Offsetting a nice all around quarter is high expectations and slightly disappointing NA RevPAR relative to Smith Travel data



  • 35% increase in development support team
  • While MAR continues to see little new full-service hotel construction in the US, they are getting their fair share
  • MAR flags account for 30% of the roughly 50 upper upscale and luxury branded hotels currently under construction in the US, more than any competitor.
  • Picked up a significant number of rooms with a pretty acquisition, but even excluding the impact of that transaction, room signings are up 45% this year. 
  • Despite tremendous North American growth, there is no need to panic. 
  • Strength of NA pipeline is indication of an overcharged industry supply
  • A number of Ritz-Carlton, Marriott, Renaissance Mac and Courtyard hotels is growing in China while construction pace and China remains on track, deals are taking longer to execute as they concentrate their development efforts in large secondary markets in the West.  
  • Development is particularly strong in Brazil and Mexico. 
  • Bullish about conversion opportunities in Europe, particularly for Autograph brand.
  • Now estimate 2014 room growth of 7% gross or roughly 6% net of dilutions. 
    • Impressive REVPAR growth of 6% despite Easter impact of -1%
    • Western US particularly strong; improving trends in Eastern US
    • RevPAR greater Washington exceeded expectations, rising 2%. RevPAR in greater New York increased over 3% despite significant supply growth in the city. 
    • Group demand is looking very good. Marriott Hotel group bookings made in the second quarter for the next 12 months increased 8%.
    • For meetings that took place in the quarter, attendance exceeded expectations, and cancellations were below trend.
    • Marriott hotel brands reported group RevPAR of roughly 3% in the quarter, but MAR estimates it would have been up roughly 5% excluding the timing impact of the shifting Easter holiday.
    • For full-year 2014, group booking pace of the Marriott brand in North America remains up about 5%.
  • Caribbean/Latin America
    • Systemwide REVPAR +11%; strong demand from World Cup
    • For the full year 2014, excluding the Venezuela, MAR modeling high single digit RevPAR growth for the Caribbean and Latin America.
  • Asia-Pacific
    • RevPAR in the Asia-Pacific region increased 5.6% in the quarter.
    • RevPAR growth was strong in Japan and Indonesia, offset by lower year-over-year RevPAR in Thailand. 
    • RevPAR in greater China rose over 7%; Shanghai RevPAR increased double digits.
    • Expect RevPAR in the Asia-Pacific region to increase at the mid-single-digit rate for the full year.
  • Europe
    • Expect Europe's RevPAR to grow at a low single digit range
    • ME&A: RevPAR: +4.9%, a bit ahead of expectations
    • For the full year, MAR expects comp hotels in the Middle East and Africa region to increase RevPAR at the mid-single-digit rate, reflecting easier comps for Egypt later in the year.
  • Incentive fees 2014:  high teens growth rate
  • Looking ahead, P&L will benefit from lower development costs of the Miami residences as these contracts close
  • Group booking pace is very strong in the third quarter.  4Q pace is less robust given the unfavorable shift in the timing of holidays in the fourth quarter. 


Q & A

  • Not concerned about STR comparison - what matters to them is RevPAR comparisons to the competitive set in each market where MAR is outperforming on average year to date
  • Increased capital return target by $100m because they did additional debt capacity, growth in EBITDA
  • Transient expected to be strong in 3Q/4Q
  • Group is meaningfully weaker in 4Q
  • RevPAR will be higher in 3Q vs 4Q because of group
  • More hotels paid incentive fees in 2Q (40% vs 34% in prior year); 2/3 were international
  • Committed to lower G&A
  • Q2 group business booked for next 12 mths:  +8%
  • Q2 group business booked 13-24 mths:  +8%
  • Group bookings pace for 2014:  +5%
  • Group bookings pace for 2015:  maybe a little lower than mid single digit
  • July/August huge months for group
  • Want to maintain BBB rating:  around 3x leverage
  • Incentive fees:  20% of domestic hotels pay; international hotels in the teens
  • Venezuela:  very lumpy market; very hyperinflationary; total investment will be $10 million
  • 2H 2014:  Some integration costs will be incurred due to Protea. There are probably two major cost items that we have in the second half timing that are different than the first half.

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