MARRIOTT ANALYST DAY PART 2 - INTERNATIONAL

Marriott International Division Commentary + Q&A

Amy McPherson: President and Managing Director, Europe

• Have 179 hotels in Europe:
  • 49% Marriott
  • 23% Courtyards
  • 18% Renaissance
  • 5% Ritz
• Over the last few years, new openings in Europe have shifted towards branded from independent brands
  • As of 2009, only 30% of hotels were branded
  • 2005-2007 openings: 52% branded
  • 2008-2010E opening: 61% branded
• European travel spend was $1.34BN in 09 vs. $1.15BN for NA
• 70% of MAR guests in Europe are European (mostly from UK, Germany and France)
• European contribution to other regions:
  • NA: 2%
  • Caribbean & LATAM: 5%
  • ME&A: 34%
  • Asia Pacific: 10%
• Marriott is the 10th largest hotel company in Europe with 40,258 rooms – Accor is #1 with 247,603 rooms as of June 2010.
  • 6% of branded supply
• Just renovated 32 hotels in Europe
• UK, Germany, and France generate 65% of their revenues in Europe
• House profit margins in Europe are expected to be 35% higher than peak levels in 2007
• Have centralized service centers across Europe to drive efficiencies
• Expect to double their portfolio in Europe by 2015:
  • Autograph
  • Courtyard and FS expansion
  • Using MAR capital to acquire strategically located hotels or chain acquisitions
  • AC hotels
• AC hotels:
  • 3rd largest brand in Spain
  • 92 hotels (9,500 rooms) located primarily in Spain (10 in Italy and 2 in Portugal)
  • At closing will bump them to #5 in Europe
• Expect 60-61,000 rooms by 2013 with 48,000-49,000 organic additions from the 41,000 rooms at YE 2010E

Simon Cooper: President and Managing Director, Asia Pacific

• Have 2.4MM rooms in Asia Pacific, 65% of which are independent, 27% are chain managed and 8% are franchised
  • Of the 647,000 rooms that are chain managed
    • Marriott has 6% share
• Source of Asia Pacific room nights:
  • 58% Asia Pacific
  • 29% NA
  • 10% Europe
• China is the fastest growing market with 58MM inbound travelers
• China is spending $117/per capita on infrastructure spend vs. $17 in India
  • Rail and low cost carriers are creating a new market of leisure travelers
• Courtyard is full service in Asia
• Signed a new agreement with Ctrip (China’s largest online travel agency with over 60% market share) to partner with Marriott Rewards this morning

Paul Foskey: Executive VP International Development, Asia Pacific

• Grew from 35,110 rooms in 2007 to 47,000 at 2010E YE
  • All managed
• 47,000 room distribution:
  •  46%: China
  • 15%: SE Asia
  • 12%: Indochina
  • 12%: Japan & S. Korea
  • 7% Pacific
• 47,000 room distribution:
  • 30%: Marriott
  • 24%: Renaissance
  • 15%: Courtyard
  • 14%: JW Marriott
  • 13%: Ritz
• Signed pipeline: 17,000 rooms
  • 43%: China
  • 5%: SE Asia
  • 39%: Indian subcontinent
  • 13% Indochina
• 17,000 room distribution:
  • 30%: Marriott
  • 14%: Renaissance
  • 25%: Courtyard
  • 20%: JW Marriott
  • 8%: Ritz
• Marriott is ranked 4th in open rooms in China and really focus on the gateway and primary cities (18.5k rooms)
  • Projecting that their rooms will generate $1BN in 2010, the same as IHG’s 45k rooms in China – since non gateway cities have very little pricing power
  • So Marriott captures 20% of the revenues with only 15% of the supply vs (AC, HLT, H, IHT, HOT, and Shangri-la)
• In India, wealth is much more geographically distributed
  • Only 107k rooms
  • Mostly new
  • Less rate disparity between primary and secondary cities
  • Marriott has 2,737 rooms in India – all managed (2nd largest western brand)
• Goal to launch 75 Fairfield units in 10 years. Also potential for Autograph.
• Expect to have 72-74,000 rooms in Asia Pacific by 2013, of which 62,000-64,000 are included in their 3 year plan
• 50% of MAR’s fee revenue in the region comes from outside of India and China