I thought the MAR earnings call was positive on the cash flow front. The rough lodging environment is no secret. MAR’s ability to drive cash flow significantly higher might have been. Here are the highlights:
• 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.
• 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.
