All right, we are moving right along, and it's my pleasure to be joined by Tony Capuano, Chief Executive Officer of Marriott International. We've got a lot of questions, but again, for those of you who showed up in person, you know we want this to be somewhat of an active dialogue, so if you've got questions, feel free to raise your hand. What a difference a year makes. Sure does. Since the last time we spoke at this conference a year ago, the industry has had a couple of ups and downs. We had Delta, Omicron, impacting really some of the trends as we've seen a recovery, but now we really seem to hit our stride. I'd love to just hear what you're seeing in terms of consumer spending behavior, business travel behavior, and how that makes you think about positioning the business going forward as we've seen these trends recover. Sure. Well, thanks for having me. Thanks to all of you for being here. You know, the resilience of travel is really remarkable, and all the data that we look at continues to underscore just how resilient travel continues to be. If you look at where we were, to your point a year ago, it was pretty murky what the pace of recovery might look like. You fast-forward to today, in April, global RevPAR was down only 7% to 2019. In the U.S. and Canada, which is our largest market, we were back to 2019 RevPAR levels. When you go through the segments, obviously the recovery's been led by leisure. We're double digits ahead of where we were in 2019. Business transient maybe is the tortoise and the hare of the recovery, but really steady and encouraging improvement. At the end of last year, business transient was down about 30%. In the first quarter, it was down only between 10% and 15%, and as we look at the way the recovery continues to proceed through the first couple months of this quarter, steady and really encouraging recovery. Then group maybe is the most interesting and fascinating. You think back a year or so ago, conventional wisdom was leisure would lead the recovery, business transient would come next, and eventually group would limp across the finish line. Group has been extraordinarily strong. In fact, if you look in May, we were only down 6% to 2019. On the first quarter earnings call, we talked about the last three quarters of this year being down high single digits to 19%. Based on what we saw last month, we actually think the last three quarters of this year will be down mid-single digits. Mm. Group has been really, really strong and encouraging. And maybe most notable, it's not just social group, which we would have expected. You had lots of weddings and family reunions and all sorts of things that had been postponed during the pandemic, but business group is coming back dramatically. I spoke down in Orlando at the Ernst & Young new global partners meeting, and they hadn't had it for two years. We had 1,600 newly minted partners at the Marriott World Center Ballroom, and I spent some time after my presentation talking to these partners. The two themes you heard consistently from them, number 1, they're hiring thousands of new accountants and consultants every year. They appropriately believe they have a strong corporate culture, and they need to be in person with those folks to immerse them in that culture. They're in the client service business, and you have these 1,600 new partners that wanna build their book of business. They absolutely believe the best way to do that is to be embedded in person in the offices of their clients and prospective clients. I think that's a great start in terms of thinking about behavior from a consumer and a business traveler standpoint. What are you then hearing from owners in terms of what they wanted during the pandemic and what they want going forward? I think on the positive side, and I don't say this lightly, I think the strength of our relationship with our owner and franchisee community is as strong as it's ever been. The very nature of that relationship is such that from time to time we'll have disagreements on certain issues. In many ways during the pandemic, we set aside some of those more modest issues and came together in opposition to this common foe of this existential threat. Yeah. to our business. I think, you know, there are edge cases certainly, but when I look at the owner community in aggregate, they have largely pivoted from a survival mentality to a recovery mentality. I know we'll talk about development in a few minutes. They are demonstrating by their actions their long-term confidence in the sector. They are encouraged about the pace at which top-line revenue has recovered. They insist appropriately that we remain mindful of the fact that, for us, with so much of our fee volume coming off the top line, it's terrific that we're back to 2019 RevPAR levels. For them, they've seen expense escalation over those two years, and they want us to stay very vigilant about continuing to drive operating efficiencies. Interestingly, we've started to bring back a bunch of our accountability measures. Mm. Brand standard audits, QA and the like, and they couldn't be more supportive. Mm. Right? They care deeply about their neighbors. They've invested heavily in our portfolio of 30 brands. They wanna make sure those neighbors are meeting our brand standards. Well, we heard yesterday from both Host, one of your owners as well as- Mm-hmm. Private equity panel that renovated properties are certainly performing better and the investments I think are generally leading to a good payoff. I think that's right, and I also think, I mean, we'll probably talk in a few minutes about the extraordinary pricing power we're seeing. That's terrific, as long as you can deliver on product and service. Yeah. Service is obviously tied to some of the labor challenges we're seeing in the sector. To your point, from a product perspective, new product typically wins, newly renovated product typically wins, and those owners and franchisees that have the financial wherewithal to continue to invest in their assets are seeing it in terms of their top line performance. On the price point, obviously very, very strong ADRs kinda leading this recovery. That's also helping with that labor dynamic and- Mm-hmm cost pressures. What's the expectation for how that trends from here? How much of that's been driven by the unique recovery that we're seeing versus maybe changes that you're making from a yield management standpoint? It's wholly appropriate to wonder with some of the prospective headwinds out there, whether it's fuel prices, rising interest rate environment, inflationary environment, that this wonderful run may come to a bit of an end. We're just not seeing it in our data. Mm. You look at Memorial Day weekend here in the U.S., again, our largest market. RevPAR was up 25% over Memorial Day weekend in 2019. The forward bookings for July 4th and Labor Day look similarly strong. In the first quarter, we talked a little bit about our luxury portfolio with rate increases of nearly 30%. We're just not seeing it. Why? I think a few reasons. You touched on the first one, which is there continues to be deep pockets of pent-up demand. Mm-hmm. Unlike previous economic cycles and economic downturns, here you have this added dimension, which was folks were locked down for 12-24 months, and on both a personal and a professional basis, they've got a lot of catching up to do. It's been well documented, the historic levels of saving rates, particularly here in the U.S. I think that's driving consumer spending. I think the third trend that we're hearing more and more about and seeing in the data is this pivot, you know, pre-pandemic, you heard lots of talk about younger generations focusing more on experiences than goods. That inverted a bit during the pandemic. Now, I think we're seeing another inversion. You saw Target's numbers this morning, which were troubling, but I think they illustrate an obvious truth, which is a move by the consumer towards spending more of that disposable income on experiences rather than goods. Right. A lot of that also has to do with inventory planning. Of course. Yeah. You're not in that business. That's right. per se. Well, we are. We just get to reprice our inventory every day. Every day. That's right. That's right. Let's go to something that is near and dear to your heart, which is pipeline development. You recently, you know, reinstated or basically reiterated the 3.5%-4% range. Mm-hmm. Help frame the building blocks to get there, and then what, how do you think longer term about where that number should be? Sure. I'll try not to overwhelm you with statistics, but I wanna frame the discussion a little bit. The pipeline has been remarkable in its resilience over the last two years. We've stayed pretty consistently at plus or minus 500,000 rooms. Maybe more impressively, we've stayed for, I don't know, Jackie, how many quarters in a row, with more than 200,000 rooms under construction globally. Maybe most encouraging to me, we continue to be at historically low levels of fallout from the pipeline. I think sub 2%. It underscores something that I've said in a number of our conversations, which is the vast majority of our owners are long-term investors in the sector. They're not jumping in and out when they think there's an opportunity. They're not flipping quickly. There are certainly some, but the vast majority are long-term investors and holders in the sector. They have site control. They've invested in pre-development. They have entitlements. They may have been slowed a little bit because of some constriction in the debt markets, but they intend to go forward with the bulk of these projects. The constriction in the debt markets that I described, some supply chain issues, some escalation in construction costs, I think has slowed a bit some of the construction start activity, although we are meaningfully ahead of where we were a year ago in terms of construction start pace. 3.5-4, we continue to feel good about for this year. We've not provided guidance beyond 2022 for all the reasons I just described. The unpredictability of the pandemic, which is still simmering, construction cost environment. We see some encouraging signs about the faucet opening a bit in terms of debt for new construction. Those uncertainties cause us to pause before we give guidance. I will say we are increasingly confident about our ability to get back to that historic level of mid-single digit net unit growth. I think in particular, if you rewind to our first quarter earnings call, maybe selfishly because I don't run development anymore, I was frustrated, but in the first quarter, we approved and signed more deals than in any first quarter in our 95-year history. I think in a lot of ways, that's the statistic that best illustrates the confidence the owner community about their confidence in the continued recovery of the sector. There's a long tail to that, so you don't have to sell yourself short. Well, I told our team, we opened more rooms ever last year than in our history, and I think I can take credit for some of those. No, I thought the first quarter pace was really, really encouraging, and it illustrates my earlier point that the vast majority of our owners are no longer in survival mode. Right? They are looking forward into what they think will be a sustained and really powerful recovery. What does that pipeline look like now versus pre-pandemic three years ago, both in terms of regional mix, chain scale? Yeah, I would say in terms of regional mix, I think at the end of the first quarter, we were about 57% international. I think that's a number that'll continue to tick up a little bit. Round numbers in the U.S. and Canada, we've got about 17% or 18% market share. We're mid-single digits outside the United States or low single digits. I think in terms of runway, while we think we still have lots of opportunity for growth domestically, the longer runway is certainly outside the U.S. and Canada. China has our biggest pipeline. That's obviously slowed a bit given the zero COVID policy. Over the long haul, we've got round numbers, 400 hotels open in China, about another 400 in the pipeline behind it. Caribbean and Latin America, which has had really extraordinary recovery. I think we're up 11% over 2019 in terms of RevPAR. We're seeing, especially in the leisure destinations, lots of growth there. I just came back from Europe Sunday night. Cities are full, flights are full, RevPAR is recovering. When you look at our forward bookings into Europe, over the last couple of weeks for bookings into the summer, we're about 50% ahead of where we were in 2019. I think that in turn will spur development activity in the region as well. Well, what about from a chain scale standpoint? Do you feel like there's specific pockets that you wanna focus in or even by brand? Are there areas that you think are under-penetrated where there's opportunity to accelerate growth? Yeah. None of them are mutually exclusive, which I think is good news. Maybe I'll touch on three areas. I continue to be encouraged in the luxury tier. I talked earlier about the strength of luxury pricing that we've seen. About 10% of our global room inventory is in our luxury brands, but that 10% represents about 25% of our RevPAR-related fees. They are big brand builders for us. They are powerful enablers of the Bonvoy loyalty program. I think you'll continue to see a strong focus in luxury, and some of that focus will be fueled by the strength of our branded residential business. Hmm. It's not lost on me that the last couple of years were among the most challenging years for our hotel business ever. Yeah. They were also a couple of the strongest years we've ever had for the branded residential business. Those two working together give me a lot of confidence about the future of luxury. The other end of the chain scale spectrum, select service continues to be a really important focus area for us. I think it's reasonable for the group to expect in the coming years, a meaningful acceleration of select service growth outside the U.S. and Canada. I think we've got lots and lots of runway to continue to grow our select service portfolio in international markets. The third area I would focus on would be our conversion-friendly brands. You have our three soft brands, Luxury Collection, Autograph Collection, and Tribute. You also have brands like Delta Hotels, which are particularly conversion-friendly. I think as we wait for the debt markets for new construction to open more and more, I'm really excited about the prospects given that stack of conversion-friendly brands for full service conversions globally. Following up on that point, typically during disruption, we see conversions tick up. What did you see or can you frame the increase potentially that we saw as a percentage of openings through the pandemic? Where would that normally kinda go back to? It sounds like you're saying you're gonna see that maybe sustain. Yeah. I'm gonna look at Jackie when I answer this to make sure my numbers are right. I think pre-pandemic conversions were kinda mid-teens, typically in a given year. Over the last couple of years, we've seen those tick up into the 20%-30% range. I am encouraged that we should continue to see really strong conversion activity, one, because when you look at the performance of a post-conversion asset, it gives our transactors really compelling stories to tell to prospective conversion owners. Again, we've just got such a rich assortment of conversion platforms that provide a level of design flexibility that maybe we've not had in past cycles. I think conversions will continue to be a really strong story for us. Another one on development. Key money has been something that's been used over the years in different places. How's your thoughts around how to deploy key money change, especially in an environment where there's maybe more difficult financing options, and maybe you could even act as a, you know, somebody who can either bridge that gap with developers? I'd start by saying, I don't think the pandemic has meaningfully changed our philosophical approach to the deployment of Marriott capital in pursuit of growth. I think we have historically been quite disciplined in terms of how we deploy that capital. When we slice and dice data on a forensic look back basis, the deals where we do deploy Marriott capital tend to generate meaningful premiums in terms of their long-term fee potential. That lens which we apply when we evaluate Marriott investment has stayed consistent through the pandemic, and I expect it to stay consistent well beyond the end of the pandemic. Changing gears a little bit, we keep hearing more and more at this conference and in general about, you know, the labor pressures that are being faced. From your vantage point, how are you thinking about the path forward for operating margins at the hotel levels? Then what are you doing to try to help alleviate some of that pressure? If you'll indulge me, I'm gonna get on my soapbox just for a minute. We had the CEO panel at the NYU conference yesterday, and one of the things that was most encouraging to me about having the five biggest global brand CEOs on the stage together, the repair work we need to do in terms of the workforce's perspective about careers in the travel and tourism sector broadly. This isn't a competitive wrestling match, if you will, among the hotel companies. This is something the industry needs to come together to remind that workforce that it's a terrific industry, it's a great industry to build long-term careers. Depending on whose statistics you believe, something on the order of one in five jobs that were lost during the pandemic were in the travel and tourism sector. We've got to do a better and more consistent job of sharing the narrative about the careers that can be created. I know for Marriott, one of the best stories we like to tell is we've got 8,000 hotels roughly, so 8,000 general managers. More than half of those started in hourly positions. Mm. Of course, we've gotta pay competitive wages, but if we simply hang our hat on competitive wages, we won't address some of the labor challenges that the industry faces. We've got to tell a better story about the careers that can be built here. I think secondly, in the U.S. market, we've got to continue as an industry to engage with the administration on immigration. The challenges that we see in immigration in this country create yet another hurdle for the travel and tourism sector in terms of addressing some of its staffing challenges. To the second part of your question around margins, we and the industry more broadly worked really hard during the course of the pandemic to identify sustainable enhancements in productivity and efficiency at the hotel level. We're increasingly confident we'll be able to maintain those efficiencies even in a post-pandemic world, and that's acutely important now in an environment where you see inflation impacting operating costs and certainly wage rates. Now, I think you'd be surprised at how many questions I sometimes field about how labor inflation at the hotel level impacts your G&A, but maybe talking about the corporate G&A, what are the puts and takes to think about inflation impacting that line as we think about margin expansion for Marriott, and even tie in CapEx, 'cause I guess I'm usually more focused on free cash flow margins. Is there also labor inflation that we should be thinking about on the CapEx side? From a cultural perspective, arguably the toughest part of the last two years was some of the really difficult decisions we had to make at the corporate level about long-tenured, really valuable Marriott associates. It was of critical importance, and we made those decisions. We made them decisively. At the above property level, we cut something on the order of 30% of our workforce. Obviously, as business recovers, some of that functionality and capability and headcount needs to be restored. We are meaningfully more efficient at the corporate level than we were pre-pandemic, and committed to maintaining that efficiency going forward. That's great. Changing gears a little bit, let's talk about the Marriott Bonvoy program. What are the biggest initiatives for- Did you wanna show me your point balance? I need to start using those points. Also, that ADR. Yeah. The ADRs are pretty high. I mean, I say that as a joke, but it is interesting to me, and maybe this is a good intro to a discussion about Bonvoy. Well, one of the privileges of my new role is the amount of time I get to spend with our customers, both on the road in general and at some of the customer events we have. The passion they have around the program is remarkable. I mean, I can't count the number of customers who, when I get the opportunity to meet them, immediately they pull out their phone and flash their number of nights and their number of points. But I do think it underscores the power of that program. Are there any new partnerships that you think about that could help bolster it or technology that you think you can leverage the program to better customize with the consumer? We'll continue to evaluate. Our experience over the last two years, one of the big learnings for me about the power of the Bonvoy program, at its very core, think about it, we had some of our most loyal, most valuable customers who suddenly weren't traveling or they were traveling meaningfully less than they did pre-pandemic. The fact that we had such strong credit card programs and continued to launch new card products even during the pandemic. We launched a new card in Mexico. We launched a new card in South Korea, just as two examples. We launched a partnership with Uber during the pandemic- Mm ...that allowed folks to pair their Bonvoy and Uber accounts, both for rides as well as Uber Eats and the like. The more we can do, Stephanie Linnartz, who you know well, she talks about constantly enhancing the stickiness of the program and the more touch points we can find to connect with our customers, certainly while they're on the road traveling. Even beyond that travel window, I think you'll continue to see us look for opportunities to grow the number of touch points that are available with those members. That's great. I said I would try to make it fairly active in terms of the dialogue, so if anybody has a question. We've got Walter over here. Can you just add to that a little bit in terms of Marriott Bonvoy? Just, I'm gonna go ahead and repeat the question. Yeah, of course. I'm not sure the mic was on, but it's just a question of who is the customer who's using Bonvoy and how has it changed through the pandemic? I think the core most active customers, so the Ambassadors and the Titaniums, that's not changed dramatically. Certainly their travel volume moderated during the pandemic, but we're seeing those core customers ramp back up quite quickly. Some of the enhancements to the program that I just described, I think have created more opportunity for those customers who travel less frequently. Stephen, to your point, one of the reasons you'll see us continue to be aggressive to look for ways to further expand the program is for exactly that other end of the spectrum. The folks that might only travel once or twice a year. If their only way for them to engage with Bonvoy was during their stay, they may lose some measure of enthusiasm about the program. Mm. The ability to give them opportunities to continue to grow their points balance even when they're not traveling, I think makes the program more compelling for that end of the customer base. We've also seen really remarkable growth in the program's aggregate membership even during the last two years. I don't recall where we were, Jackie, pre-pandemic, but we're mid-160 million and growing right now, so that the base continues to grow quite impressively. Got a follow-up on that real quick, and then we'll go out over here, which is, if you're going after that maybe slightly less frequent customer, that sounds like there is some overlap with what I think of as a traditional OTA customer. Mm-hmm. How do you think distribution channels will then change going forward? How have they changed through the pandemic? Pre-pandemic, the share of OTA business was on a fairly steady decline. I don't say that in a dismissive way. The OTAs are an important partner of ours. They do give us access to some of the less frequent travelers or travelers that aren't as familiar with the program. But it was trending to be a less and less significant portion of our business. When you look at who was traveling over the last two years, you saw it start to grow a bit, but our direct channels grew more rapidly. As we get to a more stable recovery, my guess is the pre-pandemic trend line will we'll sort of get back to that pre-pandemic trend line. Makes sense. I think we had a question in the back here. Just one question on the color you provided on where your focus is. I think pre-pandemic you were starting to focus on all-inclusive. Is that still an interest of yours? It's a great question because this was a leisure-led recovery. I get lots of questions in these forums and from the media about comments where folks will say, "It's terrific to see you starting to focus on luxury." Even pre-pandemic, luxury as a segment was growing meaningfully more rapidly than business transient or group. To your point, we jumped into all-inclusive before the start of the pandemic, which has served us quite well. We announced The Ritz-Carlton Yacht Collection before the pandemic. The first ship is in sea trials in Spain. I saw a video earlier this week. Fantastic. I think that will help us on the luxury perspective as well. Homes & Villas by Marriott Bonvoy, we launched pre-pandemic, but in terms of the volume of listings, it's grown about 20-fold during the pandemic. We recognized how powerful leisure was as a segment and how rapidly it was growing. I think the pandemic maybe has just sharpened our focus a bit on the continued importance to grow our offerings that appeal to the leisure customer. As we wrap up here, I'd love to shift gears to capital allocation priorities. Of course. You recently reinstated a dividend. You've talked about buyback. Just remind us of what the strategy is in terms of where you're gonna allocate your free cash flow as it comes back, and what are the guardrails around leverage, and perhaps even tying in how the current environment might be different or dictate how you think about setting those leverage levels. When I'm lucky enough to be invited to these conferences, sometimes I feel a little badly because I feel like I'm gonna be the dullest speaker because our broad philosophy of how we manage the balance sheet and allocate capital has not changed materially, and it's obviously served us well. The fact that we went from the depths of the pandemic to reinstating the dividend just two years later maybe underscores the power and the wisdom of that model. We have a targeted debt ratio of about 3-3.5. As we've done in other economic downturns, as we start to get more and more confident about recovery, we lead with reinstatement of a dividend, which we announced during the first quarter earnings call. We've also indicated that we expect if the recovery continues to proceed the way we expect it will through this year, that we will restart share repurchase. I think that's still our plan right now as we move towards that 3-3.5 times debt ratio. Awesome. Well, we are right at time here, so join me in thanking Tony Capuano and Marriott International. Great. Thank you so much. Thanks for having me. Good to see you.