Kevin Kopelman: Thank you so much. Given how well the MGM deal is starting off, as you think about your pipeline talks, what’s the outlook for other large partnerships akin to the MGM deal going forward? Thanks.
Anthony Capuano: Yes. So Leeny and I were both in Las Vegas this past weekend for Super Bowl, and so I’ll make a couple of comments. Number one, when you look at the vibrancy of that market, you look at how effectively the city was able to accommodate an event like that. You likely heard the NFL Commissioner talking about how anxious the league is to get back to Las Vegas. I think both of us left the market really enthusiastic about what this partnership is going to offer our guests around the world and our Bonvoy members. In terms of your specific question, as we talked about when we announced the transaction, it is a creative opportunity for us where I think you will continue to see lots of activity for us is in traditional conversions, but in the category of multiunit conversions.
You heard us a quarter ago talk about a terrific multiunit conversion in Vietnam with a partner called Vinpearl, and our teams around the world are actively working on a number of multiunit conversions. To the extent, a unique opportunity like MGM presents itself, I think we’ll roll up our sleeves and see if we can make sense of it. We’re really excited about what MGM does for Bonvoy and if those sorts of opportunities present themselves, we are certainly open to pursuing.
Kevin Kopelman: Great, very helpful. Thanks Tony.
Operator: Thank you. We’ll take our next question from Michael Bellisario with Baird. Your line is now open.
Michael Bellisario: Thanks, good morning everyone. Just on the capital allocation front, been a handful of reports, there’s just a few smaller brands for sale, particularly domestically. Are you seeing any more interesting tuck-in M&A opportunities and does the math pencil any better or worse, especially relative to where your stock is trading today?
Leeny Oberg: Well, some great questions. And as we have said for a long time, we’ve been very consistent in our message about really always being willing to entertain the way that we grow. We have grown very successfully, both in terms of tuck-in brand acquisitions as well as growing organic new brands, and growing that way around the world. We will continue to do that. We also are going to stay very price disciplined in terms of looking at both the price that you would be paying for the existing distribution as well as for the growth opportunities. We are really aware of looking at where something could add something unique to our portfolio, whether it is in a certain part of the world, as we did with the City Express deal, that really was a tremendous way for us to enter the mid-scale space in a really attractive market like Mexico, at an absolutely reasonable price.
So I think in that regard, you got to look at all the elements. And what’s out there, as you know, depends very much all the sellers’ expectations of what they’re looking for. I would say that, over time, we hope to see that those opportunities continue to be there and that we’re going to remain as disciplined as we have before in looking at them.
Anthony Capuano: I’ll just build on Leeny’s comment. I think this historical blend of considering acquisitions where we think they fill an opportunity in our brand architecture or accelerate our growth in a geography where we’re not happy with our pace of organic growth, but also looking at the launch of organic platforms, is a strategy that has served us well and a strategy that will continue to guide our thinking about adding new platforms. It’s interesting, I was looking at some numbers last night. Autograph, which was a platform in the soft brand space that we launched from scratch, between the open and pipeline, we have more than 400 hotels. And AC by Marriott, which was a platform that we acquired in Spain, that at time of acquisition I think, had 80 or 90 hotels, today between open and pipeline has nearly 400 hotels. And so there are a variety of strategies to add compelling platforms to the portfolio, and we’ll continue to look at both.
Michael Bellisario: Got it, that’s helpful. And then just one quick follow-up on midscale. What’s the owner profile there look like, thinking about the mix of existing Marriott franchisees versus new owners, and would you expect that mix to be similar for the new brand? Thanks.
Leeny Oberg: Yes, very similar. A great mix. Always welcoming new owners into our stable of owners and franchisees. But I would say, when I think about the StudioRes, some of the blend of what we’re seeing in terms of the what I call the onesies and twosies where somebody is kind of in a particular market, been very successful and wants to build a hotel there, I would say many of them in the StudioRes space reflect multi-unit expectations on the part of partners of ours who we’ve been working with for a long time.
Operator: We’ll take our next question from David Katz with Jefferies. Your line is now open.
David Katz: Hi, good morning everyone. Okay, I apologize. I wanted to just drill a little bit deeper into the conversion discussion, if I may. Just looking at the percentage of your pipeline versus what we’ve seen elsewhere, if you could talk more about where those are coming from, what the strategies are, whether there’s any change in the landscape geographies, whether there’s a change in pricing, what’s new with it, it’s been such an important discussion for the past year or so among everyone, including yourselves?
Anthony Capuano: Sure. So conversions have always been an important part of our growth story, in a climate where the debt markets for new construction are somewhat constricted, the importance of conversions is elevated. As we talked about in the opening, really compelling numbers in 2023 with 25% of our openings and 40% of our signings in the conversion category. They are coming in terms of type of project, pretty typical of what we’ve seen over the last number of years. A good mixture of conversions from other brands and with such a compelling stack of soft brands with Luxury Collection, Autograph, and Tribute. Lots of conversions coming from the world of independents as well. From a geographical perspective, not necessarily a shift in strategy, but we are seeing in, for instance, some of the Asia Pacific markets, which historically had been disproportionately new build, we are seeing some uptick in conversion activity.
Our pursuit of conversion opportunities is quite deliberate, and it’s resulting in deals like the one I mentioned earlier in Vietnam.
Operator: We will take our next question from Patrick Scholes with Truist Securities. Your line is now open.
Patrick Scholes: Hi, good morning everyone. I want to drill down a little bit on the credit card fees. It looks like you’re expecting a big step-up in, if I understand it correctly, a step up in growth rate for 2024 which actually, I think you said 9% to 10%, which if I’m correct, is a little bit lower than the Investor Day of 12%. But specifically with that step up, are you expecting that from primarily new card sign-ups or more so from sort of same user spend? Thank you.
Leeny Oberg: Sure. So first of all, I want to kind of be clear. The difference between the growth rates between 2023 and 2024 I would not expect to be very different across the credit cards. They grew 9% to 10% in 2023, and we would expect them to do fairly similarly in 2024. That is overwhelmingly a function of increase in the number of cardholders. As you’ve heard us talk about, we’ve been really successful in adding credit cards in a number of countries. We really expanded that program quite a bit and in some of the markets, I’ll point out Japan as an example, we’ve just seen really wonderful acceptance of the Bonvoy credit card. So in that respect, I’d say the growth that we would expect in those fees comes overwhelmingly from additional — having additional cardholders.
And then overall, a really very small amount related to a typical cardholder spend. Now when I look at overall non-RevPAR fees, I think that’s where it gets a little bit interesting, because you were dealing with things like residential where you see residential branding fees tied to when those units open for occupancy. So they’re quite lumpy. So as I explained in Q1, we expect them to be meaningfully lower in Q1 than Q1 in 2023, while for the full year, we actually are seeing that business do very well. And we expect year-over-year to see fantastic growth in branding fees overall for the year in 2024 over 2023. So when you look overall at the non-RevPAR fees, we’re excited about to see them continue to grow at these roughly double-digit sorts of numbers for another year.
Operator: And we will take our next question from Robin Farley with UBS. Your line is now open.
Robin Farley: Great, thanks for taking the question. Circling back to the unit growth, and I know you’ve given a lot of great color around it. Just looking at the kind of two-year CAGR you’ve given at the Investor Day, excluding MGM when the timing of that wasn’t quite known, so it’s kind of implying that 2024 and 2025 would be up, excluding MGM, in the kind of 4% to 5% range. And I think the 2024 guide today, ex MGM, is up in the kind of 3% to 4% range. So maybe expecting an acceleration to 5% to 6% growth next year. And just wondering, I know you talked about the likelihood that conversions will be a higher percent of that. You also recently announced a franchise agreement in China that the timing wasn’t entirely clear. It was kind of potentially over the next three years it could be adding, I don’t know if it would be like 50 basis points a year.
I guess I wonder if you could tell us whether that franchising agreement, how much of that you expect to be driving the acceleration next year, just kind of help put some color around the acceleration? Thank you.
Leeny Oberg: Sure. So let me — I’m going to do the last question first, and then, at some point, Tony, feel free to jump in to add more color. But let’s first talk about Delemex [ph], which we’re really excited about our relationship there, where there is a terrific large hospitality company in China, and we’re looking forward to having the opportunity to convert a number of hotels. And we actually didn’t give a time frame. So it would just be as part of our normal growth in China and as we look at our overall rooms growth, so there’s not a particular kind of specific sort of 10, 20, 30, 40 basis points associated with the conversion of a number of those hotels into tributes. We are again really excited about working with them on the opportunity, but it’s just part of our overall rooms growth.
As I said, the signings that we’re seeing in Greater China are very encouraging both in 2023 and as we move into 2024. That’s really in addition to what you’re talking to about the Delemex [ph] deal and that is where I talked about the rooms growth in Asia in the high single digits, which again is just a great reflection of the desire for our brands. When you ask about the basic CAGR for rooms growth relative to the Security Analyst Meeting that we made in September, I think you really have to kind of go back to what Tony said in his earlier comment, is that these deals can be lumpy, whether it’s City Express, whether it’s MGM, whether it’s a large conversion deal that we do. And so you really need to think about the numbers that we gave that were 5% to 5.5% for the three-year CAGR, which we continue to be really confident and excited about.
We ended up a little bit higher on our net rooms growth in 2023 than the 4.2 to 4.5 range that we gave. And that’s really a reflection of the steady strong demand for our brands. So that then when we look at the MGM and the continuation of turning these rooms from our pipeline into openings, we actually see it as being essentially the same as where we were back at the SAM [ph]. And then again, you have to kind of be looking at it not solely within the context of one year.
Anthony Capuano: And Robin, I think the only other question embedded was about conversion volume. And we mentioned in the open that our openings in 2023 were about 25% conversions. Even if you look at 2024 expected openings ex MGM, we expect some acceleration to about 30% of those openings being conversions. And when you think about 40% of our signings last year being in the conversion category, that’s logical.
Operator: And we have reached our allotted time for questions. I would now like to turn the call back over to Tony for any additional or closing remarks.
Anthony Capuano: Well, as always, thank you again for your interest in Marriott. We are coming off a terrific year in 2023. Tremendously enthusiastic about 2024 or what 2024 holds. And we look forward to seeing all of you on the road. Safe travels.
Operator: This does conclude today’s conference. Thank you for your participation. You may disconnect at any time.
