Skift Take

What we most hope to hear from Marriott is about a possible new brand to debut in Europe later this year. But we also care about a few key metrics that investment analysts will watch closely.

Series: Early Check-In

Early Check-In

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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.


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Tags: Early Check-In, earnings, future of lodging, hotel earnings, hotel investments, marriott, Marriott International, Skift Pro Columns

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