Good day, everyone, and welcome to today's First Quarter 2023 Earnings Call. Please note, this call may be recorded. It is now my pleasure to turn the program over to Senior Vice President of Investor Relations, Jackie Burka.

Thank you. Good morning, and welcome to Marriott's first quarter 2023 earnings call. On the call with me today are Tony Capuano, our President and Chief Executive Officer; Leeny Oberg, our Chief Financial Officer; and Betsy Dahm, our Vice President of Investor Relations. I 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. Please also note that unless otherwise stated, our RevPAR, occupancy, and average daily rate comments reflect system-wide constant currency results for comparable hotels. 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.

Thank you, Jackie, and thank you all for joining us this morning. We announced excellent first quarter results, reflecting continued momentum in our business around the world. While the timing of demand recovery has varied across regions, depending on COVID policies, it is clear that post-pandemic people have a deep appreciation for travel. As the largest global lodging company, with properties in 138 countries and territories, a diverse portfolio of amazing brands, and our award-winning Marriott Bonvoy loyalty program, we are proud to connect people through the power of travel. First quarter global RevPAR rose 34% versus 2022, driven by significant recovery in Asia Pacific and strong growth across the rest of our regions. Worldwide occupancy reached 65%, up 11 percentage points higher than the year-ago quarter. Global ADR grew 11%, demonstrating our continued focus on driving rate. While macroeconomic uncertainty persists, it has not weighed on travel demand to date. In fact, demand continued to rise across all customer segments in the quarter. Forward bookings are solid. Though our transient booking window is still short-term at around three weeks, trends could change relatively quickly. Global leisure demand and ADR are still incredibly robust. Following a year with leisure demand already well above pre-pandemic levels, first quarter transient room nights for the segment increased 12% with ADR rising 8% year-over-year. Group demand was also very strong in the quarter. In the U.S. and Canada, group revenue for full-year 2023 was pacing up 26% to 2022 at the end of the quarter, a significant improvement from group pace at the end of last year. For the second through fourth quarter of this year, group room nights were pacing up 9% with rate up 7%, leading to revenues pacing up 16% year-over-year. U.S. and Canada business transient demand saw a modest additional recovery in the quarter. ADR rose meaningfully primarily due to solid special corporate rate increases. First quarter U.S. and Canada business transient revenues surpassed 2019 levels for the first time since the pandemic began. Cross-border travel has continued to rise globally. However, it is still a few hundred basis points below 2019 when guests traveling abroad accounted for nearly 20% of total room nights. Additional upside is expected to come primarily from Asia Pacific given international airlift to and from China is still well below pre-pandemic levels. We are focused on strengthening our Marriott Bonvoy loyalty platform by continuing to grow our membership base, which reached 182 million members at the end of March, and enhancing engagement with these valuable customers. Our co-branded credit cards with offerings in nine countries performed well again this quarter. Global Card acquisitions soared 35% year-over-year while global card spend increased 16%. To engage with our customers, we are increasingly leveraging our digital platforms which are highly profitable channels for our owners. Those digital channels had a record first quarter. On a year-over-year basis, mobile app users grew 31%, digital room nights rose 17%, and digital revenues climbed 26%. Turning to development, we still expect gross rooms growth of around 5.5% this year and net rooms growth of 4% to 4.5%. While we are keeping a close eye on the financing environment, as Leeny will discuss in her remarks, we do anticipate returning to a mid-single-digit net rooms growth in the next few years. We were pleased to close the City Express transaction just yesterday, welcoming roughly 17,000 rooms in the Caribbean and Latin American region into our portfolio. City Express is an incredible launchpad to jump-start our entry into the high-growth moderately priced mid-scales. We see meaningful opportunity to expand the brand in CALA as well as in other locations around the world. Our industry-leading pipeline stood at approximately 502,000 rooms at quarter-end, with 57% of those rooms in international markets and about 200,000 rooms under construction. Strong interest in conversions continues, including multi-unit opportunities. Conversions represented nearly 30% of signings in the quarter and 25% of openings. I'll now turn the call over to Leeny to discuss our financial results in more detail.

Thank you, Tony. Our first quarter results reflected robust demand growth around the world with all regions and all hotel tiers posting solid performance. U.S. and Canada RevPAR grew 26% year-over-year; occupancy reached 66%, up 8 percentage points, while ADR rose 10% versus the year-ago quarter. International RevPAR rose a remarkable 63% over the '22 first quarter with ADR rising 16%. Occupancy reached 64%, an 18 percentage point improvement versus the prior year quarter. Demand was strong in all international markets with particularly impressive improvement in Asia Pacific after travel restrictions were lifted. RevPAR in Greater China was 95% recovered to pre-pandemic levels in the quarter and Mainland China was more than fully recovered. This is notable given that demand in the quarter was overwhelmingly driven by domestic travelers as international airlift was still less than 20% of 2019 capacity at the end of March. As you will recall, around one quarter of room nights in Greater China were from international guests pre-pandemic. International flights to and from China are slowly being added, although airlift is only expected to be around 40% of 2019 levels in the second quarter. Total gross fee revenues totaled $1.1 billion, nearly 40% above the prior-year quarter with a meaningful rise in incentive management fees, or IMF. IMF nearly doubled compared to 2022 to $201 million. They also topped the first quarter of 2019 by 23%, with every region except for Greater China earning more incentive fees than in the 2019 first quarter. Our non-RevPAR-related franchise fees also grew meaningfully once again totaling $197 million, up 16% year-over-year, primarily due to co-branded credit card fees rising 18%. Containing costs remains a focus at both the corporate and hotel level. In the U.S. and Canada, margins at our managed hotels rose two percentage points versus the 2022 first quarter, and they remain above 2019 margin levels. Adjusted EBITDA totaled $1.1 billion, a new quarterly record despite the first quarter being the seasonally slowest quarter of the year. Now let's talk about our 2023 outlook, the full details of which are in our earnings press release. With the better-than-expected first quarter results and robust global booking trends, we're raising our full-year guidance. Macroeconomic uncertainty is not impacting our short-term demand and trends across all customer segments remain strong. The second quarter is expected to benefit from particularly strong year-over-year growth in international markets, especially in Asia Pacific. However, there is less visibility in forecasting the company's financial performance for the second half of the year. The high end of the range reflects relatively steady global economic conditions throughout the remainder of 2023 with continued resilience of travel demand across all customer segments and markets. The low end of the range reflects a meaningful softening of the global economy in the second half of the year with worldwide RevPAR in the last two quarters roughly flat compared to 2022. For the full year, RevPAR in the U.S. and Canada could grow 6% to 9% and international RevPAR could grow 22% to 25%, leading to global RevPAR rising 10% to 13%. Total fees for the full year could rise between 13% and 16% with a non-RevPAR-related component increasing 4% to 7%. Non-RevPAR fee growth is expected to benefit from higher credit card fees resulting from growth in average spend and in the number of cardholders. We still expect G&A expenses of $915 million to $935 million, an annual increase of 3% to 5%, but still below 2019 levels. Full-year adjusted EBITDA could increase between 13% and 18%, and adjusted EPS could rise 19% to 26% above 2022. Our powerful asset-light business model continues to generate a great deal of cash. In the first quarter, our net cash provided by operating activities was around $890 million, and we returned over $1.2 billion to shareholders through the end of March. Our capital allocation philosophy has not changed. We're committed to our investment-grade rating, investing in growth that is accretive to shareholder value while returning excess capital to shareholders through a combination of a modest cash dividend and share repurchases. For the full year, we still expect 2023 investment spending of $850 million to $1 billion. This includes $100 million through the just-completed acquisition of the City Express brand portfolio as well as higher-than-typical investment in our customer-facing technology, which is overwhelmingly expected to be reimbursed over time. With the increase in our adjusted EBITDA forecast, we now expect to return between $3.6 billion and $4.1 billion to shareholders in 2023. On the development front, we are sure many of you have questions about the banking environment in the U.S. and in Europe, in particular. Given rapidly rising interest rates, the financing environment in these regions has been challenging for some time. Another element of uncertainty has now been added as some banks wait for more clarity around capital requirements and perhaps additional regulations. However, while there are challenges with lending, especially for new construction projects, deals that have committed financing continue to move forward. Additionally, the number of deals leading the pipeline is not increasing. Fallout in the quarter was around 1.5% below our historical average of just over 2%. We're closely monitoring the situation and the regulatory response but we do expect the tightening in hotel financing to be short term. As we have seen over time, hotel financing has proven to be quite resilient over the long term. Hotel loans have been among the better-performing sectors of commercial real estate lending of late as hotels continue to post excellent operating results. I'll now turn the call back over to Tony, who has a few more comments before we go to Q&A.

Thanks, Leeny. Before we open up for questions, I just want to pause for a moment and thank our team of associates around the world who continue to do such outstanding work and are a key reason that our year is off to such a strong start. They are remarkable. I'm also excited to let you all know that we plan to hold our first Analyst Day since early 2019 at the W South Beach in Miami on Wednesday, September 27. We will open registration for that event in June. We look forward to seeing you in South Florida and sharing a deeper dive on our business with you this fall. So now Leeny and I are happy to answer your questions.

And we will take our first question from Joe Greff with JPMorgan. Your line is open.

Good morning, guys. What's that to us was obviously the - I mean it was a good quarter overall. What's that to us was the incentive management fee performance in 1Q. And the comment you made that it was driven or IMF outside of China or above 2019 levels, China just below. Can you talk about China IMF expectations for the balance of this year and how you think about IMF growth relative to these and franchise and other fees growth?

Thanks. Sure. Let me set the stage a little bit. We discussed that the Incentive Management Fee has essentially doubled from Q1 last year. A significant portion of that increase was driven by the Asia Pacific region, which experienced a strong recovery in revenue per available room. In broad terms, if we attribute about a $100 million increase in Incentive Management Fees, roughly $30 million to $40 million of that originated from Asia Pacific. They contributed substantially due to their disproportionate increase in revenue per available room compared to the rest of the world. Typically, our incentive fees in Asia Pacific do not include an owner's priority, making their returns less variable. Therefore, we expect the incentive fees for the remainder of the year to continue reflecting this trend. If we reach the high end of our guidance, we could see global incentive fees surpass the peak levels we experienced in 2019. Additionally, it's noteworthy that our managed rooms, totaling about 550,000 out of 1.5 million, consist of over 75% full-service rooms. With the strength in both group and returning business travel, along with ongoing leisure demand, I believe this positions us well for the Incentive Management Fees.

And then, Leeny, the only thing I might add for Joe's benefit since his question was specific to China, we did see in the quarter, Joe, that Mainland China RevPAR was fully recovered to 2019 levels. But remember, the vast majority of that recovery was domestic demand. At the end of the quarter, only about 20% of the international airlift in China has recovered. I think by April, it was recovered about 40%. And so we do expect a stronger and stronger return of international demand in China through the balance of the year.

Thank you, that's helpful. Leeny, I appreciate your comments on the development front regarding potential financing challenges. Are you experiencing an increase in requests from developers for financial support, or do you expect more requests?

No, I think we always get requests for financial support, and we're happy to consider them. I do think, Joe, at the end of the day, the largest area of the capital stack, particularly in the U.S. that needs to be filled, is the senior loan. And so from that perspective, that is not a place where we typically get requests. And so around the edges, I would say there's a bit more request for whether they're debt service guarantees or operating profit guarantees, and that obviously is for managed properties. But I would say that, broadly speaking, the level of capital that we're putting into deals has not changed meaningfully. This is really more about a temporary slowdown in the bank's willingness to get some of these financings over the finish line.

We will take our next question from Stephen Grambling with Morgan Stanley. Your line is open.

Hi, good morning. Wanted to touch base on the digital or technology investment that you talked about last quarter. Just want to know a little bit more about how you think that could impact the consumer experience and our employee experience as we think about longer-term revenue and/or margin implications from that investment?

Sure. As we think about not only the re-platforming of our major systems but also ongoing investment in our technology infrastructure, we always think about it through the lens of the impact on our associates, our guests, and our owners and franchisees. I think from an associate perspective, particularly our future workforce is a workforce that has grown up opening an iPhone box with the understanding that there are no instructions and that, that technology will be intuitive and the design of our future technology will be similarly intuitive. We believe it will both be advantageous as we compete for talent, but it will also create capacity for them to more deeply engage with our guests. For our guests, we envision both at the property level and our customer engagement centers, making the breadth of information that we have about our guests available to our agents so that they can quickly and seamlessly address whatever questions or concerns or needs that those guests have. From the owner's perspective, there are both inherent operating efficiencies from new technologies that should be margin enhancing. Additionally, I think that from a revenue generation perspective, today, when you go to m.com, you have the ability to book rooms. When our new systems roll out, the full breadth of products and services that we have to sell our customers, including food, beverage, spa, and golf, will be available at a single click. We think that represents a very meaningful revenue upside.

And Stephen, I want to emphasize that this is really a multiyear process. We discussed it a quarter ago and touched on it again today. We are excited about the potential we see, and while it will influence this year's investment spending, we anticipate that it will take several years to fully realize.

That's helpful. And perhaps a quick follow-up on Joe's question about development and really focused on the pipeline. Given the strong growth in international markets in China, in particular, in the pipeline, how does that change the visibility as we think about translating to net unit growth from that particular part of the pipeline?

Well, I'll make a couple of comments. First of all, the continued strength in conversions is obviously great for our visibility into the pipeline. They tend to be shorter to actually open, and they tend to be clearer and exactly what needs to be done to be able to put our flag on them. You've seen that we continue to put out really strong numbers on both signings and openings. The other trend that we've noticed over the past couple of years is increasing comfort internationally with conversions. As you think about our soft brands, that really started, frankly, in the U.S. with Autograph and then have now really expanded as you think about Autograph, Luxury collection, tribute, and to some extent, Delta, you really see those spreading more around the world. That obviously gives us better visibility both for the rooms that are going to open and frankly, really helps support the net rooms growth thesis that we have.

I might just build on that, Stephen. The teams around the world continue to pursue individual asset conversions, but we are just as aggressively looking for portfolio conversions. You might remember that in the middle of last year we were delighted to announce an eight-hotel portfolio conversion in Vietnam that we referred to as Vinpearl. Just last month, we did Vinpearl Round 2, which was seven additional hotels, about 2,500 rooms, three of which are conversions that will open in calendar 2023. So I think that multi-unit portfolio conversion strategy is something you should reasonably expect to continue to be a focus area for our teams.

We will take our next question from David Katz with Jefferies.

Hi, good morning. And thanks for taking my question. I was hoping to get just a little more color on how we think about the arc or trajectory of non-RevPAR fees relative to the core fees that you've obviously provided a ton of color on and arguably, we have a bit more experience modeling over the long term.

Sure. I think you heard me talk about the 4% to 7% expectation for 2023, which is obviously a bit different as it relates to fees from RevPAR given what we're seeing in the lodging operations for the year. So I think overwhelmingly, as you know, the non-RevPAR fees are co-brand credit card fees. Those are the largest chunk. They are going to tie to both the number of cardholders and the level of average spend. I think it won't surprise you that as you've seen people start to amount of COVID that we are seeing the average spend on credit card increases year-over-year moderate. But I will also say that the number of cardholders is growing very nicely. I would say that it is relatively speaking, more growth coming from the increased base of cardholders than it is on the actual spend, but it is a great combination of the two of them. The other thing is on our residential fees on our residential branding fees, they have been growing beautifully over a kind of three to five year time horizon as there's great demand for that product of ours, but they are a bit lumpier in terms of when the actual residences open. I think you should expect to see that it will continue to grow over time, but it can vary quarter-to-quarter quite meaningfully given the one-time nature of those fees.

Understood. Very helpful. And if I can ask my follow-up, just touch on City Express a bit more, admitting that I have not stayed in one. Can you just help us sort of place that within kind of the RevPAR hierarchy of what you have? And give us a sense, as to sort of when and how and what way we might see that grow into other markets notably more in the U.S.?

Yes, of course. As I mentioned in the opening remarks, on the long list of attributes that excite us about this transaction, it is a great way for the company to enter the midscale segment, which is not a segment where we have competed previously. When we have talked in the past about the breadth of our portfolio, we've often responded to questions by saying we love the breadth of that portfolio for the way in which it satisfies the wants and needs of both our guests and our owners and franchisees. Mid-scale is a tier where we hear demands from both of those constituents. Mid-scale is positioned below brands like Fairfield that are in our current architecture. We think there is an immediate opportunity to accelerate the growth of City Express across the Caribbean and Latin American region. As we have done with many brands that we've either developed organically or acquired, we are indeed exploring the applicability of the City Express platform and its growth potential in other markets around the world. In fact, here in the U.S., we're just a few weeks away from announcing a simple, modern, streamlined, new build, extended state product that has very basic services and amenities for those looking for longer stays at our mid-scale price point, and you should expect to hear more about that in the coming weeks.

Thank you so much. Appreciate it.

Of course.

We will take our next question from Robin Farley with UBS. Your line is open.

Great, thanks. Just circling back in your introductory remarks, you talked about business transient revenue being above 2019 levels. I wonder if you could tell us, because rate clearly seems to be the driver. What business transient nights are as kind of the percent change the delta to 2019 level?

So business transient room nights are down about 1% versus 2019. Obviously, the rate has been terrific, particularly with the most recent renegotiation at the special corporate rate.

Great, thank you. And I guess my other - the follow-up question would be I know you've talked about the strength you're raising RevPAR, so clearly you're seeing strong demand. But when we look at the broader market, the STR data, we see luxury and economy that the two sort of ends both having kind of on a trailing at this point, I think it's seven weeks of trailing six to seven weeks of trailing showing down year-over-year for RevPAR for those two segments? And I realize you're much more focused than the upscale and upper upscale, but I wonder if you could just sort of like opine for a moment on whether that's something that you think will start to move into those other segments or how you view what's happening in those kind of upscale economy parts of the market? Thanks.

Sure. Obviously, we're very focused on rate and I think that's revealed in the results with global ADR up about 11% in the quarter. If you look at the U.S. and Canada, Q1 luxury rates, as you point out, were down slightly year-over-year. But as we dig into that data, our sense is that modest decline is largely around mix shift. So in the prior several quarters, the bulk of that luxury rate growth was in leisure destinations, resort destinations. As we start to see pickup in demand in urban downtown core destinations, that's great for the business, but it's at lower rates, and that's dragging down a bit. With that said, globally, luxury ADR was up 4% in the quarter even as compared to the extraordinarily strong ADR we saw for luxury in the first quarter. I think your second question was on?

On economy, which largely as you might imagine, I think we don't play very much there in any meaningful way. I think it's not a surprise when you see that just generally speaking in economy, there tends to be less variability both up and down over time than you see in the highest end rates. But I think again, I will point out on luxury, Robin, that we're still very, very pleased with what we see in terms of luxury demand. And frankly, when you think of people having more opportunities of where they want to travel, it's one of the benefits of being the size and scale of our system, because they may not be going to some places domestically that they were going before but can now actually go abroad.

And just to put a little more context to your question, Robin. This is system-wide for the quarter, we then as compared to 2022, luxury RevPAR was up 18%, extended stay RevPAR was up 16%, select brand RevPAR was up 23%, and premium RevPAR was up 35%.

Yes on that for year-over-year yes. Okay. Thank you. Thanks very much.

Yes, thank you. You're welcome.

We will take our next question from Shaun Kelley with Bank of America. Your line is open.

Hi, good morning, everyone. Thanks for taking my question. So Leeny, maybe if we could talk about capital return a little bit. Obviously, you boosted up your expectations or outlook there. Could you just remind us sort of kind of maybe where this new outlook range kind of puts you relative to your medium-term leverage target and what that target is?

Sure. I think it's a great question to be able to reinforce where we are, which is that we have been for some time continue to be and expect for the rest of this year to continue to be at the low end of the investment-grade leverage targets. So the biggest chunk of all, of the chunk relative to the increase in capital return is from the increase in expected EBITDA and cash flow for the company. If you think about broadly speaking, the midpoint of adjusted EBITDA going up between $250 million and $300 million, it's pretty straight math to see that can get you to this increase of call it roughly $700 million of midpoint of capital return. We feel really strong about the way the business is operating, from a cash flow performance as well as the visibility that we've got, certainly in the near-term. But even at the lower end of the guidance that we provided, I think we still feel really good about being at the low end of our leverage targets with the kind of capital return range that we've given.

Great. And as my follow-up to maybe switch gears a little bit, but following up on the comment around mid-scale extended stay and a little bit around M&A and City Express too. Tony, could just talk a little bit about sort of the balance of potential brand launches and where you see white space on that front relative to tuck-in M&A, which I know we saw for a number of years kind of back into the early 2010s and then obviously Starwood kind of took over for a few years in the late teens there? Maybe help us balance those two priorities or how you see opportunities in each?

Of course. The fundamental strategy has not shifted. You are right to point out that prior to Starwood, there was a fairly consistent cadence of what we always refer to as bolt-on acquisitions. Most of those acquisitions had some commonality. They often helped us gain a foothold in a geography where we were dissatisfied with the pace of organic growth. They often represented a growth platform either regionally or potentially globally. AC acquisition would be perhaps the best illustration of that. Our industry-leading scale gives us the luxury of not needing to do M&A to gain scale. We enjoy scale. But we will continue to look at opportunities if we believe there is a gap in the geography where our guests seek to travel and we're dissatisfied with our footprint, or if we see a gap in our brand architecture. That was what guided the City Express transaction, a transaction that solidified the strength and leadership of our footprint in the CALA region and also filled in a gap in our brand architecture by giving us entry into mid-scale. The final commonality in every one of those transactions is the discipline around the valuation, and you should expect to see that same discipline as we evaluate what I think will be a fair number of opportunities that will be floating around the market. As I reflect on the last decade or more of the expansion of our platform, I'm delighted that we've expanded our brand architecture through a thoughtful blend of both M&A and organically generated platforms. When I look at the success we've had with organic launches like Autograph and Moxy and I blend that with powerhouses like Residence Inn and Ritz-Carlton and AC that were added to the system through M&A, I really like that approach.

Thanks very much.

Of course.

We will take our next question from Smedes Rose with Citi. Your line is now open.

Hi thanks. I just wanted to ask a little bit about how you're thinking about occupancy as in you should hear. I'm sort of asking in the context it looks like for you and for others, that we've seen reports from that occupancy just still sort of stubbornly below pre-pandemic levels. I mean, certainly, it's closed, but they're still below, obviously offset by rate? But I'm wondering do you have any just sort of updated thoughts on - is there some piece of business that's maybe kind of gone or people are being priced out or do you think occupancies can and will return to kind of pre-pandemic levels as we go through this year and into next year?

Sure. I'll give it a try, and Leeny feel free to jump in. As we pointed out in the prepared remarks, we continue to see robust demand recovery translating into strong occupancy growth. In fact, on a global basis, we saw 11 points of occupancy improvement in the quarter. When we think about our updated guidance, at the high end of that guidance, we expect our RevPAR growth to be fairly evenly split between ADR and occupancy gains. We do expect there to be continued occupancy gains at the high end of that guidance. The low end of the range would reflect a meaningful softening in the global economy in the back half of the year. That would have worldwide RevPAR relatively flat compared to where we were in the back half of last year.

The only thing I'll add is it is interesting when you look at occupancy compared to 2019, and we do continue to make progress in that comparison. When I look at U.S. and Canada kind of moving through from January through March of this quarter compared to 2019, we're down to only two percentage points difference by the time we're at March. Globally, we were only two percentage points in March as well. I think there are a couple of things to note. Number one, the portfolios are pretty different. We've added 11% more rooms since 2019. So the comparison starts to be not completely apples-to-apples. I think there's also been some great learnings on the part of the industry about revenue management. We are trying to make sure that we're maximizing the returns on these real estate assets. As you've seen with group, for example, there's actually been some benefit over the reality that group is booking closer to the time of the actual event. We will eventually get back there. We are getting fairly close. But the best part is that you're seeing the fundamental business segments of business, transient leisure, and group really all operating on full cylinders, not exactly the way they behaved in 2019 but still really in good shape.

Okay, thanks. And then maybe just on that - I'm sorry, if you said what percent of demand in the quarter came through Marriott Bonvoy members? And could you just talk a little bit about what kind of demand is coming through OTAs at this point?

Yes. For the first quarter, globally, the member penetration was 53% and in the U.S., it was 60%.

Okay. And has the occupancy through OTAs changed meaningfully or?

No, that has stayed at about 11%, and that is quite similar to what was pre-COVID. The interesting part is that you look at either the digital channels which have grown 600 basis points since pre-COVID or if you look at all of Marriott's direct channels together. We've actually grown share about 100 basis points since pre-COVID, but the OTAs have remained roughly flat.

We'll take our next question from Patrick Scholes with Truist Securities. Your line is now open.

Hi, good morning everyone.

Good morning.

Good morning, Tony. I see there's some news in the last day or so that you folks will begin bundling your resort fees into your pricing displays later this month. It looks like you're the first major hotel company to be doing this. Do you see just putting yourself - does this create an unfair competitive disadvantage for you? And would you expect other hotel companies to also follow your lead with displaying these fees? Thank you.

Yes. So the way I'd answer that, Patrick, we've already been showing it. The discussions we've been having with the various jurisdictions are just about making sure that the transparency of those disclosures is enhanced and crystal clear for our guests. It is not as if those were hidden somehow; we're simply further clarifying and enhancing that transparency. I will leave it to the state AGs around the rest of the country for the rest of the industry. But I am pleased that we will lead the industry in terms of the transparency of our disclosure for our guests.

Thank you. And I also - I agree, I think that's the right thing to do to give full transparency on these. Thank you.

Of course.

We will take our next question from Richard Clarke with Bernstein. Your line is now open.

Hi there, thanks for taking my questions. Just the first one, your comment was that the projects that are under construction or financed are not being affected. About 60% of your pipeline is not under construction. How would you clarify that? How much of that is financed, and how much risk is associated with the 60% not under construction?

Sure. So yes, you've got the basic parameters roughly right, which is those that have started construction, you would expect those to already be financed. There's not a specific number on firm financing for that other 60%. That's an ongoing process and always has been between the developers as they consider their various capital sources. One thing to remember in that is, our pipeline is over 50% international, which does tend to be less dependent on senior loan financing. For the remainder, in the U.S., it is overwhelmingly limited service of franchised properties. From a relative speaking basis, we do believe that there is some slowdown in the pace of financing for those, but we are continuing to see that banks are willing to consider loans for strong brands and strong proven markets. We are still seeing that lenders are looking at those projects. So I don't think there is a fundamental change in how we see those projects materializing and actually building hotels. I'd also remind you that there are quite a few conversion hotels in that as well. As you've probably seen in past times where lending has had a slowdown that there can be a bit of a slowdown in the construction starts. But we do expect with the performance of the hotel business and frankly, the relative performance of hotel loans, particularly in limited service loans, we would expect that to get going again more quickly. We aren't seeing fallout of those deals from our pipeline in anything more than a typical fashion.

Okay, thanks for that color. And just as a follow-up. You mentioned your credit cards now in nine countries, just how meaningfully are those eight non-U.S. countries so far? And what is the opportunity? Can we have a credit card in 200 countries eventually or is there some natural limit to how many countries you can launch it?

Well, we're certainly going to have as many as we can, you can be sure of that. I think I'd make two comments. First of all, certainly with the use of revolving credit in the U.S., that is by far, the lion's share of the fees that we received are related to the U.S. But I would say the rate of growth that we're seeing in terms of both the spend and the cardholder numbers in international is really quite tremendous. Both in terms of the numbers of cards - numbers of countries that we're adding cards as well as the number of cardholders in those countries. We've been really pleased with the increases, for example, in Japan, and South Korea in terms of the growth in cardholders. I think that bodes really well for future growth, but also for our hotel growth and for our hotel business, because these are all Bonvoy members who want to be earning points and staying at our properties. It's a great part of the ecosystem of our business.

We will take our next question from Dori Kesten with Wells Fargo. Your line is open.

Thanks, good morning.

Good morning.

What percentage of your 200,000 rooms under construction are slated to open over the next three years?

Well, I think the best way - we don't have a particular percentage. As you know, we don't control exactly when they open. We do keep a very careful eye on how they are doing, and again, feel comfortable with the numbers that we've talked - that Tony talked about in terms of the gross room openings, which has both a share of those coming out from under construction as well as conversions.

Okay. And I guess on conversions, do you know - do you have a typical percentage that come as a result of sales versus just an owner choosing to switch?

Yes, I don't think there's necessarily a typical percentage. If I had to guess over the last decade or so, it's probably relatively evenly split between an owner that simply has an opportunity to change brands or to flag an independent hotel versus an opportunity that is created as a result of a transaction. But I think that ebbs and flows a bit depending on where we find ourselves in an economic cycle.

I'll just add one other point that may help you come up with your own math, as a reminder that for hotel construction and a limited service hotel is roughly speaking, two years under construction and a full-service hotel can be anywhere from three to four.

Okay, thank you.

We will take our next question from Brandt Montour with Barclays. Your line is open.

Thank you. Good morning, everybody.

Good morning.

Just quickly back to China Tony or anyone could you talk about maybe the starts momentum there on the ground? I know it sort of beats a little bit to its own drum or different drum than what we're talking about in the U.S., but are you seeing any building momentum in new construction starts in China? And do you think that that could potentially offset sort of the growing headwinds on the financing side in the U.S. that Lenny just talked about?

Yes. So I think the borders are just opening, the economy is just starting to really gear up. So it's a bit soon for new construction starts. What I can tell you is some of the in-flight construction projects that have been paused have restarted. Our approval volumes are accelerating, and the volume of memorandums of understanding that we're negotiating and executing is accelerating. All of the leading indicators that should drive construction starts are really encouraging, but it's probably a bit premature to have any really strong data for you.

The other thing I'll point out is that roughly speaking, about 15% of our Chinese pipeline deals have some state-owned enterprise participation. That does help as you think about capital sourcing for those projects that is helpful as we get those ongoing again.

Maybe the last point I would add, because we're so heavily weighted to the most valuable quality tiers of our upscale and luxury, oftentimes when we engage with the owner, the project is well under construction. Unlike the U.S., where our conversations start with a greenfield site, they may come to us with a tower of 25 stories out of the ground. So it's a bit of an apples-to-orange comparison.

That's really helpful. And then, Leeny, following up on the IMF discussion, you talked about Asia-Pac and international. Could you maybe touch on the outlook for IMF in the U.S. kind of squaring that with the fact that you guys aren't implying a ton of growth in the U.S. in the back half? But as you mentioned, your mix skews to full service, which has the group component in there. Can you try and sort of square those factors away for us, please?

Yes, sure. If you look at year-over-year Q1, you are right in pointing out that the U.S. IMF, which came close to doubling in Q1 from 42 to 85, actually did double, and that growth was overwhelmingly driven by the premium hotels, which was the return of group and business transient to our premium hotels. We did continue to see growth in IMF from our luxury hotels, but the biggest chunk of growth came from those premium hotels. I think with the strength of the group that Tony pointed out for the rest of the year, you should continue to see the strong growth in both U.S. and Canada IMFs as well as international.

Perfect. Thanks so much.

And we will take our next question from Duane Pfennigwerth with Evercore ISI. Your line is open.

Hi, thank you. Good morning. Just with respect to China, I understand that the recovery has been primarily domestic so far, and we obviously have a good feel for airlift recovery. But I wonder if you could talk a little bit about segmentation. Is it like other geographies in that it's primarily leisure at this stage? And could you just comment on BT and group recovery within China or if there's any differences versus other geographies? For my follow-up for the sake of time, do you share the view that it will be a fairly booming summer in Europe looking forward? Thank you.

Sure. I'll start with the second question first, and then Tony will fill in also. That is, yes, on the second question. While we have seen the dollar soften a little bit more than where we were relative to when we gave guidance earlier in February, the reality is that we are still seeing great demand for Europe hotels for the summer and are very pleased with the booking patterns we see there. On Greater China, let me talk about a couple of things. First of all, cross-border, just a reminder of our comments earlier that roughly three-quarters of the business typically is domestic. Well, right now, it's over 90% domestic. There is the reality that there's going to be more travel both in and out of Greater China as demand as the airlift improves. We would expect to see that help both other parts of the world but also that there's more travel into China. In terms of the segment, it's seeing the recovery in segments very similar to the way that we saw it in other parts of the world. The one difference being that on special corporate and business transient in China that is recovering much more quickly than it did in the U.S. For example, overwhelmingly, people are back in their offices in Greater China, while in the U.S., there's obviously much more of a hybrid mix. We are actually seeing all of the segments recover more in line with each other rather than necessarily one after another the way it was in the U.S.

The only other small note I would make, and I'm sure you're aware of this, with Chinese government just pivoted a bit and said that those foreign visas issued prior to March 28 of 2020, that initially, they said would need to be renewed, those are now available for use for entry into Mainland China, which should pave the way for greater inbound international because the queue for new visa processing for international visitors had been quite lengthy.

Really interesting. Thank you.

Welcome.

And we will take our next question from Chad Beynon with Macquarie. Your line is open.

Good morning. Thanks for taking my question. First, Tony, in terms of what your team has coined 'blazer', which has presumably helped the length of stay, I'd assume, upper upscale in luxury. While it's hard to pinpoint, have you seen any reduction in these hybrid trips? I know it's always tough to analyze that, but just trying to figure out as people get back to fully in the office if that benefit has waned at all? Thanks.

Not yet. I think the best statistical data we have is the recovery by day of the week, and we continue to see strong recovery on Sundays and Thursdays, which is probably the most compelling empirical data we have that suggests that blended trip purpose continues to be strong. I would supplement that data with what we hear anecdotally when we're talking both with special corporate customers and with group customers who are talking to us as we re-platform our technology and encouraging us to make it easier for their business travelers or their group meeting attendees to book a single reservation that has both business and leisure purposes. Our sense is that, that trend shows no sign of slowing down. And as I've said in other forums, that's great news for our business.

Thank you. And then lastly, and this is something you'll probably get into at the Analyst Day. But Leeny, in terms of the guidance you laid out, the difference between the high and low end, obviously regarding variable scenarios and prior global recessions or in the analysis you guys are currently doing for the guidance, should we expect a more pronounced flattening or maybe decline in North America or outside of the U.S.? Obviously, a lot of variables in there, but just kind of wondering how you're thinking about maybe a soft landing or slightly worse than soft landing could affect each market. Thank you.

Yes. I would probably consider it about the timing of the recovery. A couple of broad comments. Generally speaking, lodging demand does have a high correlation with GDP growth. When you think of emerging economies like India, as an example, where you're seeing 6% GDP growth, that's going to be very different than what you see in the U.S. where more typical GDP growth might be more like 2%, and so the impact of a recession can be different in that regard. When I think about the guidance that we've given this year, it is much more tied to the pace of recovery. The U.S., for example, is meaningfully farther along in its recovery from COVID than Asia Pacific, for example. I think we're clearly seeing that now all restrictions are lifted in Asia Pacific and that both pent-up demand and return of demand is coming quite nicely, which will mean that should we see an economic slowdown, I think they will be impacted a bit less than, for example, in the U.S., where obviously in the U.S., if we see it, it's starting from a different point. As we talked about, we would imagine that Q3 and Q4 slowdown does mean that there is a meaningful economic slowdown. I'm not sure I would call it a super sharp deep V, but clearly, a real meaningful economic slowdown would get us to that roughly flat RevPAR in Q3 and Q4 compared to '22.

Very helpful. Thank you very much. Appreciate it.

We have reached our allotted time for questions. I will now turn the call back over to Tony Capuano for closing remarks.

Great. Well, thank you all again for your thoughtful questions. Thanks for your interest in Marriott International. We hope to accommodate you in what should be a terrific summer around the world. We look forward to welcoming all of you to the beach in Miami in the fall for our Investor Day. Have a great afternoon. Thank you.

This does conclude today's program. Thank you for your participation. You may disconnect at any time. Have a wonderful day.