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The travel sector shoving a little bit more optimism. Tony Capawana, the president and CEO of Marriott, saying this on the latest earnings call. The demand for all types of travel remained strong even as the rebound impact from the pandemic has waned. A place to say that, Tony joins us now and he'll be with us through the at Tony, good morning to you. Good morning eighty eight hundred properties, one hundred and thirty nine countries. You've got a decent
line of sight into the global consumer. The story we've heard a lot about is US strong, rest of the world not so good. Do you see it the other way round in your business?
Yeah, I don't know that.
I would say the US is weak. I think the US has reached a normalized environment a little more quickly. If you look at the experience we had in our business last year, we saw a global RevPAR revenue per available room, which is the metric that we use to evaluate the strength of the business increase about fifteen percent, single digit growth here home in the US, strong double
digit growth internationally. Now, some of that is because those markets opened a little more slowly, so they benefited from easier year over year comparisons. But even as we look into twenty four, we guide it on our earnings called three to five percent global RevPAR growth this year again disproportionately stronger international.
Let's sit in international just for a moment. So UK economies contracting, Germany Agobian recession, Japan in one, China struggling. You don't see it in quite the same way, and I find that really really interesting. And you seeing a bounce back, then what you actually see in which region a more constructive on.
So Asia broadly is really strong from a travel perspective.
Right now.
We think about Asia in two buckets, if you will, what we call APEC Asia Pacific excluding China, and then Greater China. Greater China's fully recovered to pre pandemic levels, although interestingly largely on the show of domestic demand. If you look at cross border air airlift, it's only about sixty or seventy percent recovered to pre pandemic levels. So we actually think there's still a fair amount of upside to the China recovery story as more and more cross
border travel recovers. I'll be in China in two weeks, and I'm anxious to see how it feels in terms of international travel. I was there maybe nine months ago and it felt very domestic. I was in markets like shang Sha and Shengdu and felt like I was one of the few international travelers. So it'll be quite interesting when you look at the Apech markets. They are booming.
Thailand is very strong, Singapore is very strong. I was just in Vietnam, really strong, both from a development perspective and an inbound travel perspective.
And the last.
Comment I would make, You've seen China create some visa free travel zone across the APEC region and that's really impacting demand patterns.
I have to go there.
We talk about banning iPhones. Is there a problem with staying at a Marriotte hotel in China?
No, you know, we have It's our second largest market. We just opened our five hundredth hotel in China. We've got another four hundred hotels in the pipeline behind that. The vast majority of our portfolio is China owned, the vast majority of our workforce is Chinese, so we see great strength in our.
China business moving forward. I am curious about where you see the demand coming from I know you've fit expanding into mid scale. We said it sale mid scale types of accommodations. Is that because you see the growth in actually lower income and media income families and not as much in the luxury sector.
That's a good question. My view is it's not binary. We have the largest luxury portfolio in the industry. We have more than five hundred luxury hotels globally, another two h RIDD and fifty in the pipeline behind that. We saw a revenue per available room in the luxury portfolio actually grow ten percent. I was listening to the prior segment and hearing about trade down. We're not seeing that from luxury. Luxury continues to be a really strong segment
for us. Our entry into mid scale is really intended to open the aperture. Our objective simply is to try and capture as broad a segment of the traveling public as possible, and entry into mid scale just allows us to capture a broader segment of the traveling.
Can I ask you what is mid scale? Can you describe that? What is the difference between sit mid scan and luxury and what you call the other end of the scale.
So luxury is obviously from a physical product perspective and a service delivery perspective, everything you could hope for mid scale simply put cheap and cheerful, right, simple, high quality facility, but simply delivered minimal services g bed, great shower, great Wi Fi, but relatively limited services.
When you're looking at that mid scale, your competitor IHD was on yesterday and talked about ten next ten year projections. US middle class will grow one hundred million, China's middle class two hundred million. When you look at building out the middle class around the world, where is it is that in China?
It's everywhere. I mean, I think across Asia. You see really strong growth in mid scale. You see it here in the US, and that consumer we want to get them exposed to the breadth of our portfolio. Early. We've got nearly two hundred million members in our loyalty program Bonvoy.
By entering the mid scale segment for the first time, it gives us the ability to show a segment of the traveling public the breadth to the portfolio, who perhaps isn't aware of the thirty brands that make up Marriott today.
All I can say is that side of the table is the luxury side, and this is a fearful side. See I can thank you all.
Yeah, exactly.
Sort of a question. I love it sounds not here anymore of a mainstam.
Well, I mean I'm wrong.
I know I'm missed.
Talking about me at all. I'm not gone. Let's move on.
There is this question though, about what Karen Dawson was saying, which is, we are seeing delinquencies tick up, we are seeing retail sales come in weaker than expected, we are seeing signs of cracks on the margins. Are you not seeing it? I mean, yes, because you're offering a wonderful product and etcetera, etcetera. But is it partly because people continue to prioritize travel in a way that they just didn't before the pandemic.
I think that's exactly right. One of the great benefits of our credit card partnerships with JP, Morgan Chase and an American Express is we have really deep insights into that consumer spending and even prior to the pandemic, what we saw, maybe with younger demographics, was a shift towards or away from spending on hard goods towards spending on experiences.
It appears when we look at that data today, the pandemic acted as an accelerant to that trend across demographics, and as a result, now perhaps the consumer saw or learned during the pandemic. I didn't buy any purses, I didn't buy any watches, I didn't buy any shoes, and
I didn't miss it that much. But I sure missed traveling, and so I've prioritized that disposable income I have, and I am seeking the vacation that I missed, the family reunion, the wedding, the trip with friends, whatever it might be. And so we really don't see that decline in travel spending in the data. We just reported fourth quarter and full year earnings highest Ebadah in the history of the company.
As I mentioned, fifteen percent RevPAR growth, really extraordinary numbers, and what was encouraging to me, the strength we saw was across geographies and across demand sectors.
I missed the service. Can we talk about that. I'm not talking about Marriott now, just for the record, I'm talking about hotels in general. You go in, the towels are there, they might be on the floor. I'm usually good about that. I'll put that on the side, I don't make too much work for people. But then there'll be this little card that it will say something like we're going green, so we're pulling back on washing things. And I say the same thing every single time I'm
in a hotel room. Are we using going green as an excuse to provide less service than we used to at hotels? Yeah?
I think that would be a fair view if you didn't have optionality. And so if your view is I want fresh towels every day, I want my bed remade.
Ever, we can still go on for it.
You can absolutely still get them. But what we can't hear from our customers more and more is they want the ability to contribute sustainability and have sustainability be a part of their travel.
At the high end. Well, the makes we stay board interesting, all right. I rule myself out personally. I think that when I go and you spend that much money.
You towels are the Saint regions.
No, I'm not getting too that. If you go to a hotel, five star hotel, spend real money to go and stay there, you want fresh towels, fresh sheets, don't you. Isn't that whole part of the experience.
I don't need to go into how often do you watch your tower home.
Home every couple of days, of fresh towel every couple of days.
Honestly, I can reuse my talent because I feel like I'm obligated to.
It's the conversation I didn't expect, But ultimately I'm getting to the point about service. Don't you feel like service is pulled back since the pandemic?
Without a doubt it has been, and it's been sort of an open non secret because frankly, there wasn't the staff, which raises this question of whether you can hire enough people and what kind of people you can retain over a longer period of time.
It's a good question we can get into.
Although one of the things that's been interesting when you've watched the employment reports over the last number of quarters, you see that hospitality has been a disproportionate contributor as our industry sector.
Staff's very true, and I'll say this for the record, stand at my house is not one thousand dollars a night Tony caf one of International