Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: The travel sector shoving a little bit more optimism. Tony Capawana,
Speaker 2: the president and CEO of Marriott, saying this on the
Speaker 2: latest earnings call. The demand for all types of travel
Speaker 2: remained strong even as the rebound impact from the pandemic
Speaker 2: has waned. A place to say that, Tony joins us
Speaker 2: now and he'll be with us through the at Tony,
Speaker 2: good morning to you. Good morning eighty eight hundred properties,
Speaker 2: one hundred and thirty nine countries. You've got a decent
Speaker 2: line of sight into the global consumer. The story we've
Speaker 2: heard a lot about is US strong, rest of the
Speaker 2: world not so good. Do you see it the other
Speaker 2: way round in your business?
Speaker 1: Yeah, I don't know that.
Speaker 3: I would say the US is weak. I think the
Speaker 3: US has reached a normalized environment a little more quickly.
Speaker 3: If you look at the experience we had in our
Speaker 3: business last year, we saw a global RevPAR revenue per
Speaker 3: available room, which is the metric that we use to
Speaker 3: evaluate the strength of the business increase about fifteen percent,
Speaker 3: single digit growth here home in the US, strong double
Speaker 3: digit growth internationally. Now, some of that is because those
Speaker 3: markets opened a little more slowly, so they benefited from
Speaker 3: easier year over year comparisons. But even as we look
Speaker 3: into twenty four, we guide it on our earnings called
Speaker 3: three to five percent global RevPAR growth this year again
Speaker 3: disproportionately stronger international.
Speaker 2: Let's sit in international just for a moment. So UK
Speaker 2: economies contracting, Germany Agobian recession, Japan in one, China struggling.
Speaker 2: You don't see it in quite the same way, and
Speaker 2: I find that really really interesting. And you seeing a
Speaker 2: bounce back, then what you actually see in which region
Speaker 2: a more constructive on.
Speaker 3: So Asia broadly is really strong from a travel perspective.
Speaker 4: Right now.
Speaker 3: We think about Asia in two buckets, if you will,
Speaker 3: what we call APEC Asia Pacific excluding China, and then
Speaker 3: Greater China. Greater China's fully recovered to pre pandemic levels,
Speaker 3: although interestingly largely on the show of domestic demand. If
Speaker 3: you look at cross border air airlift, it's only about
Speaker 3: sixty or seventy percent recovered to pre pandemic levels. So
Speaker 3: we actually think there's still a fair amount of upside
Speaker 3: to the China recovery story as more and more cross
Speaker 3: border travel recovers. I'll be in China in two weeks,
Speaker 3: and I'm anxious to see how it feels in terms
Speaker 3: of international travel. I was there maybe nine months ago
Speaker 3: and it felt very domestic. I was in markets like
Speaker 3: shang Sha and Shengdu and felt like I was one
Speaker 3: of the few international travelers. So it'll be quite interesting
Speaker 3: when you look at the Apech markets. They are booming.
Speaker 3: Thailand is very strong, Singapore is very strong. I was
Speaker 3: just in Vietnam, really strong, both from a development perspective
Speaker 3: and an inbound travel perspective.
Speaker 1: And the last.
Speaker 3: Comment I would make, You've seen China create some visa
Speaker 3: free travel zone across the APEC region and that's really
Speaker 3: impacting demand patterns.
Speaker 2: I have to go there.
Speaker 1: We talk about banning iPhones. Is there a problem with
Speaker 1: staying at a Marriotte hotel in China?
Speaker 3: No, you know, we have It's our second largest market.
Speaker 3: We just opened our five hundredth hotel in China. We've
Speaker 3: got another four hundred hotels in the pipeline behind that.
Speaker 3: The vast majority of our portfolio is China owned, the
Speaker 3: vast majority of our workforce is Chinese, so we see
Speaker 3: great strength in our.
Speaker 1: China business moving forward. I am curious about where you
Speaker 1: see the demand coming from I know you've fit expanding
Speaker 1: into mid scale. We said it sale mid scale types
Speaker 1: of accommodations. Is that because you see the growth in
Speaker 1: actually lower income and media income families and not as
Speaker 1: much in the luxury sector.
Speaker 3: That's a good question. My view is it's not binary.
Speaker 3: We have the largest luxury portfolio in the industry. We
Speaker 3: have more than five hundred luxury hotels globally, another two
Speaker 3: h RIDD and fifty in the pipeline behind that. We
Speaker 3: saw a revenue per available room in the luxury portfolio
Speaker 3: actually grow ten percent. I was listening to the prior
Speaker 3: segment and hearing about trade down. We're not seeing that
Speaker 3: from luxury. Luxury continues to be a really strong segment
Speaker 3: for us. Our entry into mid scale is really intended
Speaker 3: to open the aperture. Our objective simply is to try
Speaker 3: and capture as broad a segment of the traveling public
Speaker 3: as possible, and entry into mid scale just allows us
Speaker 3: to capture a broader segment of the traveling.
Speaker 2: Can I ask you what is mid scale? Can you
Speaker 2: describe that? What is the difference between sit mid scan
Speaker 2: and luxury and what you call the other end of
Speaker 2: the scale.
Speaker 3: So luxury is obviously from a physical product perspective and
Speaker 3: a service delivery perspective, everything you could hope for mid
Speaker 3: scale simply put cheap and cheerful, right, simple, high quality facility,
Speaker 3: but simply delivered minimal services g bed, great shower, great
Speaker 3: Wi Fi, but relatively limited services.
Speaker 4: When you're looking at that mid scale, your competitor IHD
Speaker 4: was on yesterday and talked about ten next ten year projections.
Speaker 4: US middle class will grow one hundred million, China's middle
Speaker 4: class two hundred million. When you look at building out
Speaker 4: the middle class around the world, where is it is
Speaker 4: that in China?
Speaker 3: It's everywhere. I mean, I think across Asia. You see
Speaker 3: really strong growth in mid scale. You see it here
Speaker 3: in the US, and that consumer we want to get
Speaker 3: them exposed to the breadth of our portfolio. Early. We've
Speaker 3: got nearly two hundred million members in our loyalty program Bonvoy.
Speaker 3: By entering the mid scale segment for the first time,
Speaker 3: it gives us the ability to show a segment of
Speaker 3: the traveling public the breadth to the portfolio, who perhaps
Speaker 3: isn't aware of the thirty brands that make up Marriott today.
Speaker 1: All I can say is that side of the table
Speaker 1: is the luxury side, and this is a fearful side.
Speaker 1: See I can thank you all.
Speaker 4: Yeah, exactly.
Speaker 2: Sort of a question. I love it sounds not here
Speaker 2: anymore of a mainstam.
Speaker 1: Well, I mean I'm wrong.
Speaker 3: I know I'm missed.
Speaker 2: Talking about me at all. I'm not gone. Let's move on.
Speaker 1: There is this question though, about what Karen Dawson was saying,
Speaker 1: which is, we are seeing delinquencies tick up, we are
Speaker 1: seeing retail sales come in weaker than expected, we are
Speaker 1: seeing signs of cracks on the margins. Are you not
Speaker 1: seeing it? I mean, yes, because you're offering a wonderful
Speaker 1: product and etcetera, etcetera. But is it partly because people
Speaker 1: continue to prioritize travel in a way that they just
Speaker 1: didn't before the pandemic.
Speaker 3: I think that's exactly right. One of the great benefits
Speaker 3: of our credit card partnerships with JP, Morgan Chase and
Speaker 3: an American Express is we have really deep insights into
Speaker 3: that consumer spending and even prior to the pandemic, what
Speaker 3: we saw, maybe with younger demographics, was a shift towards
Speaker 3: or away from spending on hard goods towards spending on experiences.
Speaker 3: It appears when we look at that data today, the
Speaker 3: pandemic acted as an accelerant to that trend across demographics,
Speaker 3: and as a result, now perhaps the consumer saw or
Speaker 3: learned during the pandemic. I didn't buy any purses, I
Speaker 3: didn't buy any watches, I didn't buy any shoes, and
Speaker 3: I didn't miss it that much. But I sure missed traveling,
Speaker 3: and so I've prioritized that disposable income I have, and
Speaker 3: I am seeking the vacation that I missed, the family reunion,
Speaker 3: the wedding, the trip with friends, whatever it might be.
Speaker 3: And so we really don't see that decline in travel
Speaker 3: spending in the data. We just reported fourth quarter and
Speaker 3: full year earnings highest Ebadah in the history of the company.
Speaker 3: As I mentioned, fifteen percent RevPAR growth, really extraordinary numbers,
Speaker 3: and what was encouraging to me, the strength we saw
Speaker 3: was across geographies and across demand sectors.
Speaker 2: I missed the service. Can we talk about that. I'm
Speaker 2: not talking about Marriott now, just for the record, I'm
Speaker 2: talking about hotels in general. You go in, the towels
Speaker 2: are there, they might be on the floor. I'm usually
Speaker 2: good about that. I'll put that on the side, I
Speaker 2: don't make too much work for people. But then there'll
Speaker 2: be this little card that it will say something like
Speaker 2: we're going green, so we're pulling back on washing things.
Speaker 2: And I say the same thing every single time I'm
Speaker 2: in a hotel room. Are we using going green as
Speaker 2: an excuse to provide less service than we used to
Speaker 2: at hotels? Yeah?
Speaker 3: I think that would be a fair view if you
Speaker 3: didn't have optionality. And so if your view is I
Speaker 3: want fresh towels every day, I want my bed remade.
Speaker 2: Ever, we can still go on for it.
Speaker 3: You can absolutely still get them. But what we can't
Speaker 3: hear from our customers more and more is they want
Speaker 3: the ability to contribute sustainability and have sustainability be a
Speaker 3: part of their travel.
Speaker 2: At the high end. Well, the makes we stay board interesting,
Speaker 2: all right. I rule myself out personally. I think that
Speaker 2: when I go and you spend that much money.
Speaker 4: You towels are the Saint regions.
Speaker 2: No, I'm not getting too that. If you go to
Speaker 2: a hotel, five star hotel, spend real money to go
Speaker 2: and stay there, you want fresh towels, fresh sheets, don't you.
Speaker 2: Isn't that whole part of the experience.
Speaker 3: I don't need to go into how often do you
Speaker 3: watch your tower home.
Speaker 2: Home every couple of days, of fresh towel every couple
Speaker 2: of days.
Speaker 1: Honestly, I can reuse my talent because I feel like
Speaker 1: I'm obligated to.
Speaker 2: It's the conversation I didn't expect, But ultimately I'm getting
Speaker 2: to the point about service. Don't you feel like service
Speaker 2: is pulled back since the pandemic?
Speaker 1: Without a doubt it has been, and it's been sort
Speaker 1: of an open non secret because frankly, there wasn't the staff,
Speaker 1: which raises this question of whether you can hire enough
Speaker 1: people and what kind of people you can retain over
Speaker 1: a longer period of time.
Speaker 2: It's a good question we can get into.
Speaker 3: Although one of the things that's been interesting when you've
Speaker 3: watched the employment reports over the last number of quarters,
Speaker 3: you see that hospitality has been a disproportionate contributor as
Speaker 3: our industry sector.
Speaker 2: Staff's very true, and I'll say this for the record,
Speaker 2: stand at my house is not one thousand dollars a
Speaker 2: night Tony caf one of International