TONY CAPUANO Executive Vice President and Global Chief Development Officer
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March 18, 2019 MARRIOTT INTERNATIONAL 2019 SECURITY ANALYST MEETING FORWARD-LOOKING STATEMENTS FORWARD‐LOOKING STATEMENTS, NON‐GAAP FINANCIAL MEASURES AND MODEL ASSUMPTIONS This material contains “forward‐looking statements” within the meaning of federal securities laws, including RevPAR, profit margin and earnings trends; the number of lodging properties we may add or remove in future years; our potential investment spending, share repurchases and dividends; the continued realization of synergies from our acquisition of Starwood; the size and strength of ourloyalty program; and similar statements concerning possible future events or expectations that are not historical facts. We caution you that these statements are not guarantees of future performance and are subject to a number of risks and uncertainties, including changes in market conditions; changes in global and regional economies; supply and demand changes for lodging products; competitive conditions in the lodging industry; relationships with clients and property owners; the availability of capital to finance growth and refurbishment; the extent to which we can continue to successfully integrate Starwood and realize the anticipated benefits of combining Starwood and Marriott; the extent to which we experience adverse effects from the data security incident; changes in tax laws in countries in which we earn significant income; changes to our estimates of the impact of new accounting standards; and other risk factors that we identify in our most recent annual report on Form 10‐K. Any of these factors could cause actual results to differ materially from the expectations we express or imply here. We make these statements as of March 18, 2019 and we assume no obligation to publicly update or revise any forward‐looking statement, whether as a result of new information, future events or otherwise. Throughout this presentation we report certain financial measures that are not required by, or presented in accordance with, United States generally accepted accounting principles (“GAAP”). These non-GAAP financial measures are labeled as “adjusted” (or “adj”), “combined”, or identified with the symbol "†". In addition, all scenarios and models presented that include future periods (including fiscal years 2019, 2020 and 2021) assume the following items to be zero, and therefore do not include their impact, which we cannot accurately forecast and which may be significant: cost reimbursement revenue, reimbursed expenses, merger-related costs and charges, data security incident costs and gains and losses on asset dispositions made by us or by our joint venture investees. Measures that are labeled as “adjusted” (or “adj”) also exclude these items and may exclude additional items as indicated in the reconciliations accompanying this presentation. We discuss our reasons for reporting these non‐GAAP measures and, to the extent available without unreasonable efforts, reconcile each to the most directly comparable GAAP measures at the end of this material. TONY CAPUANO Executive Vice President and Global Chief Development Officer G - 1 AGENDA OWNER PREFERENCE LEADING ON BOTH FRONTS Scale Quality ACCELERATING GROWTH LOOKING AHEAD The Ritz-Carlton, Langkawi G – 2 OWNER PREFERENCE OWNER PREFERENCE Moxy NYC Chelsea G – 3 DRIVING OWNER PREFERENCE Marriott’s unmatched brand strength, powerful infrastructure, and economies of scale create revenue and cost synergies that drive economic returns for owners. TOP LINE BRANDS REVENUE ENGINES LOYALTY COMPREHENSIVE ACCOUNT MANAGEMENT OWNER BOTTOM LINE PREFERENCE INNOVATION TECHNOLOGY SCALE LENDER PREFERENCE G – 4 OWNER PREFERENCE 1/3 OF OUR PORTFOLIO IS 70% HELD BY OWNERS WITH 10 100+ OR MORE OF OUR HOTELS 70% OF OUR PORTFOLIO OVER 100 OWNERS HAVE IS HELD BY SIGNED DEALS WITH THE REPEAT OWNERS 1/3 OPPOSITE PRE-MERGER PARENT COMPANY G – 5 LEADING ON BOTH FRONTS OWNER PREFERENCE Renaissance Cancun Resort & Marina G – 6 SCALE: TOP GLOBAL COMPETITOR PORTFOLIOS CURRENT SYSTEM + TOTAL SIGNED PIPELINE ROOMS 1,687,000 1,239,000 1,038,000 916,000 843,000 G – 7 SCALE: TOP GLOBAL COMPETITORS BY MARKET SHARE CURRENT SYSTEM + TOTAL SIGNED PIPELINE ROOMS NORTH AMERICA EUROPE ASIA PACIFIC (6.4M ROOMS) (5.3M ROOMS) (5.7M ROOMS) MAR 16% AC 7% MAR 6% HLT 13% MAR 3% AC 5% WYN 9% IHG 3% IHG 5% IHG 8% HLT 2% WYN 4% CARIBBEAN & LATIN AMERICA MIDDLE EAST & AFRICA WORLDWIDE (1.3M ROOMS) (1.3M ROOMS) (20M ROOMS) AC 6% AC 8% MAR 8% MAR 5% MAR 8% HLT 6% IHG 3% HLT 5% IHG 5% HLT 3% IHG 3% WYN 5% G – 8 SCALE: SIGNINGS TRENDLINE 140,000 124,738 125,994 120,000 100,000 97,839 90,043 93,513 80,000 67,014 60,000 49,233 40,000 20,000 ORGANIC SIGNED ROOMS ORGANIC SIGNED 0 2012 2013 2014 2015 2016 2017 2018 Gaylord Protea Delta Starwood 8,098 10,303 10,574 419,526 M&A G – 9 QUALITY: GLOBAL FEES PER ROOM ALL ROOMS ARE NOT CREATED EQUAL $3,000 $2,900 $2,000 $1,000 GLOBAL FEES PER ROOM GLOBAL $0 G – 10 QUALITY: CONCENTRATION IN TOP QUALITY TIERS CURRENT SYSTEM + TOTAL SIGNED PIPELINE ROOMS Hilton IHG Distribution & Weighted Average RevPAR (WAR) $93.53 $84.71 Upper STR Global Industry Marriott Midscale & Below Average 2018 RevPAR Upper $109.21 35% Midscale & Below Luxury 68% $190.09 Upper Luxury Midscale 10% & Below 14% Upper Upscale Accor Wyndham $120.32 $83.72 $53.95 Upper Upscale Upscale Upscale $89.61 41% 35% Upper Upper Midscale Midscale & Below & Below Upper Midscale $55.55 56% & Below 91% G – 11 QUALITY: COMPETITOR PIPELINE PROPERTIES BY TIER MARRIOTT’S VALUE PREMIUM SET TO EXPAND LUXURY UPPER UPSCALE Marriott: Hyatt: 49 Marriott: Accor: 122 183 Accor: 55 461 IHG: 60 Hilton: 301 Marriott pipeline projects exceed the pipelines of the next three Marriott pipeline projects exceed the pipelines of the next competitors combined and is 5x larger than Hilton’s pipeline two competitors combined UPSCALE UPPER MIDSCALE Accor: 193 Marriott: Marriott: IHG: 1,006 1,124 IHG: 290 675 Hilton: 597 Hilton: 1,031 Marriott pipeline projects exceed the pipelines of the next Marriott pipeline projects represent roughly 2/3 of the top three competitors combined two competitors, respectively G – 12 QUALITY: TOP GLOBAL REVPAR SUBMARKETS ROOMS MARKET SHARE IN TOP 100 REVPAR SUBMARKETS North Global America Marriott 14% 23% Hilton 7% 13% IHG 4% 6% Accor 4% 1% Wyndham 1% 4% 2018 Avg RevPAR Top 100 Markets $218 $158 2018 Avg RevPAR St. Regis Maldives Vommuli Resort Next 100 Markets $139 $95 G – 13 QUALITY: CONTRACT TERMS STEADFAST PHILOSOPHY ON DEAL MAKING AND CAPITAL DEPLOYMENT • Long, stable contracts • Premium fees • Measured areas of territorial protection • Disciplined, value-enhancing investments JW Marriott Panama G – 14 ACCELERATING GROWTH OWNER PREFERENCE Hotel Banke, Autograph Collection G – 15 GLOBAL MARKET OPPORTUNITIES Marriott Worldwide Representation In 1,750 Submarkets • 1,750 submarkets with supply in at least 1 of the top 4 quality tiers • 1,750 submarkets x 4 quality tiers = 7,000 2 Chain potential market/chain scale opportunities Scales • 61% (4,300) untapped by Marriott globally 1 Chain • 40% (1,100) untapped by Marriott in 3 Chain Scale North America Scales • 75% (3,200) untapped by Marriott outside of North America None • Opportunity significantly enhanced by Marriott’s multi-brand strategy 4 Chain Scales G – 16 FOCUSED GROWTH INITIATIVES INTERNATIONAL SELECT BRANDS SELECT BRAND INNOVATION CONVERSIONS Fairfield & Sekisui Collaboration Residence Inn/SpringHill Suites/AC Nashville Downtown Delta Hotels Minneapolis Northeast ACCELERATING STARWOOD LUXURY LIFESTYLE BRAND EXTENSIONS The Westin Perth The Rome EDITION JW Marriott Residences Cairo G – 17 INTERNATIONAL SELECT BRANDS 2018 2015 1,154 hotels 2012 829 hotels 109 Countries 414 hotels 2009 84 Countries & Territories 218 hotels 60 Countries & Territories & Territories 52 Countries & Territories 2018 • Fairfield multi-unit program with Sekisui House 2013 • Moxy launch 2014 • Element launch 2008 2011 • MEA Courtyard/Residence Inn prototypes • Aloft launch • AC Hotels launch • India Fairfield prototype • China Courtyard prototype 2015 • Launch of MARCH initiative • Courtyard/Residence Inn prototype for Europe G – 18 MARRIOTT SELECT BRAND INNOVATION • Leading portfolio of multi-branded hotels with 98 open and 144 in the pipeline globally • 28 modular projects open and 13 contracted or in production in North America and growing abroad • Smaller Fairfield prototype for secondary and tertiary markets • Leveraging predictive demand analytics to target growth opportunities AC Hotel & Moxy Atlanta Midtown G – 19 CONVERSIONS GROWTH TRAJECTORY • Broad set of conversion focused brands (OPEN HOTELS) 360 • Dedicated Continental resources driving 300 streamlined Property Improvement Plan and opening process 240 180 • 12 months after converting to the Autograph Collection, the average 120 RevPAR for converted franchise hotels in 60 North America was 22% higher 0 2011 2013 2015 2017 2019E 2021E G – 20 ACCELERATING STARWOOD INITIATIVES EARLY RESULTS • Brand positioning alignment • 24% increase in pipeline for • Value engineering of Starwood Starwood brands since the merger prototypes using Marriott date procurement economies • Pipeline of Starwood brands has • Delivered cost synergies grown to nearly 33% of its existing system size • Completed loyalty and reservation system integrations • Average NPV per key for Starwood brands has increased • Implemented Program Services 58% Fund G – 21 LUXURY LIFESTYLE • Doubled the portfolio with 4 openings in 2018 • 2018 marks 20 years of W Hotels, with 55 open and (Bodrum, Barcelona, Shanghai, and Abu Dhabi) 31 in