Marriott International, Inc. (MAR) Earnings

Management highlights

### Portfolio and Development Performance - Net rooms grew 4.5% over the 12 months ending June 30 2026, expanding the global portfolio to over 1.8 million rooms across more than 10,000 properties, maintaining industry-leading scale. - Record global signings in H1 2026; global development pipeline grew nearly 7% YoY to a new record of ~629,000 rooms at end-June, with over 279,000 rooms under construction (industry-leading). - Conversions remain a major growth driver, representing 34% of H1 2026 signings and 40% of H1 2026 openings; a new strategic agreement was announced in June to introduce the Series by Marriott brand to Greater China, with plans for ~100 new hotels and first openings expected in late 2026. - 3-year (end-2023 to mid-2026) net room compound annual growth rate is 5.2%, in line with prior mid-single-digit long-term growth guidance. ### Owner Value and Support Initiatives - Management frames Marriott's success as inextricably linked to hotel owner/franchisee success, with ongoing proactive efforts to improve hotel-level economics and owner returns. - Completed productivity enhancements from the prior enterprise-wide efficiency exercise, and implemented multiple targeted owner-focused changes: lowered global Bonvoy loyalty charge-out rates by ~5% (to the lowest levels in the industry across all chain scales); enhanced owner reimbursement for Bonvoy redemption stays on high-demand nights; introduced streamlined brand standards to simplify operations and cut costs; rolled out flexible renovation scopes focused on customer-facing hotel elements; plans to launch a new Intent to Recommend (ITR) incentive program in the U.S. and Canada that offers fee discounts for top-performing hotels with strong guest satisfaction scores, with costs covered by Marriott not hotel owners. ### Strategic Partnerships and Loyalty Program - New long-term agreements were executed for the U.S. co-branded credit card program with longstanding partners JPMorgan Chase and American Express. - The new agreements reflect the strength of the Marriott Bonvoy brand, which has over 295 million global loyalty program members; incremental value is expected for hotel owners, cardholders, loyalty members, and Marriott, with benefits building over time as new/refreshed card products launch. ### Technology Transformation - Continued progress on a multi-year technology transformation, with increasing AI adoption across the enterprise. - In June 2026, Marriott began a phased rollout of Ask Bonvoy, an AI-powered conversational search tool for Marriott.com and the Marriott Bonvoy app, designed to improve customer experience, member engagement, and operational efficiency. - Marriott is also collaborating closely with Google and other leading AI platform providers as their travel search and commerce tools evolve.

Guidance

- **Global RevPAR Growth**: Full year 2026 global RevPAR growth guidance was raised to 3% to 3.5% from prior levels, reflecting stronger than expected Q2 performance and a stronger than expected second half outlook; Q3 2026 global RevPAR is expected to increase 3.5% to 4% YoY. Full year 2026 RevPAR growth for Greater China is expected to be 2% to 3%. - **Net Room Growth**: 2026 full year net room growth is now expected to land toward the lower end of the prior 4.5% to 5% range, primarily due to construction delays in the Middle East; long-term net room growth is still expected to be in the mid-single-digit range. - **Fee Revenue**: Full year 2026 gross fee growth guidance was raised, with total gross fee revenues expected to rise 11% YoY to $6.03 to $6.06 billion. Incentive management fees are expected to rise 3% to 5% YoY. Global co-branded credit card fees are expected to rise in the high 30% range YoY, with incremental benefits from the new U.S. agreements partially offset by yen-related headwinds to Japanese card fees. Full year residential branding fees are expected to increase 55% to 65% YoY; timeshare fees are expected to remain flat YoY at $110 to $115 million. - **Expenses and Profitability**: Full year 2026 G&A expense is expected to increase just 1% to 3% YoY, in line with prior guidance. Full year 2026 adjusted EBITDA is expected to increase 11% to 12% YoY to $5.97 billion to $6.03 billion. Adjusted diluted EPS is expected to grow 16% to 18% YoY, driven by strong EBITDA growth and reduced share count. The 2026 adjusted effective tax rate is expected to remain 26% to 26.5%. - **Capital Allocation and Investment**: 2026 investment spending is expected to be $1.25 billion to $1.35 billion, an increase from prior guidance, with 40% to 45% allocated to contract acquisition costs, ~25% allocated to the ongoing digital technology transformation, and the remainder allocated to owned/leased hotel renovations and other activities. Marriott now expects to return over $4.5 billion to shareholders in 2026 via share repurchases and dividends. - **2027 Preliminary Outlook**: Management expects continued strong broad-based global RevPAR growth in 2026, with potential strong YoY growth in EMEA as the Middle East market recovers, offsetting the negative comparison from the 2026 World Cup. Group bookings for 2027 U.S. are tracking toward slightly lower volumes with higher rates, with 40% to 55% of 2027 group business already booked as of mid-2026.

Segment performance

By geographic region: Global RevPAR rose 3.4% YoY. U.S. and Canada RevPAR rose 5% (the highest quarterly increase in 13 quarters), with luxury RevPAR up over 9% and select service RevPAR up over 4%; excluding World Cup impacts, regional RevPAR rose 4%. International RevPAR declined slightly YoY: EMEA RevPAR declined just over 5%, with Europe RevPAR up over 4% offset by a 43% RevPAR decline in the Middle East; Asia Pacific (APAC) RevPAR rose over 5%, with Greater China RevPAR up over 3% driven by inbound leisure demand; Caribbean Latin America (CALA) RevPAR rose 3% driven by strong luxury and leisure demand in the Caribbean. By customer segment: Global leisure RevPAR rose 5% (7% in U.S. and Canada); global group RevPAR rose 3% (4% in U.S. and Canada); global business transient RevPAR rose 2% (3% in U.S. and Canada, with 5% growth for government business transient and 3% growth for non-government business transient). Overall financials: Q2 2026 total gross fee revenues increased 13% YoY to $1.58 billion. Incentive management fees (IMF) rose 6% YoY to $212 million, with a large U.S. and Canada increase offsetting a meaningful EMEA decline from Middle East impacts. Adjusted EBITDA increased 13% YoY to $1.59 billion, and adjusted diluted EPS rose 20% YoY to $3.19.

Risks & headwinds

- The ongoing conflict in the Middle East continues to weigh on regional and EMEA-wide results: Q2 2026 Middle East RevPAR declined 43% YoY, and construction delays have pushed 2026 net room growth lower. Q4 2026 will face particularly difficult year-over-year comparisons, as ~35% of annual Middle East revenue is generated in Q4, and Q4 2025 saw strong ADR growth from large one-off events, meaning the region will have a larger negative impact on full year and Q4 2026 EMEA results than previously expected. - The full-year 2026 negative impact of the Middle East conflict on global RevPAR is now expected to be ~100 basis points, an improvement from the prior 100 to 125 basis points expectation, but remains a material headwind. - General construction delays and uneven global consumer spending create uncertainty for development pipeline progress and RevPAR performance, particularly in emerging markets. - Foreign exchange headwinds from the declining yen have created downward pressure on 2026 Japanese co-branded credit card fees, partially offsetting incremental gains from the new U.S. credit card agreements. - U.S. fourth quarter 2026 RevPAR is expected to see a small negative impact from November midterm elections. - Competitive pressure for development deals has increased the use of key money as a competitive tool, increasing near-term investment spending for contract acquisitions.

Analyst Q&A

• Q: What is the strategic goal of the new ITR incentive program for owners, and when will its financial impact be realized? /

  A: Management states the ITR program is a continuation of Marriott’s long-standing approach of aligning its success with hotel owner success. It is designed to improve owner economics while benefiting all stakeholders by rewarding strong guest satisfaction. The program launches this week to U.S. and Canada owners, offers up to 50 basis points of gross room revenue in fee discounts for meeting ITR thresholds, and its impact will be first reflected in the back half of 2026 results. The program’s costs are covered by Marriott, not owners, and are already factored into the 2026 guidance.

• Q: When will the full financial benefits of the new U.S. co-branded credit card agreements be realized, and how large will those benefits be? /

  A: The incremental $30 million of fee growth reflected in 2026 guidance only covers the remaining two quarters of 2026. Full benefits will build over time as new and refreshed card products are introduced, a process that typically takes several quarters. Management expects that by full year 2028, the new agreements will add $100 to $125 million in annual co-brand card fees for Marriott at the current 26% royalty rate. The majority of total benefits from the new deals flow to the Marriott Bonvoy loyalty program, which benefits owners, guests, and members broadly.

• Q: Why is 2026 net room growth expected to land at the lower end of the prior guidance range, and what is current owner/developer sentiment for new deals? /

  A: The downward revision to 2026 net room growth is almost entirely driven by construction delays in the Middle East tied to the ongoing regional conflict. Multi-year net room growth remains on track for a 5.2% compound annual growth rate, in line with prior mid-single-digit guidance. Despite broader economic headwinds, developer sentiment remains strong, with H1 2026 recording the highest number of new signings in any first half in Marriott’s history, reflecting broad owner confidence in Marriott’s brand portfolio long-term.

• Q: Will conversion growth decline if new build development activity picks up, as has been the historical trend? /

  A: Management expects the historical inverse relationship between new build and conversion growth will not hold going forward. Marriott has dedicated dedicated resources to conversion deals globally, for both individual assets and large portfolio transactions, and has streamlined processes to speed up hotel conversions. Marriott also now has an unmatched portfolio of brands across all price tiers that are well-suited for conversion opportunities. Management expects strong conversion volumes will continue for the foreseeable future even if new build activity accelerates.