Marriott International Class A Earnings Call Nuggets: Courtyard vs Traditional Marriott and Guidance Analysis
Courtyard vs Traditional Marriott
Ryan Meliker – MLV & Company: I think a lot of your color up front was really helpful in terms of understanding how numbers flowed in the quarter. I had a little bit of a bigger picture question that I was hoping you guys might answer for me. I guess you guys have done a lot of transformation across your select-service brands, really bringing up the quality of the product and I guess it’s not just you guys. It’s probably a lot of your competitors, too. I’m just wondering what you’re hearing from most of your big clients in terms of the disparity in product offering between a Courtyard and say, a traditional Marriott. Are you moving away from the traditional Marriott that stays group focused under 400 rooms and trying to shift those more towards Courtyards or SpringHills or even Fairfields or even more upper end to the Autograph Collections or EDITION, et cetera? Just want to get some color in terms of how the development, particularly in the U.S., is unfolding given what seems to be a little bit of a shift in the customer base, where they seem to be more open to staying at your select-service properties.
Arne M. Sorenson – President and CEO: Yeah, it’s a good question, Ryan. Part of the problem is we’ve talked more about Courtyard as an example, than we have about our full-service brands in part because particularly when you look at the managed portfolio of Courtyard, we have probably close to 300 Courtyards we manage. Average age, I would guess, is 20 years, maybe a little over 20 years. The first-generation Courtyards were built and they were nearly identical and so we could look at those as a portfolio and roll out renovation essentially that would be nearly uniform from hotel to hotel and could be done in a programmatic basis. In fact, we had 70 Courtyards under renovation in the first quarter of ’13, and we’re fast approaching a point where every Courtyard in the United States will have a new, refreshing business lobby and increasingly, we’re getting room renovations rolled off that portfolio, too. At the same time, there is a lot going on in the core Marriott brands with – Host is our biggest owner. Host has done a really fine job in many of their Marriott hotels to make sure that they’re renovated enough up to snuff, but in part because the brand is made up of a less uniform group of hotels, in other words they weren’t built in groups of 50 or 75, but often were built one at a time, there’s less of a programmatic renovation that’s under way. We are not moving away from the core Marriott brand, but I think we’ll intensify some of the communications and programmatic renovation work that we anticipate over the course of the next few quarters, and we’ll communicate with you much more about that as the year goes along.
Robin Farley – UBS: I’m trying to think about what the takeaway should be on your commentary in North America, because your guidance actually was raised a bit at the bottom end, so a little bit more optimistic, but I guess I’m trying to square that with your comments getting – your comments about sort of the (closer end) business on the corporate side being a little bit softer. So, I wonder if you could just kind of help square that?
Arne M. Sorenson – President and CEO: Yeah, I think thematically, the guidance we’re offering now is essentially the same as the guidance we offered a quarter ago. We have brought up the lower end by 0.5 point, but I think that’s mostly a function of the number we actually delivered in the first quarter. So as we look at the balance of the year, we looked at the low end of that range that we had a quarter ago, and to get to that low end would require a really kind of pitiful performance between now and the end of the year, which we just don’t think is likely, obviously, we’re also hoping that that doesn’t happen. So I wouldn’t view that 0.5 point lift of the bottom end as being a sign of a meaningfully different view today than we had a quarter ago. I think we would say today, as I think we’ve said a quarter ago, that what we see is a steady, broad recovery in the economy and as it impacts the lodging business with demand growth and increasingly powerful shift to rate growth. That is the strongest bit of tailwinds that we’ve got impacting our business. The caution is this is not a recovery which has got a sort of free-for-all robustness. I think generally, we see our corporate clients spending, not cutting back, getting back on the road but not necessarily throwing all caution to the wind and saying, we’re going to do whatever we want to do and not be thoughtful about the risks, which are still apparent in the economy particularly because of high unemployment and Europe and some of those sorts of issues. So it’s a steady and broad recovery, but it’s got an element of caution to it. I think on balance that is the same view that we had a quarter ago.
Robin Farley – UBS: So your outlook is not really expecting anything? I mean, I assume you’re expecting continued kind of softness in the short-term corporate group?
Arne M. Sorenson – President and CEO: Well, again, the biggest point here is that the recovery is steady and it is broad, and we expect that to continue to come. If you find the places where there are a bit of proof of the caution we would say it was probably around short-term group bookings in Q1, and as we come through our data, the bookings that were actually made in February for the near term were soft, but during the same month of February, when you look at total bookings that we made for the next 12 months and then for 2014, and the next 12 months after the next 12 months, they were actually up from the prior year, and so that tells us that we’ve got a recovery which continues to have strength, but again it’s not a free for all recovery.
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