Great. Good morning, everybody. Very happy to have with us in person the team from Marriott International. Up here on the stage with me is Leeny Oberg, Chief Financial Officer, and then we have in the front rows here, we have Jackie Burka and [audio distortion] Dove, who you guys know very well. Welcome, everybody. It's great to have you. Thanks. Great to be here in person. Feels like a little bit back to normal. Yeah. It's fantastic. Thank you for having us in person. Great. Maybe you could just talk big picture and having lived with how the world has changed and what's gone on in the last 18 months, how do you think travel consumption is maybe permanently changed, maybe not permanently changed? That's on sort of the end consumer demand side, maybe how do you think coming, and having come out of this and coming out of this further, how do you think hotel development changes versus the past? I think, the first thing I'd say on the demand side is I think travel is permanently appreciated. I think, when you really look at the rebound in markets where COVID is contained, the demand has come back really fast, and I think rate is one of the best examples of that. While we did have a kind of an event-driven decline in demand after 9/11, rate behaved better then than it did after the Great Recession. When you look at what's happened with rate this time, it really has been, I think, an extraordinary display of, frankly, how much people really do like to travel and how much they like hotel products and services. I think, in that regard, I feel great about the future of travel. We all saw the demographics of travel being really strong globally before the pandemic, and I think that what we're seeing now only reinforces that. I think on the development side, it really gets down to the basic factors of where you are in the world, how they're doing with the progress of COVID, and then number two, how much debt financing is involved. In markets where you've seen RevPAR come back quickly, like mainland China, and where there is relatively less dependence on banks for financing of hotels, you actually see the development of new hotels coming back very quickly. Others, I think, the banks have tended to be a bit more on the sidelines, but we are seeing improvement. There's no doubt that when you compare it to fourth quarter of 2020 versus now, that there's much more interest and enthusiasm. Our development agendas for new builds are a lot fuller than they were last year. Obviously, the conversion market continues to be really strong for us. Got it. What about North American urban development? How has that changed? I guess we've had this shift for the industry, and obviously that's been a big part of sort of select service brands in urban markets. Is that sort of taking the baton from higher price point brands in urban markets in terms of new development? Joe, I know you know this all too well. Prior to the pandemic, we'd seen these trends where full service hotels in urban markets, the supply growth there was much lower, while what you were seeing was the kind of the upscale and the top end of midscale growing much faster, literally three times the kind of growth rates and supply that you were seeing of the full service in the urban market. I think those trends have continued. Obviously, the limited service hotels in general as a segment of hotels have performed better than the premium brands. I think, again, you get back to lender comfort. I think where you're seeing transactions occur and where you're seeing refinancings and where you're seeing new build very much favors the markets that are showing the best performance and the most comfort that have gotten through COVID, and they're seeing great return. The other thing I think it's worth noting, though, that where we had deals that were getting underway in urban markets, they're still underway. They're still happening. We've got a The Ritz-Carlton on 29th and Broadway in New York City. It's one of the most beautiful hotels that we've ever had in our system, and that's going to open over the next few months and going to be an absolutely spectacular hotel that we're very excited about. It's not like projects are dropping out. I think the other thing is conversions. That activity continues to be really strong. Great. Can you talk about what you're seeing in North America? In terms of, please talk about sort of near term group trends, but more so for 2022 and 2023. Yeah Obviously, you know, through the end of the year, I would imagine group attrition will be high. Some things get pushed out because of a delay, maybe people returning to the office. How do things look for 2022 and 2023 in terms of the visibility or the extent of the visibility that you have for group activity in 2022 and 2023? Do you want me to focus overwhelmingly on group or on all segments in this particular? Broad as you would like. Broad as you would like. Well, let's first start with leisure. That is that we continue to see really strong demand in leisure. Now, that's no surprise. Everybody saw kind of what was going on in June, July, and August. I think it's also worth noting that as we look out and look at the festive periods in Caribbean, Latin America, or you're looking at kind of Christmas bookings down in Florida, et cetera. It's a good time for finding a deal. I was going to say, there's a very short-term booking window for a lot of hotels, but not for those. You need to go ahead and get on it if you're wanting to do a holiday period. I think the leisure trends continue to be strong. As we've talked about there, the rate that we're getting for that business is just a fantastic confirmation of people's view of the value of what we provide. Just terrific performance there. When we look at business transient, as you know, that is the one that is the most short term and has been slower to come back. The one thing I will say, though, is that business transient is progressing. The number of nights that we had in special corporate in the month of August was 7% higher than the number of special corporate nights in the month of July. While of course, we would like to see it move much closer to the relative to where it was in 2019, it has moved from being more than 60% down back in March to being in the 40s% down as we moved into the summer. I think it is making progress. I think one of the other interesting statistics is that it's not that business and leisure are quite like a hot and water spigot from the standpoint. It's not like in September there's only business, and in August there's only leisure. The reality is that in Q3 and Q4, in 2019, the balance between business and leisure were essentially the same, 57 and 43. Of course, you've got relatively more business transient in September and October, but you've got a lot of leisure in November and December. I just think it's important to recognize it's not all quite so broken up. Group, I think, Joe, we continue to think that it could be one of the first times that it actually does respond faster than business transient. We see the bookings that we had, for example, in the summer for group were higher than they were in 2019 for those months. I think the reality for people who are booking group business is that they want to just know that they can have the meeting, and that once they feel more comfortable, they're booking. You're right. Near-term cancellations, we have seen more for things that are coming up in September and October. We have seen some of that, but we have also seen that there is still weddings being booked, and they're actually happening, and that near-term group bookings are in great demand. When I look out at 2022, as we talked about in the second quarter, rates actually up for group while nights booked are still down, but we've had some of the strongest in the year for the year group bookings that we've ever had. I think group, once people feel comfortable, I think it's going to fill in pretty fast. I think with each passing month, there's more pent-up demand for group, which is terrific, and I think that also the reality is that people's trip purposes, there's no doubt that they've blended. We've been in meetings. We were here this morning talking about one where somebody's doing five days of which business is two. I think that's going to be an absolute reality for us going forward. Do you think there's less price elasticity for the business transient segment in that the decision really is to travel or not travel, not travel based on price? When you do travel, you want to travel and stay where you want to stay. Yeah, I do think there's quite frankly, special corporate is negotiated rate. If you actually go back to the Great Recession, when everybody talked about the great decline and the great drop-off, actually special corporate rate only declined 6%. Not quite so awful. Now, of course, you've seen that in most cases, special corporate rate has held that our largest clients are basically holding on to the existing rate. It gets very much into the specific demand in markets as to what's happening. Yeah, I do think on business travel, it tends to be quite a bit around just the fact of how comfortable people feel traveling. The only other thing I will mention, though, I think probably for all of you, there's a great full room in front of me today, and I think about where many of you probably were in March and probably not traveling. Again, there's no doubt that special corporate is moving in the right direction. It's just still coming along slower than leisure. Great. Can you talk about your loyalty program, which obviously is the biggest, the best? Can you talk about how that has evolved? I like that. Did you hear that? Everybody- Can you talk about the engagement? Yeah through this period with your Bonvoy? I think this has probably been one of our greatest strengths through this pandemic is having the halo brand Bonvoy as a way through our digital platform to be able to communicate with our customers to really take advantage of the shift of business. For example, a lot of Bonvoy Escapes where we would be able to know where you live and point out places that had availability and good rates that were within a four-hour drive of your home. Kind of really pitching offers that would make sense and make you feel good as somebody thinking about you and your travel decisions. The other thing I think has been extraordinary is really to see the dimensions of Bonvoy. By that I mean when you look at the co-branded credit cards and where we've added in a couple other countries, we've added co-branded cards and the Uber travel relationship, et cetera, where you can get points by taking Uber. The co-branded credit card spend is now above 2019 levels. Those are all folks who are building their points base to then use to go stay at our hotels, which is fabulous for our hotels and our hotel owners. Even if over the past year and a half, you haven't stayed at many of our hotels, you're racking up Bonvoy points when you go buy gas and your groceries, et cetera. To see that spend and the card acquisitions performing well, I think is a great testament to the ecosystem that Bonvoy has. Oh, by the way, it brings tremendous amount of cash to the company as well as fees, branding fees. I do think that holistic view of Bonvoy has played out really well during the pandemic. One of the questions we prepared is talking about the consumer spend on the co-branded credit cards. Is there a way for you guys to assess that strength and how much of it is new, how much of it is same card spend, how much of it is driven by people being at home and maybe shopping online? Right Or just consolidating to generate points to later burn them, to use them? Right. Every dollar of spend generates the points, which is terrific. I would say two things. First of all, typically when you do acquisitions, when you get new cardholders, they ramp up their spend. Right? It's like a new hotel. They're not providing that much in fees to us in the first, call it year or so. They're critically important because we want them here for life, and we're establishing a great relationship, and it is a really important element of the future growth. However, the fundamental strength is the existing cardholders and their spend levels is the biggest driver of what has driven these fees to us and the overall level of spend. The new cardholders, again, they take a little while to get going. The performance of the overall cardholder base, both in terms of acquisitions and spend, I think for it to be above 2019 levels, just really demonstrates, frankly, number one, that the consumer is healthy, and number two, they really like Bonvoy. Great. Maybe we can switch over to development. I know we touched on this to some extent earlier. Maybe if you can maybe go by geography in terms of where there's the most opportunity. Obviously, China's front and center. Thank God you're not in the casino operator because that would be a whole different conversation after today's news in that market. Macau hotel operator, however. Right. That's fine. Getting a cut of the top line hotel is good. Being a licensed gaming operator right now is not the best thing. Yeah, I think our share it in there is 5,000 rooms. Maybe you can just talk about developer sentiment, your opportunities, and then we can talk about gross deletions net and how you think about. Sure the next couple of years. If you want to go quantitatively or more qualitatively, that's fine. Yeah. No. Again, we're really excited about what we see out there from a net rooms growth opportunity perspective. Clearly, this year, we've talked about 6% gross rooms growth, and that clearly reflects what we've seen over the last several years, which is when you've got a 17% share of the U.S. market and a 3% share of the international market, there's no doubt that our international base of rooms is growing meaningfully faster than our U.S. base because we've got a very large chunk here in the U.S. to grow on. I think that trend will continue. You will continue to see particularly high levels of growth in Asia Pacific. CALA is seeing really strong growth rates. Europe also seeing really strong growth rates, and I think that will continue. In terms of developer appetite, it goes back to some of the things we were talking about a few moments ago, which is it really depends very much on the market. Mainland China, you've seen their RevPAR get back to 2019 levels and seen all business segments actually get back to 2019 levels. Sure enough, no surprise, without a lot of dependence on financial institutions, the developers are going to it. You look at a market that is like Europe, which clearly is more dependent on international travel for its business. You've definitely got lenders who are dealing with a lot of existing hotels that they need to work through their situations. From that standpoint, the lending environment and the new build environment has not been as strong. It is showing nice signs now, but it's still starting from further back and is still behind, but it is better than it was a year ago. When I think about the rooms growth this year, we've talked about expecting to be towards the top end of the 3%-3.5% range for net rooms growth. That's really got a one-time headwind of the 1% rooms related to the SVC portfolio. Not to bore you with the details, but that's really tied back to a long ago historic perspective that we owned those hotels, and when we sold them, we sold them with a structure that looks more like a lease, where we're guaranteeing operating profit. We really don't have other portfolios like that, so I think that's really a one-time gig. Other than that, our terminations have been quite typical levels for us. This year, that number would put us more in around the 1.5% deletions expectation to get to the 3.5% net rooms growth. There, I feel pretty good about the 1%-1.5% terminations growth rate as we're moving forward. I think the harder part about putting a peg on 2022 and 2023 is around some of these issues related to supply chain issues, kind of construction starts where some owners have said, "Yeah, I'm coming along, but I'm going to take my time." Just making sure they get all the way through labor shortages, et cetera. However, the deals are not falling out, so they're going to happen. I feel really good about getting back to mid-single digits net rooms growth for the company. Just whether that is 2022, 2023, 2024, I think is too soon to peg for us. Great. We always have this conversation with investors is that Marriott's growing net rooms growth at a slower pace than Hilton, right? Which Hilton loves to talk about, and we'll be talking about that shortly. For you guys, your composition of the pipeline is more full service than their largely more proportionately higher limited service, implying that you guys have a fee per room growth rate that's probably higher than them. You kind of almost end up sort of around the same spot in terms of fee growth. When you look at your pipeline as a percentage of full service or select service in higher ADR urban markets and things like that, is the fee per room in the development pipeline above or is it consistent with the portfolio? Does the development pipeline have this positive mix shift for you guys going forward? I'm not going to try to speak for Hilton. I don't think Kevin would like that very much. I do think that your analysis makes sense. When I think about ours, we do from an international lens. We have a lot of phenomenal full-service resorts and luxury hotels coming online. They tend to have very high ADRs, which does lend towards obviously when you get paid as a percentage of your top line of a hotel, does really help you on the fee line. We do in the U.S., it's worth noting that in the U.S. that roughly 80% of our pipeline is limited service, which is a bit higher than our existing portfolio. I would think when you look at fees per key, if we put aside COVID, you'll allow me to put aside COVID relative to stabilized RevPAR, you would see that over time, our fees per room are flat to slightly down because of this heavy proportion of limited service rooms in the U.S. I would say that potentially could be different for our competitors. Again, I think that overwhelmingly, it has been the case for some time that our average fees per room are meaningfully higher than our competition. I think that lends itself to exactly what you're describing in terms of just a fantastic portfolio of luxury and full-service resorts and full-service hotels that have higher RevPAR and deliver more fees. The only other thing I'll say is that it's worth remembering that outside the U.S., we are disproportionately a manager of hotels versus franchised. There, in many cases, the IMF has no owner's priority return. The IMF actually behaves much more like a base fee. When you look in Asia Pacific, it really does show up that way, and you can see that now with the recovery in RevPAR, is that while it's a smaller percentage of your cash flow profits than it is in the U.S., it's on day one. Happens right away. That part is also a real strength as you get into higher and higher RevPAR markets. Has conversion activity peaked? I don't think it's peaked yet. Time will tell, but I think we've still got. If you look at where conversion activity peaked after the Great Recession, it was actually several years after the downturn. It was in 2013 as compared to obviously the recession in 2009 and 2010. I think here we've got some really terrific opportunities both globally as well as with the soft brands that we've got. After the Great Recession, we didn't have the full layout of soft brands that we've got now with Autograph, Tribute, and Luxury Collection, which really covers a really nice span of hotel types. Also, frankly, you look at Delta as well. I think there are great conversations going on about conversions and I think some tremendous opportunities. Are you thinking about changing the Delta brand? Just joking. Virtually every company- It's going to be called Mu. The next variant. Virtually every company at conference the last day and a half has talked about in one way or another labor as an issue, both in terms of the availability of finding labor as well as the cost of labor. He's got the vote from the perspective of maybe you guys in corporate, but also at sort of the property level and maybe where the challenges are or maybe where the challenges are relatively manageable? Yeah. I would say let's talk about on property level first, and that is that definitely the combination of COVID and what COVID has meant for people's personal lives has had a real impact on labor for us, particularly where we've got hotels that have super high occupancy levels. In the Southeast, as an example, and some parts of the Southwest, we've had tremendous labor shortages. I will say that we are seeing an uptick in a job applicant pool. It does tend to be relatively more at the hourly level, and we're hopeful that with children going back to school full-time in person as well as with unemployment special benefits stopping, that we will continue to see improvement on this front. In many cases, as you know, Joe, we've been able to manage it on the cost side through one-time bonuses and managing it on the labor scheduling side, to be able to manage it on the cost increase. There are certain really hot markets where we have needed to increase wages, but it's not universal by any stretch of the imagination. At the corporate level, it's a little bit of a different situation. There, it is not tied as much to occupancy of the hotels and trying to make sure we're taking care of our guests the way they want to be taken care of. It is more about really having the best cost structure that we can to grow the company well, but also to do our jobs in maintaining the company's financials and all of the other parts about being a public company. There, we did a rebuild Marriott exercise that resulted in lower corporate expenses in the high teens relative to 2019. I think you should expect to see that continue. I don't think that we'll be able to hold a corporate G&A to solely inflation, given that we're still doing some recovery of classic compensation structure as well as just the growth of the business. It will not be back to the 2019 levels for as long as the eye can see. I think the operating leverage that we're going to get there is real. Then on the property levels, the margins that we've seen at the property level are truly historic. Nothing like anybody's ever seen before. Incredibly helpful for the owners. I think some of it is sustainable. There is some of it that is not sustainable, because we want to take care of our guests. I think there's been labor productivity and technological enhancements on the labor side, as well as with managing on the contactless experience for our guests that will be permanent. Great. We now have about seven minutes left in this session. I want to open it up to questions from you all in the audience, as well as those dialing in remotely. We have a couple here. Just because you finished on the labor shortages, I guess if we were to bucket the three largest reasons why there's probably 1,000 reasons why, you mentioned lifestyle choices, changes that occurred in people's thought process during COVID. The second bucket is probably people's ability to go back to work with kids in school. Right. The third probably is unemployment benefits. Right. Can you dig a little deeper into sort of lifestyle choices, A, are they temporary, are they permanent, and then are you seeing any increase in hiring activity or application activity with the benefits rolling off? We have seen a slight uptick in states where there has been a roll-off of those benefits. I wouldn't say that there are huge assumptions to be made there. I think it's, again, a slight uptick is the way to think about it. Again, some of that is all a function of how we emerge out of COVID, right? Because I think there's the reality that the benefits go away, but there's then also the reality that people start to feel safe again. Those can be two different things and two different times. It is great to start to see the application pool pick up a bit. I do think some of it has to do with the unemployment benefits and family situations getting more stable. I do think people's eyes were opened to different career alternatives. I think that's one of the things that the lodging industry is really spending a lot of time focusing on. We have amazing career progression opportunities for folks who start in hourly levels. I would argue really some of the best out there for folks who start in hourly levels. We have thousands of GMs at hotels who started in hourly levels. We have top leaders at the company who started in hourly wage rates. Those are tremendous opportunities for people looking for work. I think especially with COVID, hopefully, more and more in the rear view mirror, people feel safe and they start to appreciate, "Wow, I could look at this. I can do this and work my way up the ladder." Frankly, work in most any city in the world and have a great career that offers tremendous compensation benefits in addition to job satisfaction. I think there's a lot there that is both structural, getting out of COVID, and I think the government benefits is a piece of it. Great. Was there a second question? Yeah. Another capital project [audio distorion] Right. Oh, yes. I think if you talk to a number of hotel owners, they absolutely did exactly what you described, where they kind of sped up some things. If you're in an urban market in Boston or New York, you might as well go ahead and get this stuff done. I think there was quite a bit of that, especially when things were planned and already funded. I think where it's a little bit tougher is where things weren't yet funded. There, I think it can be a little bit longer window. No, I think there's been great opportunity. I know for the hotels that we own, while in 2020, we kind of made sure that our cash situation was okay, but we're now really looking forward with the W - Union Square in New York City, with our Elegant Hotels in Barbados. We can't wait to make these things shining examples of what we think they should be for their brands, and put the capital in. Great. Any additional questions from the live audience? Can I make one more point that I just? Absolutely didn't cover before that I think you guys would all appreciate. That is, we've all talked a lot about kind of the progression of RevPAR as we move through the summer, and you guys have heard that we've talked about kind of being 38% down globally in June and going to 27% in August. I think one of the most interesting things is to think about rate. Rate, when you go back to June, was 11% down, 11%-12% down globally compared to 2019. By the time you got to August, it was 2%-3% down. This is similar both globally as well as in the U.S. While there has been some murkiness around the impact of the Delta variant, I just think it's, again, it's a shining example of kind of the power of demand for lodging to see that rate just continues to strengthen relative to 2019 is a great sign of the recovery of the industry. Great. We have a question here that was submitted virtually, electronically. Can you talk about the M&A environment and are acquisitions on your radar screen? Maybe you can sort of answer the question in the context of your targeted leverage levels. Yeah how you actually assess that. Is that sort of a run rate, or do you need to be on a clear path to achieve it? Then maybe also touch on sort of a return of capital as well. Capital. Sure. In a minute and 12 seconds. in a minute and 12 seconds. Let's see how I can do this. All right. Let's first real quickly talk about leverage, since that's kind of the overarching environment that we got to work with that playing field to then go to the next ones. The reality is that, yes, we do want to get back to our 3x to 3.5 x. We really like that space for us because it gives us flexibility when an interesting M&A opportunity does come up. We think it provides us with lots of choices. The good news is we're moving there and getting there faster than we frankly could've anticipated a year ago, both in terms of EBITDA as well as cash flow and debt paydown. I think all of that is really going really well and perhaps a bit better than anticipated. As you start to imagine that pretty quickly, we're going to get back to where we want to be. Certainly, thinking about return of capital to shareholders is part of the thought process. We first always want to make sure that we're investing in the growth of our business to the extent we see great opportunities out there that are value add for our shareholders, for our system overall, and that will always be the first lens. We've loved doing bolt-on acquisitions in certain parts of the world, in certain segments that we think we can improve the performance of that brand as well as grow it in markets outside that. Really continue to be excited about possible opportunities that may show up and that we might find as we move forward, in addition to the normal organic growth. In terms of capital return to shareholders, we typically, as you know, have a model that delivers excess cash flow on top of what we need to invest in the business. I fully expect that we will be beginning to do that as soon as we feel like that the leverage targets are in sight. Second half of next year is what you're telling us? This all depends on the pace of the recovery, but assuming the pace continues as we all hope it does, the second half is not unreasonable. Great. Well, thank you so much, Leeny. Yeah. Great to see you guys. Jacqueline, Stephanie. Thanks for coming.