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