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Should be an in-line quarter although we are below the Street for 2010.

We’re at $0.25 cents of normalized EPS for 4Q09 and $244MM of Adj. EBITDA, which is in line with street for EPS and 2% above on EBITDA.  We are also ahead of mgmt guidance of $0.20-$0.23.  Note that our $0.25 excludes gains on timeshare note sales which should amount to $0.05.

However, for 1Q2010 we’re projecting EPS of $0.15 and adjusted EBITDA of $166 million (excluding gains), lower than the Street at $0.18 and $181 million, respectively.  For 2010, our EPS and EBITDA estimates of $0.83 and $841 million compare to Consensus of $0.88 and $856 million, respectively.

Below are our assumptions.


  • Worldwide (WW) RevPAR down -14% (vs. -13 to -16% guidance)
  • Owned, Leased, Corporate Housing & Other revenues down 9% and margins at 5.1% (inclusive of termination fees) - in –line with guidance
  • Fee revenues down 20% (above mgmt guidance of $310-320MM)
    • Base fees down 12% and incentive fees down 45%
    • Franchise fees down 8.7%
    • Timeshare segment results of $14MM vs. $15MM guidance
    • Net interest income of $28MM


  • WW RevPAR down -8.3%
  • Owned, Leased, Corporate Housing & Other revenues flat and margins at 2% (inclusive of termination fees)
  • Fee revenues down 8.3%
    • Base fees down 8.7% and incentive fees down 20%
    • Franchise fees down 2%
    • Timeshare segment results of $3MM


  • WW RevPAR down -2%
  • Owned, Leased, Corporate Housing & Other revenues flat and margins at 4.3% (inclusive of termination fees)
  • Fee revenues flat
    • Base fees down 1% and incentive fees down 5.4%
    • Franchise fees up 4%
    • Timeshare segment results of $56MM

Other stuff:

  • Fx will be less of tailwind than previously expected. At current rate, the Euro is 6% stronger in 1Q2009 (benefiting WW RevPAR by about 1.5 -2%) and only 60bps stronger than in 2Q2009.  In 2H2010 the fx tailwind reverts back into a modest headwind again since the current dollar/ Euro exchange rate of $1.37 is now below the 2H09 average of $1.45.



Current trends & Outlook: 

  • “We are encouraged by signs of economic recovery in our business.”
  • “We nevertheless expect REVPAR to continue to decline in 2010, albeit modestly, while occupancy levels will likely increase, negotiated room rates for special corporate and group business, not to mention per diem rates for government business, will likely constrain price improvement.”
  • “Pricing will continue to be pressured by a significant amount of price-sensitive, leisure, transient business.”
  • “While supply additions are slowing dramatically, the increase in new hotel supply expected in 2010 will still provide headwinds to near-term improvement in business fundamentals, especially in the upscale segment.”
  • “REVPAR may turn positive sometime during 2010, but probably not early enough or strong enough to report higher REVPAR numbers for the full year.”
  • “The first quarter of 2010 is likely to continue to show meaningful REVPAR declines as any gains in occupancy continue to be more than offset by softness in rates.”
  • “We expect to open 25,000 to 30,000 new rooms in 2010.”
  • “We continue to work with those owners most impacted by the economy, deferring FF&E reserves, relaxing brand standards, and delaying brand initiatives. Our hotels are paying fees and expenses on time and we are not cutting our fees.”
  • “We expect conversions to accelerate in 2010 as lending opens up a bit more and lenders begin to recognize and deal with problem loans.”
  • “Travel departments are quite aggressive and today everyone wants a deal. We have renegotiated from special corporate rates during 2009, lowered other corporate rates, we are selling fewer premium rooms.”
  • “Cancellations and attritions were less of a problem than in the first half of 2009. The last minute in the quarter/for the quarter bookings were relatively few.”
  • “We are beginning to see stabilization as contract sales for one-week intervals modestly exceeded expected levels in the third quarter.”
  • “We would need REVPAR to be positive modestly before we could keep margins in percentage terms, flat.”
  • “I think the optimistic side here is that we will cross over the zero line on occupancy sometime in, hopefully, the first half of 2010, though who knows. And once we've crossed over that line, we will start to have inevitably a little less threat around pricing.”
  • “I think one of the things we're seeing in groups is the cancellations and attrition is less of a problem than it was in the first half of the year. The booking windows are still pretty short, though. The fourth quarter booking pace is down 19% and 2010 is down 12%.”
  • “We have with, at least the Euro and the pound, some hedges that will remain in place through the end of the year and they insulate us. Ultimately, we'll still look forward to FX adjusted REVPAR but the fees in effect are coming in on a constant dollar basis through our P&L. At least with respect to those currencies.”


  • “While we aren't giving formal guidance for 2010, our fee outlook assumes 2010 worldwide, system-wide REVPAR will be flat to down 5% compared to 2009 levels. Even assuming the bottom of our REVPAR range, our 2010 base and franchise fees should at least stabilize as unit growth offsets the REVPAR decline.”
  • “We are working under the assumption that contract sales in 2010 will be at roughly 2009 levels, which would imply roughly flat timeshare development profits.”
  • “We do expect to target our timeshare business drive at least $75.0 million in net cash flow in 2009 and that least double that in 2010.”
  • We anticipate that Marriott's general and administrative expenses will decline about 20% in 2009 on an adjusted basis but will likely rise a bit in 2010 as we resume investing in our business and our people for the future.