Conservative Guidance, Bullish Commentary - stronger corporate group pace plus strengthening rate = upside leverage to the cycle
CONF CALL
- Protea: will close April 1 2014; paid 10x EBITDA
- Transactions to date: completed London Edition (netted $240MM), Renaissance Barcelona sales (netted $60MM, closed in Jan 2014)
- US supply grew <1% in 2013
- STR US 2014 supply forecast: +1.2%
- AC brand: 1st opening in early 2015
- MOXY - have 12 in pipeline and 15 in discussion; expect 150 MOXY hotels in Europe in a decade
- China: economic growth has moderated; aggressively pursing domestic leisure market
- Worldwide STR REVPAR for MAR brand: increased 1% full point in 2013
- In last 7 wks, did $880MM in transactions
- Expect $1.25-1.5BN in share repurchases in 2014
- All Marriot branded hotels (500) will be available for mobile check-in in 2014
- Unit growth is sustainable in developed and developing world, including US
- Q4 Fee revs strong - better REVPAR in international markets and strengthening group business in NA
- Better branding fees and profit from leased hotels added $0.02
- G&A: $0.06 unfavorable from certain items
- Tax line helped 4Q by 3 cents due to several discrete items
- NA
- Strong REVPAR in San Fran, Houston and Miami
- NY had tough comps due to Hurricane Sandy
- Bookings pace for MAR brand was up 4% for 2014 - similar to what they reported in 3Q. Corporate group pace at 10%. Since corp demand is quite short-term, the trend is very encouraging for 2014
- Group performance outperformed competitiors in 2013
- 4Q Europe REVPAR: +3%
- UK: +6%; Germany: +9%, Caribbean/Latin America: +4% (constant currency), ME&A: -9%, Asia-Pacific: +5%, Greater China: +3%
- NA incentive fees: +34%; outside NA incentive fees: -2%
- FY 2013 worldwide incentive fees: 39% (32-33% in 2012)
- 2014 REVPAR outlook: Mid-single digit in Asia/ME; low single digit in Europe; high single digit in Caribbean/Latin America
- 2014 incentive fees growth: Low double digit rate
- Outlook reflects lower termination fees, slightly higher preopening expenses, stronger profits from owned/leased and affinity credit cards
- 1% REVPAR 2014 outlook sensitivtiy: $20MM in fees, $5MM owned/leased line pre-tax
- Plan to renovate several owned hotels; build the Fairfield Inn in Brazil to launch that brand and to complete Protea acquisition
- Sept 8 Analyst Day Washington DC Marquis hotel
Q & A
- 2014 looking a lot like 2013
- About 3,000 hotels in US; expect DC to continue to be weak
- MAR Marquis DC: not likely to be terribly impactful
- D&A changes - more transparency and better comparability
- Contract amortization line broken out in CF statement
- 4Q G&A unusual items: Through 3Q, 33,000 signed rooms. By end of year, had 67k rooms; the record quarter signings drove more legal costs ($8MM), transaction costs related to Protea ($10MM), writeoff/impairments ($6MM)
- Ex items, about $3-5MM of G&A above previous 4Q guidance
- 2014 Group trends (does not include new DC hotel): first 3Qs (+6%), 4Q weaker
- Great December period for 2014 bookings
- 2014 Non-room revenues will grow a few tenths of a % faster than REVPAR
- Full-service/select-service: full service doing better than select service - partly due to distribution and strong group business. Residence Inn may be at lower end of REVPAR guidance.
- Brand growth: top-end brands + Courtyard
- EDITION sales: long list of bids for London
- NY EDITION: will open 1Q 2015 (about $350MM)
- Miami EBITION will close for $200-230MM in late 2014.
- European REVPAR guidance conservative? Well, last year, Euro REVPAR was only up 1.5% YoY. 3%ish guidance is about right.
- Possibly more Courtyard sales in Europe: $20-30MM each
- 2014 REVPAR will be driven by rate
- Group business always lags
- There is more growth opportunities in US
