• MAR cut capex by $400MM YoY, is financing fewer loans to owners, and will still sell off timeshare notes receivable even at a loss. This strategy is very positive for cash flow.
• I think that the guidance was conservative, certainly more so than HOT. HOT probably couldn’t give realistic guidance because that would show a covenant breach. MAR has no covenant issues.
• The capex cuts were good but they still can cut another $200-250MM per our math, and I think they will.
• Timeshare will be a positive free cash flow generator in 2009
• MAR doesn’t have the same nasty tail on the flow through here because of the fee-based model, so 2009 could be a real bottom.
We will follow up with a more detailed post.