Good morning, everybody. We're very excited to have with us Tony Capuano, Chief Executive Officer for Marriott. Also in the second row is Jackie Burka, who heads up Investor Relations for Marriott. Tony took over as CEO, I guess, 13 months ago. Is that right? Correct. From a gentleman, Arne Sorenson, who was not just a phenomenal CEO, but just an even better human being. The one thing we always appreciated about Marriott over the 23 years of covering it was not just an appreciation of a great business model, but an appreciation of having a very deep management bench. Tony is a prime example of stepping up and the company not missing a beat from a you know one of the more talented CEOs in America. Welcome, Tony. Thank you. Appreciate it. Is your support coming here? Good to be here. Thanks for doing this in person. Oh, my God. Yeah. It's important for our business, obviously. Nice to see everybody so happy to be out on the road. Maybe you can sort of talk about sort of from a more strategic perspective what your top priorities are as CEO, maybe how you think about a report card in the business and how you plan on taking you know Marriott from here. Sure. A couple things. I think number one, as I reflect on what you accurately described as quite a year from almost every perspective. I think I'm struck by the resilience of travel broadly. Certainly the resilience of our asset-light model. I've been really energized. I've mentioned to you before we started, I'm in the middle of a six-city trip right now. As I visit our hotels and I see the adaptability and the resourcefulness and the passion of our frontline associates, it's really encouraging, and it really helps us pursue those strategic priorities you described. I think those priorities always start with a focus on our three most critical constituents, our associates, our guests, and our owner community. Every decision we make, every prioritization discussion we engage in, it's trying to strike the right balance between the needs and expectations of those three really critical constituents. I would say secondly, net unit growth. Growth is a really important and powerful lever for our economic model, continuing to look for ways to be creative to drive accelerated growth. Third would be about loyalty in the Marriott Bonvoy program, which is really around finding ways not only to grow the program in aggregate, but to find ways to more deeply engage with those members, to drive their activation. As you might expect over the last two years, with even our most loyal customers, many of them not traveling at all, exploring things like, new credit card platforms and the Uber partnership and other ways to engage with them even when they aren't traveling. I think lastly, and it dovetails with that comment, looking for opportunities to innovate around our business. Whether it's continuing to innovate in technology to activate service opportunities for our associates, whether it's looking for business adjacencies that can develop into new revenue streams like our recent launch of travel insurance. Even as we work through the recovery, we've got to continue to innovate. Great. How do you think about your different customer segments? Obviously, leisure segment, in most geographies, you know, China has been, I mean, the definition of, you know, of resiliency, and almost price inelastic. Why do you think leisure has been so strong? Is it just a function of average consumers in better financial shape than when their houses were underwater, you know, in the last couple of years? You know, how do you think about price elasticity to seeing, you know, higher than pre-pandemic average sale rates? When I think about the three segments, maybe it's a little bit of a tortoise in here, right? There's no question. Leisure has been the bright shining star in recovery. We have seen extraordinarily rapid recovery not only of demand levels, but pricing power, as you point out in the leisure segment. Why? It's probably a few of the factors that you identified. You've got historically high levels of savings. You have folks that have been cooped up for two years. You have a lot of pent-up demand for leisure. Leisure, there are many options that are drive-to if folks were uncomfortable. Leisure continues to be remarkably strong. In fact, with the structure of presence we've gained here in the U.S., we saw RevPAR up 13%. We saw ADR up 12%. As we start to move into the spring break window, forward bookings and leisure destinations, we see ADR up about 11%. I think it's interesting when I have these conversations, people say, "That's terrific, but obviously it's gonna wind down here at some point." We're quite bullish and having a lot of run in front of us for leisure. One, the data shows us that it continues to be strong and growing. Two, the pricing power, which you talked about. I think three, when we look at leisure around the world, the vast majority of that leisure recovery has been on the shoulders of domestic demand. We're just now starting to see borders open in a wholesale way. The influx of cross-border travel in these leisure markets, we think gives us lots of upside. Pivoting to business travel and group, groups would be the tortoise. Slow and steady. Okay. Well, slow and steady carries the day. As you heard in the fourth quarter earnings call, and I think you actually asked a question about this. Both those segments in the fourth quarter were down about 30% relative to 2019. In each of those segments, that was about a 10 percentage point improvement. We are seeing slow and steady recovery. When I think about business travel, you are seeing even some of the companies that were most aggressive about going 100% remote, they in turn are now becoming some of the most aggressive about return to the office. We're hopeful that'll be a catalyst for continued improvement in business travel. Group, admittedly, a lot of it is leisure group. That's continued to be strong and growing. With a return to the office, we hope to see continued recovery on the corporate group side. What do you think of the two latter customer segments, individual business transient and say, corporate group and convention, which leads the balance of this year? Yeah, it's a great question. I mean, in the early days of the recovery, the conventional wisdom was, leisure leads the recovery, business transient comes back, and eventually group kinda limps across the threshold. I think they'll be neck and neck. I mean, group has been strong. Maybe strong to the upside, which has been encouraging. When you think about group for the balance of this year relative to pre-pandemic, how would you look at sort of revenues? How does that compare relative to maybe where we were a couple of quarters ago? Yeah. We'll see. I mean, we've been a little hesitant to. We think in aggregate, we expect that 19% shortfall to 2019 that we saw in the fourth quarter will continue to narrow as we get to the back half of this year. You raise an interesting question, which is, and you and I have talked about this a little bit. Pre-pandemic, it was really easy to walk into the lobby of any hotel in the world and say, "She's a business traveler, he's a group meeting attendee. They're that family is a leisure family." It's becoming harder, and that's good news for our business. This idea of blended trip purpose, we think is really gonna help fuel the recovery. Where we really saw it over the last couple quarters in the way the day of the week demand patterns have recovered. Friday, Saturday were the traditional leisure nights. Monday, Tuesday, Wednesday, traditional business travel nights, and Thursday and Sunday were the shoulder. Friday, Saturday are already well ahead of where we were in 2019. Monday, Tuesday, Wednesday, down about 30%. Thursday, Sunday are almost back to where we were pre-pandemic, which would tell you people are blending trip purpose. You know, your group may not admit it, but some of them probably came out a day or two early for a little leisure time in Vegas. See a lot of people in this room, I would imagine, yeah. I do think that blended trip purpose, while it may make it a little harder for the brand companies to identify with great precision what their market mix is. I think it's great news for demand recovery. How important is international tourism inbound to the U.S. for the RevPAR recovery and vice versa, U.S. outbound to Europe and other geographies? Yeah. I mean, as a pure percentage, it's a relatively modest percentage. Which, you kinda think about leisure in the U.S. where it is right now with de minimis contribution from international. Right. It's remarkable. It is. What I think, though, broadly, in our fourth quarter earnings call, we talked about the outperformance in the Middle East. That was really, I think, the best illustration of the power of opening borders and cross-border travel. Given the events that we're watching unfold in real time in Russia and the Ukraine, even there, we've not seen material cancellation volume yet into Western Europe. The forward bookings through the spring and summer look strong, and we expect to see more and more cross-border travel. Right. Can you talk about labor and staffing? You mentioned earlier, when I said what are your focal points or priorities, and you mentioned your people, which has been a mainstay for Marriott since the very beginning with Mr. Marriott. How hard is it to just find the right kind of labor for you guys? Maybe I'll give you a macro and a micro answer. On a macro basis, a few quarters ago when we talked with you and your peers, we talked about the fact that we had in the U.S. upwards of 10,000 or 12,000 vacant positions, and that was making it more challenging for us, particularly in some of the leisure-focused markets that were recovering most rapidly. When we look at those numbers today, we've got ± 6,000 vacancies, which interestingly, is almost precisely where we were on a run rate basis prior to the pandemic. On a macro basis, you look and you say, "Great, you're not materially worse off than you might've been before the pandemic started." The challenge is pre-pandemic, those 6,000 openings may have been spread fairly evenly across the country. They are disproportionately in the markets that have recovered most quickly. The irony is, those are the markets where we have the best pricing power, where we can drive the most rate. Our guests are happy to pay those rates if we're delivering on the service promise, which is made more challenging when you've got some high vacancy rates. From your perspective, the driver for why it's hard to hire, is it? What is it? Is that being solely because of wages? Yeah, I don't know that it's hard to hire. I mean, we still have relative, you know, by historical measures, low unemployment in this country. I do think that pre-pandemic travel and tourism sector broadly was viewed as a set of safe harbor industries, where there were to always be plentiful jobs, where careers could be built, and that confidence has been shaken by some of the really difficult decisions that the big hotel companies had to make in the early days of the pandemic. I think as an industry, we've got some work to do to restore that confidence and identify the opportunities that exist and the careers that can be built. Great. Maybe we can pivot to your old your global development. Sort of another, I guess, nice surprise to the upside throughout, you know, the pandemic has been a nice, steady, sequential increase in your development pipeline. Can you talk about, you know, the drivers of that? Of course. The importance of conversions. Conversions now I think were 21% of net rooms growth last year. 27% of signings last year. Right. That's a decent amount relative to issue, which is mid-teens, at least of new rooms growth. A few things. Obviously, net unit growth and growing our portfolio is not only important as an economic driver for Marriott, but when you think about the three constituents that we serve, new hotels kinda meet the needs of each of those constituents, creates job opportunities for our associates, gives more opportunities for our loyal Marriott Bonvoy guests to explore the world. For our owners, many of whom are multi-unit owners, gives them more opportunities to continue to grow their share of development wallet with us. It’s pretty remarkable that in 2021, which will go down as among the most challenging years in the history of our industry, we opened more gross rooms, about 86,000 rooms, than in any other year in our history. I think that demonstrates a few things. It demonstrates the development community's confidence in the long-term viability of the travel and tourism sector. I think it reflects, when they are committed to projects, they're not trying to market time for a quarter or two. These tend to be long-term investors and holders of assets. I think it demonstrates the appeal of the broad brand portfolio that we offer and the performance of those brands from a RevPAR index perspective, from a revenue generation perspective, and from a loyalty perspective. Right. I'm also surprised there hasn't been sort of an air pocket of openings in that, you know, ones that are delayed, everything is delayed, and then, you know, at some point we'll see things pop. Do you think we're at a bottom in terms of where that is? I mean, I know the world is ever-changing, as we've seen in the last, y ou know, couple of weeks. Of course. Obviously inflation having an impact on construction starts, among other things. But do you think that this year or last year will have marked the bottom in terms of- Well, it's gonna be interesting to see. I mean, I know that, we've been hesitant to provide much visibility beyond 2022 for exactly the reasons you described. You provide guidance, you know, last month, and then you have, you know. Operating Right. I mean, it's only downside versus upside right now. You know what? I will say to you hit on one of the highlights, which is the uptick we've seen in conversion volume. It's one of the silver bullets we have because you can deliver those openings more quickly. The reality is, for a select service hotel, you're talking about a ±24 months from the time you put the shovel in the ground to the time you open. For full service and luxury, it can be even longer than that. As a result, you've seen fairly sharp declines in construction starts versus 2019. In 2020, they dropped about 40%. In 2021, they dropped even further. They will come back, and we have confidence about that. You started this question talking about pipeline. We saw in 2021 a fallout rate from our pipeline that was about a third lower than what our historical average had been. Why is that? Well, I think it speaks to my comment about the profile of our owners and franchisees. They're not jumping in and out of the development cycles trying to time the market. These are long-term holders. In most cases, they own the site, they've invested heavily in pre-development, and so they are going to finish the vast majority of these projects. Remember too that of the roughly 485,000 rooms in the pipeline, more than 200,000 of those rooms are under construction as we sit here today. We feel really good about being able to, in turn, getting back to our sort of historical average of mid-single digits of net unit growth. The question will be: How quickly can we get shovels in the ground? We are starting to see modest improvement in month-over-month construction starts, but we're a long way from where we were in 2019. Right. The construction start delay, is it more concentrated in perhaps the urban, higher end versus more outlying hotels? I mean, it shifts because of the mix of our activity where we see the slowest volume obviously in terms of absolute numbers is in select service, but that represents a disproportionate share. Can you, stepping away from the near term a bit and looking at things maybe longer term, how important is luxury growth? Yeah. We feel really great over the long term about the portfolio of luxury brands we have, the size of our footprint, the depth of our pipeline, and one of the reasons that's so critically important, while luxury rooms represent about 10% of our global inventory, those luxury rooms generate about 25% of our RevPAR-related fees, and so they are disproportionately impactful. I mean, you've heard me for as long as you've known me say all rooms are not created equal, but that's probably the statistic that illustrates that best. I think secondly, when you think about the increasing importance from a consumer perspective of a loyalty program, in many ways, these beautiful luxury hotels are the payoff for that loyal customer that's spending 150 nights a year. It's to take their friends and family to stay in one of these beautiful luxury properties. What's going on with China development? That seems to be, again, surprising me, relatively steady, not seeing much of a change. Yeah. In fact, we just put out a press release in the last few days. We're gonna open 50 additional hotels in China this year. We've got a pipeline that's slightly bigger than our current footprint across China, and it's growing rapidly. I mean, five years ago, I think we had 85,000 or 90,000 rooms in China. We're close to 185,000 or 190,000 today. It continues to be steady, and I think it's a different version of the same answer I gave you. These are long-term investors that are doing big horizontal mixed-use projects, and we continue to see really strong demand for our brands across Greater China. Right. The one component or among the many components of guidance items, some operational and some not, but you did target for this year 3.5% net rooms growth. You also indicated confidence in getting back to that historical mid single-digit percentage. How much of that is growing the gross at a higher pace than what you're planning on doing for this year or shrinking that deletion percentage? Yeah. I think it's both. I mean, we work both ends of that balloon as aggressively as we can. On the gross rooms growth side, we had a terrific signings year last year. We signed a little over 90,000 rooms last year, and we'll look to build on that momentum. You talked a little bit about the conversion volume we saw in 2021. That's a powerful driver of quick openings and will continue to be both aggressive and creative on trying to drive conversion volume. As recovery kind of ripples through our owner and franchise community, we'll work as we have for the last two years with our owners to look at projects and try and retain those if they can continue to be accretive to our brand equity and continue to be profitable for both us and the ownership side. Historically, Marriott has grown its footprint not just with organic same brand growth, but also through external M&A-related growth. Is M&A a focus for you or how do you view that from here? This is why I like you, Joe. You didn't set me up with the, is 30 brands too many or not enough? And then give it to M&A. I would say to you this, we are delighted with the breadth of the portfolio. We like having that breadth of choice both for our guests and for our owners. There aren't any sort of glaring gaps. As we have done in the past, we will look at opportunities, if we think they're accretive to our shareholders. If we think they fill a particular opportunity, we will certainly evaluate them. Great. Invariably, every corporate person here is gonna get the question about, "Hey, what's your exposure to Russia? What's your exposure to Eastern Europe?" Please address that if you could. Of course. Yeah. Could you also talk about maybe from your perspective, who's been in this industry for so long, you know, dramatic increases in commodity prices such as oil? Sure. How that directly or indirectly impacts your business. Just to ground you on our presence, we don't have any managed hotels in the Ukraine. We've got 28 managed and franchised hotels in Russia. Those hotels represent significantly less than 1% of total fee volume. When we look at outbound Russian travelers, they're meaningfully less than 1% of room night generation around the world. You know, there's the human side. We are very focused on the safety of our associates and the safety of our guests in those markets. But from a materiality perspective in terms of the company's financial performance, not particularly significant. The appropriate follow-up question to that is, given what we're watching unfolding in real time, how material is the impact on our business, particularly in continental Europe? The answer is it's too early to tell. We continue to see strong forward bookings into Europe. The last literally four or five days, we've seen a really modest uptick in cancellations, but not anything measurable at this point. Clearly, we've got to watch it closely. I mean, the view today could be very different than the view tomorrow. Recovery around the world has largely been driven by traveler confidence, and depending on how the situation evolves in the Ukraine, could that have an impact on traveler confidence to Europe? Of course. Historic impact on steep prices. Steep increase in oil commodity prices. Yeah. We're doing a bunch of analysis right now, and we'll look at what our historical experience has been, particularly for drive to destinations in the U.S. The thing I will tell you, while we'll look at that as a data point, I do think the current environment's a bit different. I think in the U.S. you've got historic levels of savings rates. We continue to see in the data just extraordinary levels of pent-up demand. While folks will certainly look at every element of the cost of that trip, the volume of pent-up demand is such that at this point, we're not anticipating any sort of material impact. Great. At this point, I'll see if there are any questions from the audience. Great. One final question then. Of course. To close out our 30-minute fireside chat session. Capital return. I know you've addressed it and talked about it on the last earnings calls. If you can sort of remind us or update us on the latest there. Of course. So as we discussed on that call, we are keenly focused on getting back to that 3x to 3.5 x adjusted debt to adjusted EBITDAR ratio. We are feeling you know, assuming there are no major shocks to the pace of recovery that we've seen, we are increasingly confident about the ability to start to return capital to shareholders in the back half of 2022. Our expectation is we'll lead with capital return through a dividend, probably a bit below our historical kind of 30% target that we've had. We continue to be on track, I think. We reduced our debt by a little under $2 billion in 2021. We've got really modest maturities over the next 18 months. Knock on wood, as recovery continues, we look forward to starting to return capital. Great. I have one more question then. Of course. Yeah. Fourth quarter, you guys generated $186 million of credit card related fees which is an enormous amount. When you forecast that internally, is that harder for you guys to forecast than, say, you know, more RevPAR related? I mean, it's a different calculus certainly, but we've got I mean, the credit card companies, our partners are terrific in terms of the transparency of data they have. They're tracking it not just by the day, but by the hour. I think that gives us some visibility. I think for us, the last two years gave us lots and lots of opportunities to dig in deeper on how our Bonvoy credit card holders, how they think about the use of that card, where they're using that card, and allowed us to do some things with points promotion on groceries and the Uber partnership and some other things we've done to really drive engagement through the credit cards. Do they give you the data that maybe shows how credit card activity associated with Bonvoy compares to credit card activity associated outside of programs like Bonvoy? Yeah. They slice and dice that data every day. How does that trend of growth or change compare then? Well, I think for that passionate, loyal Bonvoy member, we're getting a really significant disproportionate share of their spend a wallet. Got it. Cool. That was my last question. Okay. Thank you, Tony. Joe, thanks for having me, and thanks for hosting the event. Of course. I appreciate it. Absolutely. Thanks. Good to see you. Likewise. Appreciate it. Good. Thank you.