Marriott to Hold First Investor Day Since 2019: What to Expect From the Hotel Giant

Marriott will broadcast its Wednesday, September 27, “Security Analyst Meeting” live (details here). It’ll be the first such presentation the world’s largest hotelier has given since 2019.

The company has a few goals.

• Executives want to give analysts a deeper understanding of the company’s fundamentals.
• They want to showcase the company’s management team and its strategic vision.
• They hope to create buzz about Marriott among investors.
• Expect to hear some updates on how Marriott’s hotels have performed since August 1, when it reported earnings.

The day will have its limitations.

• It’s unlikely Marriott will share any groundbreaking information not already contained in its financial filings.
• Expect to see charts of the company’s modeling that suggest possibilities rather than forecasts.
• For instance, expect to see charts with potential three-year ranges for net room growth and revenue per available room (essentially a measure of gross revenue coming in).
• The last Investor Day presentation starred CEO Arne Sorenson, who died in 2021. Reading the transcript from 2019 is a sad reminder of his loss.

Robin Farley of UBS Research said one figure she will closely watch will be revenue per available room (RevPAR).

• The consensus of all investment analysts is that Marriott will show 2% revenue per available room growth next year and 3% growth in 2025. Will management guide analysts to that, or coming in lower or higher?
• “Our regression model suggests U.S. RevPAR growth of +1% in 2024, and we have Marriott a little ahead of that at +2% in 2024,” Farley wrote.
• “We are a little more conservative in our 2025 estimate for RevPAR at +1%, given the macro uncertainty at the moment,” she wrote. “But we believe that a low single-digit range for RevPAR guidance after 2023 would be in line with investor expectations, and a more aggressive piece of guidance could actually be taken negatively if investors were to view it as too optimistic.”

Conor Cunningham at Melius Research is eyeing net room growth.

• Gross fees from franchise and management contracts represented three-quarters of Marriott’s net revenues over the past year. So each net room at a quality property that Marriott adds should contribute incrementally to the bottom line. So, net room growth is a good proxy for overall earnings growth.
• The broader Marriott’s footprint becomes, the more valuable its loyalty program becomes, too. That’s because consumers are more likely to be repeat customers if Marriott always has a place wherever they need to go.
• “Given the issues with the capital markets, there has been growing concern around the ability to grow rooms in 2024 and beyond,” Cunningham wrote this week.
• “Near-term, there likely needs to be an uptick in conversions [of properties that are independent or flagged with another brand] to bridge the tough financing environment [that makes hotel construction more costly],” Cunningham wrote. “Over the next several years, we continue to assume 4% annual net room growth led by international expansion and conversions.”

Patrick Scholes at Truist cares about the above factors, too, but also about a few other matters:

• “We receive many investor questions about the “Marriott growth algorithm,” Scholes wrote in a report on Thursday. So he’s interested in learning more about Marriott’s loyalty program and non-core projects, such as the Ritz-Carlton yachts and fees on branded residential condominiums and timeshares.
• “In a slowing new development pipeline and some structural questions about China’s economy/real estate market, we view [the loyalty program] Bonvoy will be once again highlighted as a critical brand within Marriott,” Scholes wrote. “We expect a focus on credit card fees and international growth of new cards as well as the MGM partnership as examples of the importance of Bonvoy.”

Might Marriott preview a new brand in Europe during the presentation?

• Scholes is hopeful that Marriott’s execs will provide color on the possible launch of a conversion midscale brand in Europe later this year, which he assumes is not a brand acquisition but something built internally.

Reading between the lines may be valuable.

• One thing I’ll be listening for, as a reporter, is tone. Culture eats strategy for breakfast, as they say.
• Can the era of CEO Anthony Capuano provide clear messaging of strategic prioritization like the Sorenson era did?
• I’m betting the answer is, Yes. But it’s not a sure thing.

What do you hope to learn — or expect to hear — at Marriott’s investor day? Tell me. I’m at [email protected] and on LinkedIn.