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MAR reported a solid quarter this morning - as expected. However, guidance was particularly strong, especially the RevPAR guidance.  We need to really step back and digest the results, guidance and implications, but below are some quick thoughts.  Bottom line, we believe that this asset light model will still perform well in an inflationary recovery and MAR is a lot cheaper than the real estate lodging plays out there.

1Q2010 Results:

  • The upside vs. our estimates came from better incentive fees and timeshare results.
  • Franchised room growth was very strong - exceeding out estimates by 2.7% or 7.6k rooms.  Minimal attrition in the quarter was also quite impressive. 
  • ADR declines in the quarter were a little higher than our estimate while occupancies were better on the limited service brands


  • We know that RevPAR trends are strong, but frankly we are surprised by the how good MAR's RevPAR guidance is. We'll learn more on the call. All we can add is that their comps are much easier for 2Q and 3Q then 1Q - so that's certainly part of it. 
  • We suspect that MAR's capex is working well for them in securing better room growth by providing some key money to franchisees and managers.