Marriott International

Stand by, program is about to begin. If you need audio assistance during today's program, please press star zero. Good day, everyone, and welcome to the Marriott International's second quarter 2022 earnings call. At this time, all participants are in a listen-only mode. Later, you will have an opportunity to ask questions during the question and answer session. You may register to ask a question by pressing star and one on your touchtone phone. Please note this call may be recorded. It is now my pleasure to turn today's program over to Jackie Burka. Please go ahead.

Thank you. Good morning, everyone, and welcome to Marriott's second quarter 2022 earnings call. On the call with me today are Tony Capuano, our Chief Executive Officer, Leni Oberg, our Chief Financial Officer and Executive Vice President of Business Operations, and Betsy Dahm, our Vice President of Investor Relations. I will 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. 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. Please also note that, unless otherwise stated, our REVPAR occupancy and ADR comments reflect system-wide constant currency results for comparable hotels and include hotels temporarily closed due to COVID-19. REVPAR occupancy and ADR comparisons between 2022 and 2019 reflect properties that are defined as comparable as of June 30, 2022, even if they were not open and operating for the full year 2019 or they did not meet all the other criteria for comparable in 2019. Additionally, unless otherwise stated, all comparisons to pre-pandemic for 2019 are comparing the same time period in each year. 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 are very pleased with our second quarter results, which were driven by robust demand for our brands around the world. By the last month of the quarter, RevPAR in all regions outside of Asia Pacific had more than fully recovered to pre-pandemic levels, leading to June global RevPAR 1% above 2019. Worldwide occupancy for the month rose to 71%, just five percentage points below pre-pandemic levels, with global ADR an impressive 8% over the same month in 2019. Demand across all customer segments improved during the quarter. Record leisure demand strengthened further, with second quarter global leisure transient room nights 14% above the 2019 second quarter. Group demand experienced the greatest acceleration. In the US and Canada, group REVPAR had nearly fully recovered in June, down just 1% to 2019, compared to down 17% in March. Group revenue pace for the back half of the year has also continued to improve. June in the year for the year new bookings were up 50% compared to those bookings in June of 2019. At the end of the second quarter, Group REV PAR for the remainder of 2022 was pacing just a few percentage points down to 2019. We expect additional short-term bookings will further bolster group revenues, which could lead to second-half group REV PAR in the U.S. and Canada being even to even up slightly compared to 2019. Our sales team remains focused on driving group average rate, which has been steadily rising for new bookings. At our hotels in the U.S. and Canada, ADR for in-year, 40-year group bookings made in January was just above 2019 levels. But by June, the rate had risen to up 16%. Business transient demand also strengthened, albeit at a more moderate pace, as workers returned to the office in greater numbers. In the U.S., June business transient room nights were 9% below the same month in 2019, versus down about 20% in the first quarter. Day of the week trends in the US and Canada suggest that travelers are continuing to combine leisure and business trips. While occupancy midweek has continued to recover, in June, Monday through Wednesday occupancy was still around 10 percentage points below 2019. Occupancy on Fridays and Saturdays was fully recovered, And occupancy on Thursdays and Sundays, typically known as shoulder nights, was close to 2019 levels. With nearly all major countries around the world having opened their borders, rising cross-border travel was another key driver of a solid recovery during the quarter. However, cross-border travel was still not fully back to pre-pandemic levels, so there is still additional upside, especially from greater China, where stringent travel restrictions remain in place. While we are closely monitoring consumer and macroeconomic trends, we have yet to see signs of a slowdown in global lodging demand. On the contrary, the pent-up demand for all types of travel, the shift of spending towards experiences versus goods, sustained high levels of employment, and the lifting of travel restrictions and opening borders in most markets around the world are fueling travel. And as Leni will discuss, we expect to see continued red part recovery through the end of the year. As travelers get back on the road in increasing numbers, our 169 million Envoy members are more actively engaging with our powerful loyalty platform. Monthly active users of our app, digital visits, and direct digital bookings, which help drive the owner and franchisee profitability, all reach new highs in June. Additionally, more members are earning and using points outside of a hotel stay as a result of our focus on enhancing the platform through numerous collaborations. The number of Bonvoy Cogram credit card holders is climbing globally, with card acquisitions and total card spend both hitting record levels in the second quarter. Remarkably, the number of global card accounts rose 16% from the end of 2019 In July, we introduced a new credit card in China, and the initial response has been tremendous. Turning to the development front, the pace of deal activity continues to pick up. In the second quarter, we signed another 135 deals, a second quarter record following a record first quarter. Additionally, despite supply chain issues, labor shortages, cost inflation, and rising interest rates, the number of deals falling out of the pipeline remains below historical levels. Interest in conversions remains particularly strong given the breadth of our roster of conversion-friendly brands across chain scales as owners continue to seek out the meaningful top and bottom line benefits associated with being part of the Marriott portfolio. Conversions represented 30% of room signings in the quarter. One win to highlight is a recent landmark agreement for eight hotels in Vietnam with Vinpearl, a new owner to our system. The deal includes six conversion hotels that are expected to add 1,700 rooms to the system. Conversions also represented 25% of the roughly 17,000 rooms added to our system in the quarter. While construction timelines have lengthened a bit this year in most markets, Due to supply chain disruptions and labor shortages, we still expect the number of room additions to ramp in the second half of the year. For the full year, gross additions are still anticipated to approach 5%. Given our announcement several weeks ago that we are suspending all operations in Russia, we now expect a 1.5 to 2% deletion rate for 2022. While our expectation for deletions outside of Russia remains at 1% to 1.5%, the deletion of 6,500 rooms in the country represents almost half a percentage point. Now, as a reminder, fees from Russia represented well under half a percent of global fees in 2019. We have not been recognizing fees from Russia for many months now, and the financial impact of these rooms leaving has diminished. So our net rooms growth for 2022 could now be 3% to 3.5% or 3.5% to 4% before factoring in the deletions in Russia. We remain confident that over the next several years, we will return to our pre-pandemic mid-single-digit net rooms growth rate. The timing will largely depend on when new construction starts, which have trailed well below 2019 levels for the last two years, really begin to accelerate. particularly here in the U.S. Construction timelines in the U.S. are currently just over two years for a limited-service hotel and longer for full-service properties. Looking ahead, with the largest footprint in the industry, strong owner affinity for our brands, and the improving global travel environment, I am bullish about the company's future growth prospects for development and for the company overall. I want to take a moment and thank all of our associates around the Their commitment to taking care of our guests has helped produce our outstanding results, and I'm so very proud of their dedication and resilience. And now I'll turn the call over to Lene to discuss our financial results in more detail.