optimism that is in some respects derived from that. If that optimism shows up in greater performance of those two segments of our economy, obviously that will be good demand from those customers.”e respects more brands is a positive, not a negative.”