Earnings call transcript: Marriott Q3 2025 earnings beat expectations

Marriott International Inc. reported its third-quarter earnings for 2025, surpassing analyst expectations with an adjusted earnings per share (EPS) of $2.47, compared to the forecasted $2.37. Revenue also exceeded projections, coming in at $6.49 billion against an expected $6.47 billion. Following the announcement, Marriott’s stock rose 3.6% in pre-market trading, reflecting positive investor sentiment. The company continues to demonstrate impressive gross profit margins of 81.69% as of the last twelve months, according to InvestingPro data.

Key Takeaways

• Marriott’s Q3 2025 adjusted EPS beat forecasts by 4.22%.
• Revenue increased 0.31% above analyst predictions.
• Stock price surged by 3.6% in pre-market trading.
• Adjusted EBITDA rose by 10% to $1.35 billion.
• Marriott Bonvoy membership grew by 18% year-over-year.

Company Performance

Marriott International demonstrated robust performance in Q3 2025, with significant growth across various segments. The company’s adjusted EBITDA increased by 10% to $1.35 billion, and total gross fee revenues rose by 4%. Despite a 7% decline in incentive management fees, co-branded credit card fees saw a 13% increase. Owned, leased, and other revenue net of expenses also grew by 16%, showcasing the company’s diverse revenue streams.

Financial Highlights

• Revenue: $6.49 billion, up from $6.47 billion forecasted.
• Earnings per share: $2.47, exceeding the $2.37 forecast.
• Adjusted EBITDA: $1.35 billion, a 10% increase year-over-year.
• Gross fee revenues: $1.34 billion, up 4%.
• Co-branded credit card fees: Increased 13%.

Earnings vs. Forecast

Marriott’s Q3 2025 results exceeded expectations, with an EPS surprise of 4.22%. This marks a positive deviation from forecasts, reflecting strong operational performance. The revenue surprise was modest at 0.31%, yet significant enough to contribute to the overall earnings beat.

Market Reaction

Following the earnings announcement, Marriott’s stock price rose 3.6% in pre-market trading, reaching $265.98. This increase reflects investor confidence in the company’s performance and future prospects. The stock’s movement positions it closer to its 52-week high of $307.52, indicating a positive market sentiment.

Outlook & Guidance

Marriott provided optimistic guidance for the coming quarters, expecting global RevPAR growth of 1.5-2.5% in 2026. For Q4 2025, RevPAR is projected to increase by 1-2%. The company anticipates strong net rooms growth and a full-year adjusted EPS between $9.98 and $10.06. Marriott’s pipeline has expanded to over 596,000 rooms, signaling sustained future growth.

Executive Commentary

CEO Tony Capuano emphasized the strength of Marriott Bonvoy, stating, "The power of Bonvoy, the value of Bonvoy points to our customers, the strength of the portfolio and the brands... make us one of the most attractive customer groups in any industry." CFO Leeny Oberg noted, "We are still meaningfully below construction starts compared to 2019," highlighting ongoing challenges in new hotel development.

Risks and Challenges

• Supply chain disruptions could impact construction timelines.
• Market saturation in key regions may limit growth opportunities.
• Macroeconomic pressures, including inflation, could affect consumer spending.
• Competitive pressures from other hospitality brands.
• Potential regulatory changes in international markets.

Q&A

During the earnings call, analysts focused on Marriott’s credit card partnership renewals and the stabilization of the business transient segment. The company also addressed its strategies for AI and digital distribution, aiming to enhance operational efficiency and customer engagement.

Full transcript - Marriott International Inc (MAR) Q3 2025:

Conference Operator: Good day, everyone, and welcome to the Marriott International Q3 twenty twenty five Earnings. At this time, all participants are in a listen only mode. Later, there will be a question and answer session. Please be advised that today’s call is being recorded. I’d now like to turn the floor over to Jackie Maconica, Senior Vice President, Investor Relations.

Please go ahead.

Jackie Maconica, Senior Vice President, Investor Relations, Marriott International: Thank you. Good morning, everyone, and welcome to Marriott’s third quarter twenty twenty five earnings call. On the call with me today are Tony Capuano, our President and Chief Executive Officer Leeny Oberg, our Chief Financial Officer and Executive Vice President Development and Pilar Fernandez, our Senior Director of Investor Relations. Before we begin, would like to remind everyone that many of our comments today are not historical facts and are considered forward looking statements under federal securities laws. These statements are subject to numerous risks and uncertainties as described in our SEC filings, which could cause future results to differ materially from those expressed in or implied by our comments.

Unless otherwise stated, our RevPAR, occupancy, average daily rate and property level revenues comments reflect system wide constant currency results for comparable hotels and all changes refer to year over year changes for the comparable period. Statements in our comments in the press release we issued earlier today are effective only today and will not be updated as actual events unfold. You can find our earnings release and reconciliations of all non GAAP financial measures referred to in our remarks today on our Investor Relations website. And now, I will turn the call over to Tony.

Tony Capuano, President and Chief Executive Officer, Marriott International: Thanks, Jackie, and good morning, everyone. We are pleased with our third quarter financial results, which were ahead of our previous expectations. Development activity remained strong and we grew our industry leading global portfolio of rooms by 4.7% year over year to over 1,750,000 rooms across more than 9,700 properties at the September. As expected, RevPAR growth in the quarter was modest, reflecting ongoing global macroeconomic uncertainty. Our hotels continued to gain RevPAR index.

Third quarter global RevPAR rose 05%. International RevPAR grew 2.6%, again outperforming The U. S. And Canada, where RevPAR was down 0.4%. By region RevPAR growth was strongest in APEC, which has been benefiting from solid macroeconomic growth in many countries and double digit rooms growth.

Third quarter RevPAR in APAC increased nearly 5% driven by robust ADR growth and higher demand from international travelers, particularly from Greater China and Europe. Third quarter RevPAR in EMEA rose 2.5% on increases in both ADR and occupancy led by strong regional demand. Excluding the impact of the Olympics in France and the Euro twenty twenty four in Germany last year, EMEA RevPAR would have been up 5%. RevPAR in CALA rose nearly 3% with gains in both ADR and occupancy and helped by citywide events in Puerto Rico and Rio. City Express hotels across the region are seeing meaningful benefit from being integrated into our ecosystem and are performing very well.

The operating environment in Greater China remains challenged by weaker macro conditions, though our market share across the region continued to grow. With year over year comps easing and demand stabilizing, RevPAR was flat and would have been slightly positive excluding the impact of multiple typhoons. Leisure demand was solid offsetting a decline in business transient demand. The slight RevPAR decrease in The U. S.

And Canada was driven by declines in select service brands, which offset nice gains in luxury along with calendar shifts impacting group. Third quarter group RevPAR decreased 3%, while leisure was up slightly and business transient was down slightly compared to last year. Business transient was further impacted by government declining 14%. Globally RevPAR growth was again strongest at the higher end as high end consumers have demonstrated resilience to macroeconomic uncertainties and continue to prioritize travel. Luxury RevPAR rose 4% as performance weakened down the chain scales.

Our portfolio is well positioned to benefit from outperformance at the upper end as 10% of our rooms are in the luxury segment and another 42% are in the full service premium segment. By customer segment on a global basis, leisure transient continued to lead RevPAR performance rising 1%. Business transient RevPAR was flat and group RevPAR declined 2% reflecting timing of events. As Leeny will discuss further, RevPAR growth is anticipated to accelerate from the third quarter with RevPAR expected to increase 1% to 2% in Q4 compared to the prior year. Full year 2025 RevPAR is still anticipated to rise between 1.52.5% year over year.

We also still expect strong net rooms growth in 2025 and beyond as owners continue to show preference for our brands. Despite higher construction costs and the challenging financing environment in both The U. S. And Europe, we saw an excellent momentum in our global signings. During the first nine months of the year, signings reached a record year to date level.

Our pipeline grew to a new high of more than 596,000 rooms at quarter end with over 250,000 pipeline rooms under construction. Conversions remain a key driver of our portfolio expansion, reflecting the many revenue and cost related benefits of being part of the Marriott ecosystem. Conversions accounted for around 30% of both signings and openings in the first nine months of the year.

: We remain keenly focused on driving growth and on being in more places around the world with the best brands and experiences. In September, we launched Outdoor Collection by Marriott Bonvoy, which includes postcard cabins and trail borne hotels. This new portfolio offers guests unique outdoor focused stays with easy access to popular activities like skiing, snowboarding, biking and hiking. We also announced The U. S.

Debut of Series by Marriott less than three months after the brand’s initial launch with an agreement to convert five select service found hotels in major U. S. Cities. As the largest global lodging loyalty program, Marriott Bonvoy serves as a powerful engine for guest engagement and brings significant value to our owners and franchisees. Membership grew to nearly two sixty million members at the September, up 18% year over year.

The power of Marriott Bonvoy is evident across our many adjacent businesses, including Marriott Bonvoy boutiques, Marriott Media Network, homes and villas by Marriott Bonvoy, and our portfolio of 32 co branded credit cards across 11 countries. Our U. S. Cards are by far the largest contributor of our credit card fees. Our current U.

S. Deals were signed in 2017 and extended in 2020, and we are currently in active discussions with our current credit card partners. Our best estimate right now is that

Tony Capuano, President and Chief Executive Officer, Marriott International: we could have new deals in place sometime next year that reflect the increased relevance of Marriott Bonvoy and the significant growth of our global lodging portfolio. On the technology front, we continue to progress in the multi year evolution of our property management, reservations and loyalty platforms and the deployment of new cloud based systems across our global portfolio, which we believe will enable Marriott to have an industry leading technology stack. Leveraging best in class technology architecture and proprietary innovations, this tech transformation is expected to deliver a new ecosystem of capabilities and revenue driving opportunities on property. Owners are excited about the potential top and bottom line benefits at their hotels. The first few hotels recently started to transition onto the new systems, and associates have shared very positive feedback about the new capabilities and how they empower them to deliver on the customer experience.

We plan to continue deploying our systems to hotels around the world over the next few years. We’re also excited about increasingly leveraging AI across our business with a focus on areas like content creation, augmented business intelligence for associates, and more efficient processes that help associates deliver elevated customer experiences. Before I turn the call over to Levy, I wanna thank our fantastic teams around the world for all

Leeny Oberg, Chief Financial Officer and Executive Vice President Development, Marriott International: that they do. Their commitment and perseverance are invaluable to our continued success and among the many reasons I remain incredibly optimistic about Marriott’s future. Leeny? Thank you, Tony. Our results today demonstrate the power of Marriott’s business model and the numerous levers driving our earnings growth.

Despite continued macroeconomic uncertainty and modest global RevPAR growth, our third quarter adjusted EBITDA rose 10%, and our adjusted EPS grew 9%. As Tony noted, third quarter global RevPAR increased 50 basis points, in line with expectations, driven by nearly 1% ADR growth, offsetting a 30 basis point decline in occupancy. Third quarter total gross fee revenues increased 4% year over year to $1,340,000,000 The increase primarily reflects rooms growth and strong co branded credit card fee growth. Co branded credit card fees rose 13%, reflecting robust card acquisitions and meaningfully higher global card spending as well as the timing of point transfer promotions. Fees from our international cards, which continue to ramp nicely, rose nearly 20%, driven by particularly strong performance in Japan and The UAE.

Incentive management fees, or IMFs, totaled 148,000,000 higher than previously anticipated, down 7% year over year. The change was primarily due to declines in The US and Canada, reflecting some large hotels undergoing renovations in the third quarter this year and certain hotels in Florida benefiting from insurance proceeds in the third quarter last year. Owned leased and other revenue, net of expenses, surpassed expectations, rising 16 compared to the prior year. The year over year increase was largely driven by contributions from the Sheraton Grand Chicago, which we purchased in the fourth quarter last year, as well as improved performance at other hotels in the portfolio. Third quarter G and A declined 15% compared to last year’s third quarter, which included a $19,000,000 operating guarantee reserve for a U.

S. Hotel. The year over year decline also reflects timing and lower compensation costs as we continue to benefit from the work we did last year across the enterprise to enhance our efficiency and productivity. The strong growth in gross fee revenues and owned, leased and other net, coupled with the decline in G and A, led to adjusted EBITDA increasing 10% to $1,350,000,000 above the high end of our guidance. Now let’s talk about our outlook.

With ongoing economic uncertainty, we expect global RevPAR to increase 1% to 2% in the fourth quarter. The acceleration in global RevPAR growth from the third quarter to the fourth quarter is partially due to calendar shifts and onetime events. RevPAR growth is anticipated to still be meaningfully stronger internationally than in The US and Canada. And higher end chain scales are expected to continue to outperform lower end chain scales. As we look ahead to next year, while we’re still working on our budget, our preliminary view is that 2026 year over year global RevPAR growth could be similar to the 1.5% to 2.5% growth expected this year.

Growth is expected to again be higher internationally than in The US and Canada. And next summer’s World Cup could contribute around 30 to 35 basis points to full year global RevPAR growth. Turning to this year’s P and L in the fourth quarter, gross fee growth could be in the 4% to 5% range. Compared to prior expectations, this outlook reflects slightly lower expectations for IMS and fees on F and B revenues in Asia. Fourth quarter IMFs are now expected to rise in the low to mid single digit range, partially reflecting the timing of some fees that shifted to the third quarter.

Full year IMFs are anticipated to be around flat with last year. Fourth quarter gross fee growth will still be impacted by the timing of residential branding fees, which are expected to be down year over year. Fourth quarter adjusted EBITDA is expected to increase 7% to 9%. For the full year, we expect gross fees to increase around 4.5% to 5% year over year. Full year co brand credit card fees are now anticipated to grow roughly 9%, primarily reflecting stronger than expected third quarter performance.

Timeshare fees are still expected to be around $110,000,000 and full year residential branding fees are now anticipated to decline around 20%, a meaningful improvement compared to expectations at the beginning of the year, reflecting the continued success of our residential business and volatility in the timing of residential project sales. Owned leased and other revenue, net of expenses, is expected to total around $370,000,000 $20.25 gs and A expense is anticipated decline 8% to 9% to $975,000,000 to $985,000,000 This decline reflects roughly $90,000,000 of above property savings from our enterprise wide initiative to enhance our effectiveness and efficiency across the company that is also expected to yield cost savings to our owners. Full year adjusted EBITDA could increase between 78% to 5,350,000,000.00 to $5,380,000,000 Full year adjusted EPS could total $9.98 to $10.06 Our full year adjusted effective tax rate is expected to be just over one percentage point higher than a year ago, given a shift in earnings to higher tax rate jurisdictions. Our underlying full year core cash tax rate is still anticipated to be in the low 20% range. Our 2025 net rooms growth is still anticipated to approach 5%.

As we look ahead to the next few years with our strong momentum in global signings and conversions in particular, we still expect global net rooms growth in the mid single digit range. Full year total investment spending is expected to be roughly $1,100,000,000 or $1,450,000,000 when you include around $350,000,000 for the CitizenM transaction. Our capital allocation philosophy remains the same. We’re committed to our investment grade rating, investing in growth that is accretive to shareholder value, and then returning excess capital to shareholders through a combination of a modest cash dividend, which has risen meaningfully over time, and share repurchases. We’re pleased with the company’s strong year to date cash flow performance and outlook.

Given strong cash flow generation, we expect full year capital returns to shareholders to be roughly $4,000,000,000 while maintaining our leverage in the lower part of our net debt to EBITDA range of three to 3.5 times. The operator can now open the lines for questions. Please ask just one question each so we can speak to as many of you as possible. Thank you.

Conference Operator: Thank

: you.

Conference Operator: We’ll take our first question from Shaun Kelley with Bank of America. Please go ahead.

Shaun Kelley, Analyst, Bank of America: Hi, good morning everyone and thank you for taking my question. Tony or Leeny, obviously the language around the credit card program and renewal conversation there is new. So I think we’re going to field a lot of questions on the parameters of what that deal could look like. So obviously these things are delicate while they’re in negotiation. But maybe you could put in perspective a couple of things for us.

One, just current size of the program. Two, how we should think about maybe what’s on the table or what could be renegotiated relative to maybe some of the growth rates that you saw back when you combine the programs and did the renegotiation back in 2017? I think just some parameters around that would be helpful. And then third, if can sort of add it into the general gist, earlier late in the year would be helpful just because it could be a meaningful earnings contributor. Just any timing, refinement would be useful too.

Thanks.

Tony Capuano, President and Chief Executive Officer, Marriott International: Thank you, Sean. Well, the good news is you’ve been asking for a few quarters, so I’m gonna make you happy that we talked about it. Bad news, I’m probably not gonna give you the specificity you want for exactly the reason you described that we are still, you know, we are an active and fluid negotiations. But maybe I can give you a little bit of atmospherics around how we’re thinking about it. And then if it would be helpful, I might ask Leaning just to remind you about how the mechanics of the program work.

As we said in the prepared remarks, we’re in active discussions with our current partners. The power of Bonvoy, the value of Bonvoy points to our customers, the strength of the portfolio and the brands, the broad array of experiences that we offer, without question, make us one of the most attractive customer groups in any industry for our partners in financial services as they think about credit card products, number one. Number two, as Bond Boy continues to grow, that growth translates to more cardholders, more spend, and we expect to see that reflected, in growing co brand credit card fees. And you heard Leeny talk a little bit about that. And then I would just remind you that when we did the the deals originally in 2017 and then extended them in ’20, the value that Marriott Bonvoy brings these partnerships has grown exponentially.

So I I mean, when we did the deal on ’17, Bonvoy didn’t even exist. We launched it in ’19. The membership in our loyalty platform has more than doubled from a 110,000,000 members back in ’17 to the nearly two sixty million that we described earlier on the call. Since the end of ’seventeen, the number of co brand accounts and global spending on our cards have both grown by about 80%. And our system size has grown from around or has grown around 50% from 6,400 properties globally back in 2017 to over 9,700 at the ’3.

So with that, Leeny, I might ask you to remind Sean and the rest of the participants just exactly how the mechanics of the program work.

Leeny Oberg, Chief Financial Officer and Executive Vice President Development, Marriott International: Yeah, sure. And thanks for the question, Sean. I think it’s definitely too early to talk about potential upside from these deals. But I think kind of reminder about how the basic economics of the credit card partnerships work is useful. Our credit card partners basically pay us overwhelmingly variable amounts,

: with

Leeny Oberg, Chief Financial Officer and Executive Vice President Development, Marriott International: the funding mostly based on the volume of cardholder spend, with some additional smaller payments based on items like number of free night certificates, etcetera, number of loyalty program points actually purchased by cardholders. And it’s really worth remembering that the co brand card payments actually account for more than half of the Marriott Bonvoy program funding. And the co brand financial services companies actually pay a higher amount per point than what our hotel owners pay. So it’s an important part of the overall benefit to our hotel owners, and frankly, the power of Marriott Bonvoy, and what we can provide in value to our Bonvoy members. And then as you think about what then flows into Marriott’s income statement, obviously, we recognized revenue in our franchise fees that is compensation for the licensing of our intellectual property.

And so we take a royalty rate into earnings that is essentially a percentage of the total credit card funding. And so as we move forward, it would actually, of course, not make any sense for us to talk about specifics in the negotiations, I think Tony was clear in pointing out the

Tony Capuano, President and Chief Executive Officer, Marriott International: increased relevance of Bonvoy overall. And we’re very excited about how our cards have done and how they continue to perform, and are very optimistic about the outcome next year of these discussions. And then I think, Sean, your last question was you were hoping for some specificity on timing. All you know, again, we are in in the throes of negotiation. Hard to give you specifics other than to tell you, given the value we think these projects will unlock for our financial services partners, for, Bonvoy and our owner community and for Marriott International.

The teams will work diligently to try to get them done as as reasonably quickly as possible.

Leeny Oberg, Chief Financial Officer and Executive Vice President Development, Marriott International: And just as a reminder about how we’re performing this year, in 2024, our credit card branding fees were $660,000,000 And we’re looking at that growing this year 9% in 2025 from, again, the continued powerful combination of the credit card partners and Marriott Bonvoyance.

Conference Operator: We’ll hear next from Michael Bellisario with Baird. Please go ahead.

Michael Bellisario, Analyst, Baird: Thanks. Good morning, everyone. Good morning. We dig into the health of the franchisee? I think just to assure you’ve reduced loyalty chargebacks, you’ve expanded your renovation scopes framework, I think, to more brands.

And obviously, RevPAR has slowed. So I guess two parts is what are owners still asking for? What else can you provide them to ensure that economics remain attractive and you can get back to your mid single digit net unit growth target? Thanks.

Tony Capuano, President and Chief Executive Officer, Marriott International: Yeah. So there’s a lot in that question I’ll try to unwrap. I think the fact that through the first nine months of the year, we have on a global basis achieved record signings, is is indicative that I think we’re hitting the right mark with the owner and franchise community. We are focused on driving enhanced top line performance, and we think that that’s one of the most compelling features of the technology transformation journey that we’re on. We think that represents some really exciting opportunity to continue to drive top line.

The reduction in the loyalty charge out rate was an example of an ongoing effort to identify across the landscape opportunities to reduce affiliation costs. And then we continue from the work we started last year, not just to lower corporate g and a expense, but to look for opportunities for margin enhancement across the portfolio. And I

Leeny Oberg, Chief Financial Officer and Executive Vice President Development, Marriott International: I just add to that, that as we do all the normal comparisons of our affiliation costs against our competitors, we believe we have the lowest affiliation cost relative to revenue in the industry. And we expect with our economies of scale to continue to work on improving that even more.

Conference Operator: We’ll go now to David Katz with Jefferies. Please go ahead.

: Good morning, David. Good morning. Good morning. Thanks for taking our question. One of the observations is the investment spending has sort of moved up to the high I think the higher end of the range for what the guidance was before.

You know, I can venture some guesses as to, you know, what’s driving that, But I’d love to have you sort of unpack that a little bit. And in particular, give us some color on key money and how that is trending because I suspect that’s one of

: the drivers there. Thank you.

Leeny Oberg, Chief Financial Officer and Executive Vice President Development, Marriott International: Well, thanks, David, very much for the question. I’m happy to. As you remember, when we talked at the beginning of the year, we talked about these expenses, these investments breaking up into roughly three fairly even categories, which is key money, tech investments, and then CapEx expenditures in our owned leased and existing portfolio. And from that standpoint, it’s actually not development related key money. The increase is really around clearer visibility around the nondevelopment related expenditures.

So for example, the timing of tech transformation investments, owned lease CapEx, timing investments in our existing hotel base when there may be a particular asset sale, etcetera. So in that regard, it’s really not reflective of any sort of change in our key money philosophy or actually the amounts that we’re spending relative to key money. As you know, very often the deals that you sign are for hotels that are either converting over the next year or so, or for new build hotels, which then don’t actually open for several years. And the comments that we’ve made about our key money used in new unit development are actually quite consistent in terms of both amounts and the way that we’re using it.

Conference Operator: We’ll turn now to Dan Poulter with JPMorgan. Please go ahead.

Dan Poulter, Analyst, JPMorgan: Thanks and good morning everyone. I wanted to go back to the 2026 outlook, the 1.5% to 2%, 2.5% RevPAR growth. I mean, it it seems like it it you guys are kind of extending or assuming a status quo mostly mostly holds here. But maybe you can unpack that a bit in terms of what you’re seeing across leisure business transient in group for next year and and any any kind of, you know, color on on pacing there too. Thanks.

Leeny Oberg, Chief Financial Officer and Executive Vice President Development, Marriott International: Yeah, sure. Absolutely. Be happy to talk about that. So first of all, just a reminder that we have talked we said in our prepared remarks, we continue to expect that The US will be lower than the international and that overall, broadly speaking, we’d expect it to be roughly the same globally. I will say that we would expect The US to end up slightly higher next year than this year.

And a lot of that benefit is related to the World Cup. So when you think about the World Cup next year having a very healthy impact on US and Canada, that from that standpoint, this extra 30 to 35 basis points globally is heavily squarely in US and Canada benefit side of things. When I think about group, I think it is, again, very encouraging to see that our group pace for next year is up 7%. That’s similar to a quarter ago. And actually, group pace for The US is up 8%.

So I think as we look into next year, I do agree with you that I expect leisure to continue to be a stronger performer on a relative basis, and particularly in the upper chain scales. But overall, a fairly similar environment globally.

Tony Capuano, President and Chief Executive Officer, Marriott International: Yeah. And I might just reemphasize a comment I made in the prepared remarks, and that is to remind yourself of the distribution of our portfolio with 10% of the rooms in the luxury tier and another 42% in upper upscale. We’ve had questions the last couple of quarters about the sustainability of the high end and to post another quarter with 4% RevPAR index leading the charge. I think is a pretty powerful illustration of the strength and appetite of that luxury consumer.

Conference Operator: We’ll go next to Connor Cunningham with Melius Research. Please go ahead.

: Sorry to go back to the credit card for a quick second here. Can you talk about the benefits of being between Amex and Chase? Is there anything that that that that’s helpful to having two partners rather than one? And then if you could just high level talk a little bit about the the opportunity there. Like, is is it is it further is is there just, a scale opportunity from having two different providers in general?

Thank you.

Tony Capuano, President and Chief Executive Officer, Marriott International: Yeah. Thanks for the question. Happy to take it. We are obviously delighted with the success of the dual issuer strategy we’ve had since 2017. Having two issuers, it’s really the success of that strategy is demonstrated by the growth of our branding fees and our partners’ contributions to the loyalty program.

And you heard Leidy provide some context to that. Going with the dual issuer approach gives us access to what we think are two very complementary customer bases, Gives us the ability to achieve really broad market coverage while providing customers with a unique set of choices. So we think it’s a really powerful opportunity for us. It also gives us or gives our cardholders greater trial and point transfer sales with their proprietary card base.

Conference Operator: We’ll go now to Stephen Grambling with Morgan Stanley. Please go ahead.

Stephen Grambling, Analyst, Morgan Stanley: Hey, thank you. Just wanted to dig into the pipeline a little bit. I think you touched on this a little bit in your intro remarks, but it looks like you had a sequential improvement in the under construction in particular, also grew pretty substantially year over year. So just curious where some of that strength is coming from, and if you’ve seen any kind of change in the environment from changes in rates or otherwise. Thank you.

Leeny Oberg, Chief Financial Officer and Executive Vice President Development, Marriott International: Yeah, sure. Absolutely. First, I’m going to point out, Steven, which continues to be a real trend, and that’s all around conversions. So the momentum around conversions has not stopped, and that obviously feeds into our under construction pipeline in material way. And we fully expect a third of our room openings this year to be conversion rooms.

And frankly, when you look at our signings, that trend is not doing anything except staying the same, if not actually moving up a little bit. So I think that’s very encouraging as you look at rooms growth. But when you talk about the under construction pipeline, probably it’s a good reminder that in The US that Marriott has the leading share of both signings for new build construction hotels, as well as actually what’s under construction, that 29% of signed and 28% of under construction. And we did see a pickup in Q3 of rooms going under, actually digging the shovel in the ground. But I would say, overall, the trend is fairly similar.

We are still meaningfully below construction starts for compared to 2019. And when you think about the environment, we don’t see a major trend. Clearly, as you look at dropping rates, that should help. We are seeing a bit of a pickup in asset sale transactions in proven markets with proven brands. But I would say we still need to see more improvement on the financing environment to see a dramatic pickup in new build construction starts.

But again, every little bit of momentum is appreciated, and we are seeing a little bit.

Conference Operator: We’ll go next to Patrick Scholes with Truist. Please go ahead.

: Good morning. Thank you. In relation to the last question, can we drill down a little bit about the latest trends in the development environment in APAC and China? Thank you.

Leeny Oberg, Chief Financial Officer and Executive Vice President Development, Marriott International: Yeah, sure. So basically, we’re thrilled with what we see in terms of both rooms growth and continued signings in Asia. Let me talk first about Greater China. Again, broadly speaking, both areas are seeing double digit rooms growth and continued disproportionate share of signings as we move forward. So when you look at the pipeline, I would say we’ve got a situation where in APAC, you’ve got 8% of our existing rooms, while 15% of our pipeline.

And in Greater China, you’ve got 11% of our existing rooms 18% of our pipeline. So so really great progress there. And, you know, they they have different situations where in APAC, you’ve got a number of economies that are growing rapidly and in meaningful need of greater lodging supply to meet the demand growth. And so when we think about markets like India, Indonesia, Japan, we just see continued outperformance for Marriott as compared to our competitors in signing new deals across all the chain scales. We’re continuing to do lots of premium deals there, but also now seeing more extension down into the upscale and even mid scale space.

In Greater China, it’s obviously a little bit of a different story. While we see the same big increase in signings growth, it is much more concentrated in the upscale tier. And from that standpoint, you’re seeing investors appreciate the relatively lower volatility and lower unit costs for developing a hotel as compared to a luxury hotel in a tier one city, for example. So as we see the continued growing strength of our brands in Greater China, the demand for a strong model that has the power of Marriott Bonvoy and also very competitive affiliation costs and operating costs, those brands are doing particularly well. So we’ve seen very strong improvement there.

And again, just as a reminder from a Greater China perspective, We are right now still seeing a bit higher percentage of domestic travelers than we did pre COVID in the low 80 percentage. And I think it’s a good reminder that our hotels provide jobs for Chinese citizens. They’re overwhelmingly for Chinese customers. And as our brands grow in strength, you are seeing this growth across markets and across chain scales, for Marriott International. And Patrick, just to quantify some of that Greater China momentum that Leeny described, year to date through the end

Tony Capuano, President and Chief Executive Officer, Marriott International: of the third quarter, our room signings in Greater China are up 24 year over year.

Conference Operator: We’ll hear next from Brandt Montour with Barclays. Please go ahead.

Jackie Maconica, Senior Vice President, Investor Relations, Marriott International0: Morning, everybody. Was hoping we could double click on business transient. It doesn’t sound like you guys are baking in a dramatic recovery in the fourth quarter or your comments on ’26, but trends did seem to sort of worsen as of late. So just wondering how much of that was the government shutdown or government related and ex government, have you seen trends stabilize or any sort of green shoots there you can talk about? Thank you.

Tony Capuano, President and Chief Executive Officer, Marriott International: Yeah. Let me give it a try. The global business transient in the in the quarter was effectively flat, but that was a sequential improvement versus q two when global BT was down 2%. Global BT RevPAR, if you exclude government to your point, was actually up 1% year over year, but we saw government transient down 15% year over year. And I think as we look into 2026, little bit of more of the same.

The the larger companies that make up BT, we’re seeing actually pretty encouraging strength. But you are seeing a bit of hesitancy from some of the SMEs as they try to navigate the volatile economic environment.

Leeny Oberg, Chief Financial Officer and Executive Vice President Development, Marriott International: And the only thing I’ll add is that from a relative basis of the larger corporate DT versus the small and medium sized businesses, we did see relatively more weakness in the smaller and medium sized businesses, which as you might imagine has a bit greater impact on our select service brands.

Conference Operator: We’ll hear next from Ari Glyne with BMO. Please go ahead.

Shaun Kelley, Analyst, Bank of America: Thanks and good morning. Going back to the credit cards, there’s been some pretty big program renewals for premium cards at both Chase and Amex with their own offerings. I’m curious if you view that as competition in any way and what if anything that might mean for the upcoming renewal? Thanks.

Tony Capuano, President and Chief Executive Officer, Marriott International: Yeah. Listen, I think it’s not limited to those companies. There is a broad recognition across the financial services players about the strength and the long runway for travel related spending. Certainly, in the context of the discussions we’ve been having with our partners, we think those cards can coexist and be complementary. But it’s it’s, you know, something that’ll be incorporated into the ongoing discussions.

Conference Operator: We’ll hear next from Richard Clark with Bernstein. Please go ahead.

Jackie Maconica, Senior Vice President, Investor Relations, Marriott International1: Hi, good morning. Thanks for taking my question. I guess you gave some helpful color on how you’re using AI, artificial intelligence internally. Just any comments on the sort of external use, making your hotels discoverable, bookable through ChatGPT and other platforms. Do you see that as an opportunity?

Is that something that’s being worked on at Marriott?

Tony Capuano, President and Chief Executive Officer, Marriott International: Yeah. Without question, when we think about our distribution strategy broadly, we are increasingly certain that AI platforms can and will be helpful new distribution channel for us. More and more guests are gonna use them for trip suggestions, trip planning. While the search and the commerce models are still, you could argue, in their infancy, we are certainly optimizing the content across our platforms to take advantage of Gen AI services. Our channels channel strategy broadly is designed to ensure we’ve got broad reach across all traditional and emerging channels.

And certainly, generative AI, Gen Tech AI falls squarely in that emerging category.

Conference Operator: We’ll turn now to Duane Pfennigwerth with Evercore ISI. Please go ahead.

Dan Poulter, Analyst, JPMorgan: Hey, thank you. Good morning.

Conference Operator: Good morning.

Dan Poulter, Analyst, JPMorgan: Wanted to ask you about any changes you’re seeing in underlying seasonality.

: One of the

Dan Poulter, Analyst, JPMorgan: things we’ve heard from the airlines has been a shift in the underlying seasonality to Europe, a little less focus on peak summer, July and August and better trends in the fall with October seeing more demand versus maybe the pre pandemic period. I wonder if you’re seeing this elongated peak seasonality too. And can you just remind us how much of your Europe demand comes from a US point of sale?

Tony Capuano, President and Chief Executive Officer, Marriott International: Yeah. While Leeny is pulling that, I wanna give you the precise number. I’ll give you maybe a more anecdotal answer. I’ve been on the road for the last six or seven weeks. I was in a few cities in Europe.

I was in Rome and Milan and Venice. And walking around in October in those markets felt like the traditional crowds in June and July. I do think some of that is weather related. I was in Florence talking to our teams there, and they said that the pretty significant press coverage about elevated temperatures during traditional peak season caused a bunch of rebookings into the fall. As I talked to our operators across Europe, there is certainly a view that the season is extending, earlier into the spring and later into the fall.

And, Leeny and I were in Japan for the opening of our new JW Marriott in Tokyo, and I think we saw the same thing there, a really strong extension of peak season into the fall.

Leeny Oberg, Chief Financial Officer and Executive Vice President Development, Marriott International: Yeah. So just, you know, from a from a a just straightforward numbers perspective, the mix of US customers in Europe in q three this year was 36%. For the full year last year, it was 33%. So there’s not really a huge shift. I think, generally speaking, looking to see if there are any other kind of categories that look meaningfully higher.

And just a little bit more from certain other parts like APAC, etcetera. But I’d say overwhelmingly pretty similar. You know, you would have thought that with FX, with the weakening dollar, that you you might have seen more of an impact. But we still saw very strong, summer results. And then just as a reminder, there were certain events that happened in q three a year ago as compared to this q three, like the Paris Olympics, which I I think also is is just a point to mention.

But from an overall seasonality, you know, we’ve got the boomers obviously traveling all over, but I’d say no major shifts.

Conference Operator: We’ll go next to Smedes Rose with Citi. Please go ahead.

: Hi, thanks. I just wanted to go back to the Wounds growth expectations just a little bit just because we keep hearing a lot of discussions, which we have for some time now around kind of the K economy, the lower end consumer not doing that well, and we certainly see it showing up in kind of select service, limited service RevPAR numbers and that softness. I think in general, expected to continue. Do you have a sense of how developers in The US are thinking about returns on that kind of products if they come down? Do you feel like, you know, you’ll take more share given the strength of your brands within what is being built?

Or just just kind of curious, like, you know, you know, how does the developer decide to put a shovel in the ground now given, you know, what what we’re seeing at least on the revenue side?

Leeny Oberg, Chief Financial Officer and Executive Vice President Development, Marriott International: So I’m gonna talk about two aspects of this, and one is on conversions and one is on new build. Because I do appreciate the opportunity to have

: a little

Leeny Oberg, Chief Financial Officer and Executive Vice President Development, Marriott International: advertisement regarding our growth in mid scale. We’ve only been in the mid scale space a couple of years. We’ve already got 200 rooms open, and we’ve got well over 200 more in the pipeline in the midscale space across our StudioRez, City Express, and Four Points Flex. Hotels. Hotels, yeah.

And in The US and Canada, for example, we’ve got 150 mid scale hotels in the pipeline. So it’s really very excited about the opportunities there. And to your point, we actually see meaningful interest in the conversions to our brands for the strength that we provide relative to revenues as well as extremely competitive affiliation costs. I think on the new build side, there continues to be a host of factors that have met that there is a bit more reluctance. And part of this is around expectations on interest rates, I.

E, when might it be that money is cheaper on the financing side, and when the constraints around exactly how much debt and equity have to be put in, whether that will change. Now we’ve also got the reality that you’ve seen labor cost and construction cost also have gone up meaningfully over the last few years. And so seeing those moderate would be helpful as well. That being said, we continue to see a steady drumbeat of new hotels going under construction. But I think we all have to recognize that compared to 2019, when the financing costs were close to zero, that it is a different environment.

But we think from an attractiveness of the asset standpoint that it still fits many of the qualities for a limited service hotel, where you see strong cash on cash yields, fairly steady performance over time, and a good environment. So I think some of this is about standing on the sidelines and waiting to go back in rather than not doing the deals at all.

Conference Operator: We’ll go now to Lizzie Dove with Goldman Sachs. Please go ahead.

Jackie Maconica, Senior Vice President, Investor Relations, Marriott International2: Hi, there. Thanks for taking the question. Just wanted to ask if you have any kind of appetite for whether it’s kind of small tuck in M and A or partnerships, similar to kind of Citizen M and if so, if there’s any kind of areas of the portfolio you’d be looking to kind of fill out more? Thanks.

Tony Capuano, President and Chief Executive Officer, Marriott International: Sure. So at the risk of being repetitive, I’ll give you the answer I’ve given you in the past, which is I don’t think the team feels any burning need to chase m and a in pursuit of scale. Thankfully, we enjoy industry leading scale. We’ll apply the same lens that we’ve applied historically to opportunities that may present themselves. And the the lenses we have applied, if we see a a geographic area that we think represents real opportunity for growth and or represents an important outbound demand generation market and we are dissatisfied with our pace of organic growth, we might look for an opportunity.

If we scan our brand architecture and we see a gap that we think is more effectively filled by a tuck in m and a acquisition versus the launch of an organic platform, we would consider it there. But again, I think we’ll be quite deliberate and we’ll apply the same financial rigor that we always do and as was evidenced in a deal like CitizenM.

Conference Operator: We’ll turn now to Meredith Jensen with HSBC. Please go ahead.

Jackie Maconica, Senior Vice President, Investor Relations, Marriott International3: Yes, good morning. Maybe following on a little bit from what Richard and Lizzie asked. On the launch of the Bonvoy Outdoor, I was hoping you might speak a little bit about how this sort of dedicated digital vertical within Bonvoy might sort of serve as a framework for future loyalty sub kind of ecosystems, or if this was more opportunistic given that homes and villas and some of the properties were already on a sort of separate platform for digital integration. And maybe just to add on to that, if sort of looking at these platforms like Cision M or the outdoor platform sort of shifts your way of thinking about digital distribution in broader sense? Thanks a lot.

Tony Capuano, President and Chief Executive Officer, Marriott International: Yeah. Let me give it a try. The, some of this is really inexorably linked to the the central reservations transformation, which we think will be quite reflective of how our customers want to shop. So the ability to search our our portfolio through passions as opposed to simply a geographic search. Homes and villas is a good example of that.

Outdoor collection is a great example of that. So rather than saying I wanna go to Costa Rica or I wanna go to Hawaii, I may search surfing options within the portfolio, and the new central res system will give our guests a seamless ability to do that. CitizenM, I I would view as a little more traditional. It’s a terrific product, but I think that will likely benefit from a more traditional geographic search.

Leeny Oberg, Chief Financial Officer and Executive Vice President Development, Marriott International: I think the only thing I would add is as you talk about kind of the broader view of what our digital channels provide and how we think about that platform, obviously we want people to be coming to the Bonvoy platform and then being able to do their shopping and their communication with us however they choose, whether it’s by city or whether it’s by activity. But one thing just as a really critical piece that we view an ultimate critical component of it is that we control the experience that our customers have. And that is where we really want to be the providers of fantastic experiences of being able to communicate with them about what they want, what they need, how they want that to go. And so while, yes, the digital shopping is very important, at the end of the day, the face to face, person to person way that people experience their lodging stays is something that we feel very strongly about, and we’ll want that to be part of the overall advantage.

Conference Operator: And ladies and gentlemen, with no further questions at this time, I’d like to turn the floor back over to Tony Capuano for any additional or closing comments.

Tony Capuano, President and Chief Executive Officer, Marriott International: Great. Well, thank you all again for your continued interest and coverage of Marriott. Levy and I have both been on the road quite a bit. We have some extraordinary hotels and some new additions to the portfolio. Our teams continue to be as passionate and as engaged as you would hope.

And we we look forward to seeing you on the road and hosting you. Have a great afternoon.

Conference Operator: Thank you. Ladies and gentlemen, that will conclude today’s event. Thank you for your participation. You may disconnect at this time and have a wonderful rest of your day.

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