Ladies and gentlemen, thank you for standing by, and welcome to the Marriott International Third Quarter 2016 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. And after the speakers' remarks, there will be a question-and-answer session. Thank you. I will now turn the conference over to Arne Sorenson. Please go ahead.

Good morning, everyone. Welcome to our third quarter 2016 earnings conference call. For those in the U.S., happy election day. We're pleased you're taking the time to listen to our earnings call, but we hope you also get to the polls today. Joining me today are Leeny Oberg, Executive Vice President and Chief Financial Officer; Laura Paugh, Senior Vice President, Investor Relations; and Betsy Dahm, Senior Director, Investor Relations. Before we get started, let me remind everyone that many of our comments today are not historical facts and are considered forward-looking statements under Federal securities laws. These statements are subject to numerous risks and uncertainties as described in our SEC filings, which could cause future results to differ materially from those expressed in or implied by our comments. Forward-looking statements in the press release that we issued last night, along with our comments today are effective only today, November 8, 2016, and will not be updated as actual events unfold. You can find a reconciliation of non-GAAP financial measures referred to in our remarks on our website at www.marriott.com/investor. There are several topics we want to cover today, including our third quarter financial results, third quarter business trends, fourth quarter guidance, and our early look into 2017. But first we want to talk about the Starwood acquisition and the integration. This is the first earnings call for the new Marriott International. On September 23, we completed the most transformational transaction in the company's history. Including the pipeline, our global system encompasses nearly 1.6 million guest rooms today. Our near term priorities are straightforward; reach out to associates to knit the company together culturally; seize, as soon as possible, top line synergies; property cost efficiencies and $250 million in G&A savings, and do all this while remaining focused on our ongoing…

Thank you, Arne. As you saw last evening, we reported diluted earnings per share for the quarter of $0.26. GAAP results were constrained by $237 million of merger-related costs, including $186 million of severance and retention costs, $24 million of transition costs, $18 million of transaction costs, and $9 million of interest expense, partially offset by the eight days of Starwood's operating results. To provide visibility into Legacy-Marriott's performance in the quarter, we've adjusted third quarter results by backing out the eight days of Legacy-Starwood results and merger-related costs, as well as confirming the share count. As a result, adjusted diluted earnings per share for the Legacy-Marriott business totaled $0.91, a 17% increase over the prior year. Compared to our July 27 guidance, adjusted fee revenue was $6 million below the midpoint of expectations due to more modest RevPAR growth and lower than expected application and relicensing fees. Still on an adjusted basis, our operating income of $378 million exceeded our guidance of $370 million to $375 million, as we saw good performance on our owned, leased and other net line, lower than expected depreciation and amortization expense, and better than expected G&A spending due to solid cost controls and some open positions. Adjusted fee revenue for the Legacy-Marriott business increased 6%, with incentive fees up 13% in the third quarter. While Legacy-Marriott RevPAR and unit growth drove fees higher, fees were constrained by $9 million of unfavorable foreign exchange. Worldwide house profit margins for Legacy-Marriott increased 90 basis points for company-operated hotels, as many hotels are already focused on cost containment in a slower RevPAR growth environment. Strong results at our owned and leased hotels reflected recently completed renovations in Tokyo and Charlotte, the addition of two new hotels in Rio de Janeiro, which benefited from the Olympics, and…

And your first question comes from the line of David Loeb with Baird. David Loeb - Robert W. Baird & Co., Inc. (Broker): Wow. Thank you for taking me first. Good morning.

How about that. Good morning, David. David Loeb - Robert W. Baird & Co., Inc. (Broker): I appreciate that. There's a lot of interesting stuff to discuss in this and a lot of really good progress. But I want to focus on one particular issue, which is the ongoing book direct initiative. And I wonder if you can give us an idea about how you're viewing that relative to the owners? What impact you think that's having on RevPAR, on ADR in particular? And do you think the owners are seeing an offsetting or partially offsetting decrease in OTA commissions as a result of that initiative?

Well, I – it's a good question David. I wish we could be more definitive about it. I think it's still relatively early in assessing the impact of this. What we've seen so far is encouraging to us. But I think, fairly, we don't have statistics that we can use that would prove to you that we have delivered true success from this yet. But the early statistics, we see a high level of signups, I think something like 800,000 or 900,000 incremental Marriott Rewards signups since member only rates were launched. I think we are getting through the din of the marketing battles. As we've talked about in the past, there was a perception that rates at our hotels were cheaper on channels other than our own, which has not been true for well over a decade. And we wanted to really find a way to break through that noise and make sure folks knew that they could get competitive rates by booking directly with us and going so far as to say there's a bit of a discount, actually, if you book directly with us we thought was a powerful way to get there. And so we're seeing good pick-up of that marketing message, good stickiness with the loyalty program. Obviously, though, the discounts are available to folks who would have booked directly previously, as well as folks who might be booking directly now for the first time, and that has – continues to have a very modest impact on RevPAR. We think in Q3, probably about 30 basis points. And we'll watch it as we go forward. Obviously, this is something we talk with our owners about with some regularity, and I think generally the community to include us and our owner partners is supportive of continuing to pursue this. So it's all systems go. David Loeb - Robert W. Baird & Co., Inc. (Broker): Okay. And on the cancel/re-book technology, what are your latest thoughts? I know I've asked this before, but what are your latest thoughts on how you might combat the impact of that technology going forward?

Yeah, I mean, the first thing to note is we don't see a material impact from that yet in any event. So we obviously continue to watch it. We're looking at cancellations generally, what's happening across our portfolio, and we're looking at it in individual markets. And I think stay tuned. That's something we'll continue to watch. David Loeb - Robert W. Baird & Co., Inc. (Broker): Okay. Thank you all very much.

Your next question comes from the line of Smedes Rose with Citi.

Hi. Good morning. Thanks.

Hey, Smedes.

Good morning, Smedes.

Hi. I wanted to just ask, you know, you're taking a little bit more of a conservative stance on your RevPAR outlook for 2017 versus your largest U.S. competitor. You're at 0% to 2%. And I was just kind of curious, what do you think you're seeing now that were a few weeks further on here than when they reported that maybe has kind of changed your view? Or are you just sort of just taking a more conservative outlook given what you're seeing in the economy?

We obviously don't know exactly how they came to the, what range that they've provided when they released earnings. So it's a little difficult for us to provide a real detailed comparison. Having said that, listening to the words that they used and going through our own process, I think there's a couple of things that we would say. One is, I think we would be providing exactly the same guidance if we were simply Legacy-Marriott. So the first thing to point out is this is not a range which is driven by the recently completed merger with Starwood. I think the second thing, and my guess is this is more or less the full explanation you'll get, is that we expect GDP to continue with the sort of anemic numbers that have been posted in 2016 as we go into 2017 and beyond. And it sounded as if one of our largest competitors was expecting a rebound of some sort in GDP. We hope they're right. Obviously, if GDP performs stronger, that will increase demand strength in our business, but we're building a model that essentially assumes we'll continue to bump along at the levels we've been at.

Okay. And then just sort of on that, I think on your last call you noted that group RevPAR was pacing up 7% in 2017 and you called it to 2% now. Is that pace of deceleration kind of normal as you move through towards the end of the year? Or is that a faster pace than what you would have expected?

Yeah, I mean, I think it's faster than we would have expected. If you go back to the full year, I think we started – and Laura can maybe pull this out as we talk – but I think we started 2016 with group business up almost 10% for 2017 compared to where we were at the first of 2015 for 2016. And I think we cautioned folks that that was not likely to hold because as we got farther into the year, we would see that we could book less because we had less capacity. And so we expected that we would tail down towards the maybe mid to high single digits. But I think the experience in the last quarter or so going from roughly 7% to roughly 2% is worse than we anticipated. I think there are a couple of – one positive thing that can be said next to that, when you look at bookings done in Q3 for all future periods, we were up about 8%, if memory serves. So people are still making commitments on group business and there's good growth. But when you look at the near term, when you look at group bookings in the year for the year, or you look at group bookings for the next 12 months, we see less robustness there. And to us that's a sign of some caution by corporate customers probably particularly who – in the sense that's where group business gets most like corporate transient business too. And there I think we're seeing companies be just a bit cautious and probably reflect the sort of anemic GDP growth environment that we've been all operating in.

Great. Thanks for the additional color.

You bet.

Your next question comes from the line of Robin Farley with UBS.

Great. Thanks. I wonder if you can give a little bit of color on, it looked like the percent of properties – I think this is just Legacy-Marriott properties -- paying incentive management fees was down year-over-year. I wonder if you could give a little bit of color around that.

Right. Overall, we've got Legacy and Marriott. Just a couple interesting facts for you is that, in general, the percentage of hotels earning incentive fee for Starwood is slightly higher than Marriott given their international exposure. For us, it's actually down year-over-year only barely, only by one percentage point difference. So it's not really anything meaningful. And really is again reflection of certain markets experience for RevPAR.

Okay. Great. Thanks. And then I wonder if you can give a little more color around the cut in the CapEx budget just for the Legacy-Marriott properties since three months ago, down by about $125 million. So it's a pretty significant percent of the full year budget that changed in the last three months, if you could give a little color. Thanks.

Sure. As you know as we begin a year, we have a range of projects that we're looking at. Overwhelmingly, they're identified. And what happens as we move through the year, you're looking at the pace of those deals and, in general, I would say it's just that the deals continue to move forward, but they've been pushed out a little bit. So I don't think it's a reflection of deals dropping away, but more that they're taking a bit longer to put together. It ties in with what you're hearing in the lending environment that lenders are at the margin a bit more cautious. And as we're looking at, in some cases, putting in mezzanine loans, they're taking a bit longer to put the deals together. But they continue to be in our pipeline and we look forward to doing them as we move forward.

Okay. Great. Thank you.

Your next question comes from the line of Harry Curtis with Nomura.

Morning, Harry.

Hi. Good morning.

How are you?

Good morning. I'm great. Thank you very much. The owned and lease segment was particularly strong. It's been strong all year. Can you talk about the components of that? And as you look into 2017, what would you expect to remain strong and what's going to face a tough comp?

So, hi, Harry. Thanks very much. So a couple things. I think when you look overall, let's first talk a little bit about Legacy-Marriott. Legacy-Marriott had strong owned, lease performance for its owned, leased hotels and then particularly strong performance on the branding fee side where we've had meaningful growth year-over-year compared to 2015. As you go into 2017, we're just in the process of putting our budget together now. So we wouldn't really be able to comment on anything specifically. But as you look at kind of tough comps across the board, again, we're continuing to look for our owned/leased portfolios to do well. And for the branding fees to continue, we've got a great pipeline of projects to continue to do well. I think the part I would point out is the owned/leased portfolio on the Starwood side, we clearly are seeing the impact of their sold hotels. So as you look at that going forward, you would see the owned/leased profits related to that that would kind of, on a year-over-year basis from 2017 to 2016, decline. And then you've probably got a couple one-off, like the Olympics in 2016, but again, the biggest impact, I think, will be the change in owned hotels on Starwood side.

Thank you. And just moving to the second question, I was really interested and may have missed something in – has there been a change in the way that you calculate your leverage ratio by incorporating or moving to EBITDAR? The reason I ask is that, is that part of the reason why you've achieved your target leverage ratio? And I'm guessing that the rating agencies are fine with it.

Yeah, so no change. No change in the way that we construct the ratio. As I pointed out in my comment, there were some changes relative to the calculation that we gave you a number of months ago based on better information. So whether it was the fact that you had better performance, particularly in Starwood's owned/leased portfolio where I talked about them being able to produce $180 million to $190 million of EBITDAR in 2016, to better information on the lease adjustment, for example, that's in addition to the debt in your calculation of total adjusted debt for your leverage ratio. So it really is better information than it is a change in the actual way, the methodology that we use in the calculation. And as I talked about in my comments, it kind of falls across a number of categories, including those items, and frankly, more cash.

So all systems go with respect to share repurchase then over the next even three months?

Yes.

Okay. Very good. Thank you.

Your next question comes from the line of Felicia Hendrix with Barclays.

Hi. Good morning. Thanks for taking my question.

(40:20).

Hi. So not to push, because I know you've all worked very hard, but it does look like you're well on your way to achieving your synergy goals. So wondering if there's any chance on surpassing those on the cost side. And I know it's early, but can you give us any color of maybe some early wins you might be having on the revenue side?

I think the $250 million that we've talked about for G&A savings is still your -- the right target. It's certainly the target we're managing against. That is not a conservative external target which looks different from the target that we've got internally. And so, I would continue to look at that. To state the obvious, with eight days only of Starwood in Q3, I think it's difficult for you – for us, let alone you, to conclude how much of that $250 million we've achieved so far. But we're getting underway. We're getting underway very quickly. And as you can tell from our preliminary comments, we're really trying to set up the organization as quickly as we possibly can so that the change to people is behind us and so that people can be looking forward. And so we'll move at that. I think just to state the obvious, 2017 will be a bit messy because we'll have transaction and transition costs that will help you understand as each quarter is reported. They're a bit difficult, really, honestly, for us to predict by quarter at this point in time. But we remain optimistic by the time that we get towards sort of 12 months from closing, the lion's share of that $250 million, at least from a run-rate basis should have been achieved. We can't tell you sitting here today that we know for certain that every final dollar of that will be achieved by 12/31/17. I suspect there could be some areas where we're running duplicate systems or something else that creates some costs to slop into 2018, but we'll be very close. And to the extent we don't achieve the year-end, we'll, I think, get it fairly quickly in 2018. I think in terms of synergies for the hotels, both top line and bottom line, we talked obviously about the loyalty program. I think the early response from our customers about linking those programs and matching status is very comforting and that is exactly the kind of response we want and expect. It will hopefully drive larger share of wallet for us with an even larger loyalty community. And obviously, that's what we're focused on. And then on the cost side, we obviously talked about procurement. We talked about OTA commissions, but we're looking at essentially every relationship that the two companies have, whether they be about cost of systems that are proprietary to us, or third-party contracts. We're trying to make sure we deliver using the economies of scale that we've got and think that we can deliver top and bottom line improvements for our hotel owners in both portfolios.

Great. And then when you think about your unit growth going forward and you gave us some, or I guess maybe gave us some guidance, or one of you did, at the beginning of your prepared remarks. I'm just wondering, are you seeing an invigorated interest in the Starwood brands? And as you now market a consolidated portfolio to your owner and developer base, I'm just wondering, could there be upside to your unit growth forecast?

Well, the openings obviously are overwhelmingly driven by deals that we've already signed. Maybe even (44:05).

I guess I was talking more about your pipeline.

Yeah, pipeline will be interesting. I think we are very optimistic that brands like Aloft and Element, which are very interesting from a customer perspective and I think have been something that the franchisee community particularly in the United States has looked at and been interested in. We have already seen that there is a strong appetite to grow those brands. I think Starwood saw that even before we closed the transaction with significant increase in the signings for those brands in the United States and we'll focus on those. We'll continue to make sure that we refine them without changing the kind of customer idea that they've got and we think we'll see growth of those brands accelerate quite significantly.

Great. Helpful. Thank you.

You bet.

Your next question comes from the line of Patrick Scholes with SunTrust.

Hi. Good morning.

Good morning.

Hi, Patrick.

I'd like to dig in a little bit more into the falloff of the group pace. Specifically, falling from 7% to 2%, what was it with the composition? Was it the occupancy or the rate or perhaps both that had really tailed-off in there?

Well, one thing we should specify is, we're comparing apples to oranges here just a little bit. The 7% is Legacy-Marriott. The 2% is the combined company. And we probably should have helped you a little bit better with that, I suppose, in the release that we put out. I think if you look at simply Legacy-Marriott, it's more like a decline from 7% to 4%. Now that's still a decline and it's still a decline of three points. So let's not use those statistics in a way that suggests your question isn't still relevant. I think the bulk of the impact is in volume. In other words, no, it's not rate. And it's simply this relative caution about near-term commitments. And, again, it would simply be repeating what we said a few months ago, but that is really mostly a corporate story, mostly near-term caution that does not seem to be impacting the kind of commitments they make longer term.

Okay. So Starwood came in with a sort of a weaker growth rate versus your Legacy. And I may have missed it. Did you give out statistics on 2018 for group pace at this point?

All we said was that the bookings in Q3 for all future periods were up about 8% or 9% compared to what we booked in Q3 of 2015 for all future periods, which is positive. The 2018 numbers are up high single-digits, very high single-digits. I don't think they're quite 10%, but I think they're very close. And Laura will keep me honest here and make sure that we know which portfolio we're talking about.

Legacy-Marriott for 2018 is up about 9%.

Legacy-Marriott.

Yeah.

Okay. Thank you. That's it.

You bet.

Your next question comes from the line of Shaun Kelley with Bank of America.

Hi. Good morning, everyone, and congratulations on the deal close. So my first question is on the fee growth that you guys experienced and the outlook for the fourth quarter. So on a pro forma basis, I think the commentary was you're looking for 1% to 2% growth, which is probably a little lower than what we were looking for. Leeny, I know you broke out a few items that were headwinds in that number, but I was wondering could you give us a little bit more clarity or quantification on some of those and specifically the reversal on the incentive management fees?

Yeah. I think at this point, we wouldn't get into specific numbers, but I think you could see high single millions in terms of year-over-year, in terms of the delta, in terms of what kind of you're looking at across the board from the two companies having to suffer from everything from the Middle East to what was a change in FX and the impact of RevPAR going forward. So I think it's overwhelmingly incentive fees. And base and franchise are going to look a lot more normal relative to the growth in units and the growth in RevPAR. There are a few contract changes here and there that could impact the difference between franchise and managed, per se, but overall when you look at base and franchise, they're going to look very much in line with what goes on with RevPAR and unit growth. It's really incentive fees where you're going to see this combination of effects. The other thing, again, year-over-year, when you kind of adjust and look for full year, I think that is important to look at because you've got some quarter to quarter variations that affect this that when you look at the full year 2016 to 2015 on a combined legacy basis, you'll get something that looks much more like the mid single digits which you would expect overall from the portfolio given the RevPAR and unit growth.

Okay. Perfect. That's helpful. And then maybe we can take that forward as we think about next year and probably again thinking about the overall, but maybe the IMF in particular. As you think about the RevPAR outlook that you provided, and I know you don't want to get into giving specific guidance this early on, but just directionally is it possible for IMFs to be positive next year in an environment where RevPAR is only growing with the outlook that you provided 0 to 2% and we're starting to see house profit margins probably peaking or starting to erode a little bit?

So a couple of comments. First of all, clearly next year, with the kind of RevPAR that we've outlined, we would be thrilled to end up with flat margins. We have done an incredible job with margins in the RevPAR environment that we've had this year. And perhaps in some respects, you could argue that we've gotten margin that now we will be happy to keep in terms of the margin improvement. So, I think on that standpoint, I wouldn't look to see higher IMFs as a result of any margin improvement with essentially what is a pretty low RevPAR environment. Now, we would expect to have unit growth and we expect to have unit growth internationally, which is going to obviously help our IMFs given the construct of our contracts there. Where it is tough to predict is this issue of where. For example, when you look at the Middle East this particular quarter that we're looking at, in Q4, you clearly see the dramatic impact of lower RevPAR on our IMF as we go into Q4. So I think that's where we need to get into the details on our budgeting process to look at the tradeoff between unit growth, internationally, as well as RevPAR, as well as then the performance of specific markets and what happens to their IMFs. So it's possible, but certainly too soon to tell at this point.

Shaun, you should also remember that for Marriott legacy in 2015, we earned about half of our incentive fees outside the U.S. but combined with Starwood now, we're probably at about two-thirds of our incentive fees come from outside the U.S. So we're a more international company than we were in the past.

Excellent. Thank you both.

Your next question comes from the line of Jeff Donnelly with Wells Fargo.

Hello, Jeff.

Hi. Good morning, folks. Good morning. Just, first question for Leeny. I was just trying to get my arms around the prospect of any kind of significant investment you see in technology going forward. And now that you've had some time with Starwood systems, can you talk about where you are at with just integrating all the major technology systems, reservations, accounting and what not so it's efficient for employees but also from a seamless consumer experience, whether it's mobile apps or the ability to do digital key and what not.

Sure. You've definitely outlined our next 18 months. We are heavily involved in every single one of the systems that you described. I think you can start at the easy place, which is thinking about the hotels, and actually the way that they operate. And we are looking at putting them all onto the same back office system that we have at the Marriott Hotels. And that's a process that we'll be getting into absolutely as soon as we can. As we look at the reservations and the loyalty platforms, clearly there is a massive amount of work to be done. And it also, we need to take into consideration our relationships with our credit card and timeshare partners, and a lot of technology work in looking at what exactly it will take. So we can't give you a specific timeframe yet on the exact timing. But certainly moving in that direction. And as far as the fundamental systems of everything from company payroll and the way the hotels work, we are moving so that well into 2017 we will have everybody on the same system.

That's useful. And maybe for Arne, there's been no shortage of ink spilled about the need for 30 plus brands. I think that question probably comes up just because of the subtlety of differences in pricing and positioning and the argument that every brand adds some degree of marginal cost. I guess in that regard, can you maybe talk about the incremental cost of operating another brand? And is it your longer-term plan maybe to provide more differentiation between brands so that (54:34) focus?

Yeah. We've said a couple of things here that are sort of obvious. I think if we had not merged with Starwood, would we be trying to build 30 brands from scratch? I think the answer is probably not. At the same time, having done this deal, the 30 brands all exist. They all have substantial capital that has been invested in them, particularly by the hotel owners who have made deliberate bets about which flag they put on their hotels. And we don't have the power to, nor the desire to, try and convince them that those bets have not been good bets. I think the other thing that's really important to recognize here is the biggest expense from a brand perspective, in theory, is about marketing the brands. And, obviously, that's the most expensive when each brand has to be marketed on its own. And in that context, you would want as much definition as you could have between brands. And it would still be expensive to go out and market each one alone. I think in many respects that's no longer our model, if it ever was. I think the principal model today is we go to market through our loyalty platform, through our dot com site, through our app. And those things allow us to essentially market a portfolio and offer through that portfolio an incredible range of choice to our customers, which drives, actually, conversion from looking to booking that much higher and makes the economics of each brand better, not weaker. And so you put all that together, and I think that's why we conclude that we're going to keep these brands and we're going to continue to grow them. I don't really think that there are material incremental costs to having a brand given that that's the business model that we have.

Okay. Great. Thank you.

You bet.

Your next question comes from the line of Ryan Meliker with Canaccord Genuity.

Hey. Good morning, guys. Thanks for taking my question.

Good morning.

I just wanted to follow up a little bit about your outlook for 2017. You talked about corporate negotiated rates being up in the mid single digits. Can you give us any color how those conversations are progressing with some of your biggest corporate clients? Do you expect volumes to tick up? How are they thinking about things? Obviously, rate's a component. But you guys, obviously, want to try to lock in as much demand as possible as well.

Yeah, we said in the prepared remarks that we would increase, we thought, the volume of special corporate business that we brought in. And at the same time we said for like-for-like accounts we should see mid single digit growth. I can't tell you. I'm not sure we know yet what the average rate for the larger portfolio of special corporate compared to last year's special corporate volume will look like. In other words, are the new clients we're adding at the same rates? Or are they at higher rates because they're smaller? Are they in different markets? All those things will have to get worked out. We're still a bit early. I mean, we have generally made proposals to every one of our significant special corporate customers, and often we've heard back from them, so we've got some to and fro, but by and large, those negotiations have not been completed. And we think it's based on the early data we've got that we talk about the mid-single-digit increase on like-for-like accounts.

No. That's helpful. And then I guess – and obviously, I'm not asking you to negotiate on the phone here. I'm just curious, as you guys are reaching out to some of your corporate clients, are you at a stage with RevPAR growth kind of in this low single-digit range to be willing to sacrifice rate for some type of volume guarantee?

Well, let me answer it this way maybe, and which I think can give you some comfort. While RevPAR growth rates have declined a bit, obviously, the occupancies of our hotels remain very high, particularly on nights and in markets where business travel is significant. So if you look not at full week occupancy, but you look at Monday, Tuesday, Wednesday, and Thursday nights, we're running chock-a-block, and that means even in a 0% to 2% RevPAR environment, we're not without some position in discussions with our customers to make sure that we're being fairly compensated for that occupancy, which is in relatively short supply.

Okay. That's really helpful. Thank you. And then just kind of one last thing that's a little bit bigger picture. Anything over the past 10 months that you learned associated with the Starwood transaction that you think will help you guys going forward that you didn't know going in?

There's – I'm sure we can put down a long, long list of things. But I – let's keep it maybe a little bit in general. And maybe we can even back up a little bit. When we were in the summertime with significant news about whether we'd get approval and how long it was taking, one of the New York tabloids ran a story suggesting that we had buyer's remorse and maybe didn't really want to close the deal. That story had zero factual support, absolutely zero factual support. We never lost any enthusiasm for completing this transaction, and now six weeks from close, seven weeks from close, I guess, this Friday, we are enthusiastic as ever. And I think when you look at the report that we issued last night and we've been talking about this morning, what we see is a combined company with leverage levels already back to the levels that we target long-term with an enormous ability to produce cash, and we'll be back in the market with that cash buying back our stock. But we also see and we look at the third quarter EPS growth results and it's Legacy-Marriott because that's the only sort of apples-to-apples comparison we can do, but you're in a high teens percentage growth year-over-year. And we think the model's working extraordinarily well. We think the strength of the Starwood brands and the Starwood loyalty program have continued to impress us. And we should see that that development engine and the share of wallet we are enjoying from our customers should continue to expand. So we are very pumped up and eager to go.

All right. Thanks a lot for the color, Arne.

Your next question comes from the line of Thomas Allen with Morgan Stanley. Thomas G. Allen - Morgan Stanley & Co. LLC: Just following up on those previous comments about buy-back, can you set some level of kind of market expectations for the level of buy-back in the fourth quarter? Thanks.

Sure. I would – something in the couple hundred million dollars ballpark is not an unreasonable area of expectation. Thomas G. Allen - Morgan Stanley & Co. LLC: Okay. Helpful. Thank you. Then just a bigger picture question. You still have – you have these Starwood assets you're looking to sell. Can you just talk about your view on the current state of the transaction market? Thanks.

Sure. As Arne talked about in his comments, clearly, there is some, just in general overall in the transaction market, there is some concern about the slow pace of economic growth. However, I think at the end of the day, what we see is that for brands that are very strong and in markets where there is demonstrated performance that deals can absolutely continue to be done. And so from that perspective, as I described, we've got, call it 70% of the assets in the U.S. and I would expect those to be sold relatively sooner than necessarily the ones in Latin America, and that for – in general for those hotels that they are strong assets and we're already engaged in discussions on a number of them and seen good strong interest. Thomas G. Allen - Morgan Stanley & Co. LLC: Great. Thank you.

Your next question comes from the line of David Katz with Telsey Group.

Yes. Hi. Good morning.

Hey, David.

Good morning.

Congratulations on your closing and I, as you know, I'm an avid reader of the tabloids. I did want to just follow-up on Harry's issue from earlier. As I look at what the debt balances are and I know, Leeny, you made some comments about what the debt balances were that you assumed at the closing. And then if I just, really from a high level, look at the debt balances and cash that you gave us relative to the leverage comment, I'll admit I'm finding a bit of a disconnect. How much debt did Starwood pay down, I suppose, is really the question? How much debt did you actually assume from them? And I would imagine all this will be ironed out when a Q gets filed.

Right. So you'll see the Q tomorrow and it'll be a little bit easier to take you through it in the detail. But just in broad terms, they did pay down roughly $800 million in debt prior to the transaction closing. So when you look at what we described, we've got basically the $8.8 billion of debt that we've got at the end of Q3 and we've also got $1.1 billion of cash. Okay? So kind of in and of itself you've got the scenario that we are in a better situation relative to the debt than we had expected prior. I think the other thing I would point out is that earlier when we were looking we had less comfort about knowing the details around their cash globally. And as a result of doing the entity restructuring that I described earlier, we are comfortable that we are going be able to use all of the debt – all the cash balances that we don't need to run our business to repay debt and use for general corporate purposes over the near term. And I think that probably when you compare it to where we were a number of months ago, we were at the margin a bit more cautious about knowing the details about what we would be able to do from a cash perspective.

Right. Is there some meaningful adjustment in there for bank purposes with respect to the leverage? In other words, if Starwood has a capital lease, is that something that gets added back or deducted from your debt balance, or is there any meaningful chunk in there we should consider?

Right. There's kind of a classic calculation where you take an NPV of the lease payment. And that, again, we've got more refined information on knowing what their required lease payments are over the next number of years as compared to what we knew six months ago. And there again, I think we benefited a bit from being more conservative in our estimation about the length, the size, the nature of some of those leases where we got some benefit probably not – certainly not a whole tenth of -- 10 basis points, but certainly some benefit there. I think the three biggest ones, as we described before, the three biggest changes to the 40 basis point improvement was as we described: just more cash overall, Being able to feel comfortable about our access to that cash; The level of EBITDAR which is refined for both their higher owned/lease performance and frankly the combination of the two companies combined performance on the latest trailing 12 months; And then the third that you were able to look at the actual amounts of cash that you have on hand.

Got it. Okay. Thanks for your answers. I appreciate it. Good luck.

Sure.

Your next question comes from the line of Bill Crow with Raymond James.

Hey, Bill. Bill A. Crow - Raymond James & Associates, Inc.: Good morning. Good morning, congratulations on the transaction. Arne, with the deal done but obviously you got your hands full on the integration. But are you able to look at other industry issues like short-term cancellations and start to dedicate more resources, or is that just too risky to the new combined loyalty program?

Well, we talked about this just a little bit in response to one of the other questions that came in. And I don't want to go further than we're prepared to go. But I think the general point here is that the transaction was attractive to us, compelling to us, in significant part because of what we think we can do with the loyalty programs. And those loyalty programs, managed well, should allow us to drive that much more of our business directly from our most loyal members, which is the cheapest business for us to book because it comes and books to us to directly. And to – you don't do that just by being nice and good looking. You've got to do that by delivering real value to those customers because they're not going to be loyal to us unless it's in their interest to be loyal. And so we're working through those things. They include significant work around systems and the like that we use to have our relationship with them but also, how do we continue to make sure we're delivering value to them. And so, free Wi-Fi and member rates and mobile check-in and keyless entry and points, these are already things which are really available to our loyalty members, but not to other customers. And we'll continue to make sure that we're managing that in a way that hopefully will give us good protection against whatever sort of either threatening intermediaries or newfangled ideas that come out that are seeking to upend that relationship. Bill A. Crow - Raymond James & Associates, Inc.: All right. And the follow-up. Arne, as you look at your franchise applications and you kind of use all your years in the industry as a guide, where do you think – what year do you think U.S. supply growth peaks, the cycle?

Oh, it's a good question. I just haven't thought precisely about that question. Obviously, a big part of it depends on what happens to GDP growth. So if GDP bumps along at 1%-ish in the U.S. for the next year or two, I suspect we'll see more hotels open than are signed to the pipeline for the industry. Obviously, the trick here is for a company like ours to do better than the industry does and we'll continue to be focused on that. But I think the – in that kind of operating environment, we'll probably see most of the hotels that are in the pipeline in the industry open, ultimately, but the pipeline shrink in its entirety, which I would guess would mean that 2018 maybe is peak in the U.S. Obviously, if you've got a stronger GDP environment than that, more projects will be started. And at some point you'll hit a – it'll hit a place where the total pipeline sort of stays at the same kind of level or conceivably it could grow, in which case peak supply growth could be later than that. Bill A. Crow - Raymond James & Associates, Inc.: Thank you. That's it.

Take that for what it is, which is a off-the-cuff answer.

Your next question comes from the line of Rich Hightower with Evercore ISI.

Hey, guys. Good morning.

Hey, there.

Good morning.

Just a quick follow up on the loyalty program question, as a lot of my questions have already been answered. Now that you've gotten some time to take a look at some of the details within Starwood's loyalty program and unpack some of the differences and how they see the world and see customer value and all those sorts of things, where – if you had to pick two or three places in that context, where do you see the most opportunity to maximize the economics of the combined program eventually?

Yeah, and I'm not sure if this is exactly what you're getting at, but one obvious place where we think we have upside in terms of share of wallet, let's use a loyal SPG member, maybe an Elite member who, far too often in the past would find themselves in markets in which Starwood had no product. Think about particularly markets in which select serve hotels are much more prominent than full-service hotels. Starwood had obviously some Four Points, a few Alofts and precious few Elements. But you compare the number of those three brands that Starwood had across the United States with what Marriott had in Courtyard and SpringHill Suites and Residence Inn and Fairfield and the like, and there are thousands more places for those customers to stay with us now broadly defined as the new Marriott. And as a consequence, we should drive more share. And with that greater distribution, the loyalty program itself becomes more powerful. Obviously, one of the things that customers look for is what are the benefits I get in terms of suite upgrades or bonus points or access to lounges or other things. But also can I stay within that network regularly when I travel so that I can earn the kind of status and earn the number of points that I need in order to really get the free vacations or to get the other things that I want to get with those points? And so the breadth of distribution by itself is going to be hugely powerful in driving this. And then we've got to make sure that we are again continuing to deliver the right kind of value to the customers.

Right. That's very helpful. Is there anything in terms of the sort of the (1:13:49) level of generosity of the rewards in either program that you think is an opportunity or a deficiency versus prior? Anything like that?

There are dozens of differences between the programs.

Right.

And it'd be dangerous to focus on any one, but I'll give you one little peek under the hood. When we announced the deal in November of 2015, because Marriott was the acquirer, SPG members particularly were a bit nervous about, okay, what is Marriott going to do to the benefits that we like. And we of course tried to be reassuring in the words that we used. In a cynical era, I think people are not inclined necessarily to believe everything that's said. And so one of the things we did is with the Marriott Reward program in second quarter, if I remember right, we started doing suite upgrades and late checkout. And that was actually a powerful communication to the SPG members that actually Marriott is paying attention to what Starwood has provided to some for some period of time, and that's a reassuring sign. But we'll look at suite upgrades and redemption rules and all these other aspects over the course of the next few years and try and do right by our customers and obviously do right by the program.

Great. Thank you.

Your next question comes from the line of Chad Beynon with Macquarie. Chad Beynon - Macquarie Capital (USA), Inc.: Thanks. Just one for me just regarding the third quarter result. So on the North American limited service side of things, the performance for both Legacy-Marriott and Legacy-Starwood and actually the industry from what we've seen from STR, was a little weaker than expected, yet we continue to hear that the corporate leisure customer is strong. So could you just kind of help us flush out some of the underperformance in the quarter?

Yeah, I think the – it's interesting, if you look at our schedules, you see a bit of a difference between the managed portfolio and the franchise portfolio too. But if you look at the portfolio as a whole, the full-service hotels get disproportionate benefit from group business, and group business is stronger than corporate transient, particularly today. The managed Select-Service portfolio also skews, not as much as the full service hotels, but skews a little bit more towards group than the franchised Select-Service portfolio does. And so that's helpful, too. And I think the third thing is around geographic distribution. So when you look at Select-Service, when you look at the franchise portfolio, when you look at a lot of industry data, Select-Service hotels can skew more towards oil and gas markets. Think about markets that nobody had ever heard of before and a couple of years ago like Williston, North Dakota, and environs where you've got all this oil work that's happening out there. Select-Service hotels exploded onto the scene. There's not a single full service hotel in the whole area basically. And it's maybe a little less dramatic in markets like Houston, but you look across Texas, you look across many of these markets and you'll see that those hotels are competing in on average tougher markets, again, without the benefit of group. And that would be the bulk of the explanation. Chad Beynon - Macquarie Capital (USA), Inc.: Okay. Thanks, Arne.

You bet.

Your next question comes from the line of David Beckel with Bernstein Research.

Good morning. David James Beckel - Sanford C. Bernstein & Co. LLC: Hey. Thanks for the question. Good morning. Had a quick question about Starwood's pipeline actually. I know there's a like-for-like comparison issue here, but it does appear that the pipeline may have stalled out a bit this quarter. I was wondering if there's anything idiosyncratic at play there worth pointing out?

Yeah, no. There's really not. So a couple of comments overall. Always looking quarter to quarter can make for some interesting comparisons because a lot can go on one to the other. So, I think you will find, in general year-over-year, you'll find some really strong growth across both portfolios and perhaps in some respects a better measure of how they're doing. At the same time, it clearly, when we look at it we are trying to make sure that we are taking into consideration exactly what is going on with either delayed deals or deals that are falling off. And so from that standpoint, we kind of trued it up. I think you'll find it's such a small difference when you look at how the two companies put their pipelines together that it's not anything particularly meaningful. We are excited about the level of interest. We've done a bunch of deals even since we've closed on the transaction and look forward to continuing to watch it grow. David James Beckel - Sanford C. Bernstein & Co. LLC: That's really helpful. Thanks. And just a quick follow up on net room growth expectations for next year. I know you mentioned in the past that you do expect to prune – I don't know if that's the right word – certain Sheraton properties that might have been under-performing in the past. Is that reflected within your forward room guidance? Thanks.

Our best guess is 6% net growth next year and that's net of – best information we have on deletions as well. David James Beckel - Sanford C. Bernstein & Co. LLC: Perfect. Thank you.

You bet.

Your next question comes from the line of Jared Shojaian with Wolfe Research.

Hi. Good morning. Thanks for taking my question.

Hey, good morning.

Can you help me think about the P&L impact that is lost from selling $1.5 billion in assets? So, I guess, this year I think you're doing around $620 million of gross income on the owned/leased line. What does that look like after $1.5 billion in asset sales?

Are you talking on the revenue line or on the owned/lease net line?

The owned/lease net line.

Okay. At this point, we're really not in a position to get super detailed. I think the easiest way to describe it is what we talked about from a EBITDA perspective, which is the $180 million to $190 million of EBITDA associated with Starwood's owned hotels. We also did talk about the fact that our depreciation and amortization estimates associated with the purchase of Starwood have declined relative to the earlier description. And part of that, I'd say roughly half of that, was associated with moving several of those hotels into the assets held for sale category which is, again, going to impact D&A. But it's not going to impact the owned hotels net. So specific numbers we'll be able to talk more about in February. I think for now, the EBITDA is probably the easier way to think about it. Obviously when we sell these hotels we'll end up with a great stream of management fees in managing the hotels. So it's one thing to keep in mind is that, although there is EBITDA that goes to the buyer of these assets, we're going to continue to have a great stream of earnings from them.

I'd just add – let me add one thing to this. It will vary a little bit by market around the world. Obviously, the U.S. assets are easiest to predict, but we've got some owned assets in other markets around the world. On average, though, you would expect that the sales prices we received should be at least at the EBITDA level if not higher that the company is trading at. And so the transaction should be accretive from an EBITDA perspective. And when you look at it from an earnings perspective after depreciation associated with owned hotels, they should be significantly accretive from an earnings perspective. Now, again, that's on average. We're not saying necessarily that in a higher cap rate market where the risk profile is actually quite different that we will necessarily always get proceeds which are higher than our EBITDA multiple. But I think generally across the average we should see this is accretive to the P&L and the balance sheet of the company.

Okay. Thank you. And then, Arne, I just want to go back to your loyalty comments because Hyatt said last week that they've effectively converted 30,000 SPG members over to their loyalty program. And I know that's a small number in the grand scheme of things, but have you seen any tangible evidence of SPG members leaving presumably out of fear of just their points being diluted?

I don't think that's what they said. I think what they said last week was that they had offered to match Elite status to 30,000 SPG or SPG and Marriott Reward members. That doesn't mean they've converted them to be loyal to that company. Those folks are undoubtedly still members of our program and we're not giving up on them.

Okay. Thank you.

You bet.

Your last question comes from the line of Joe Greff.

Hey, guys. Good morning.

Hey, Joe.

Hey Joe.

What did we do to get you last in line?

I don't know. I was going to ask you the same question. I could have voted four times. Just with regard to your comments on 2017 with the 6% net room growth. Given your comments about certain delays today, and I think you also mentioned it anecdotally the last quarter, is that rooms growth disproportionately weighted to the second half of the year? And then when we look at your totality of comments today and think about next year, and we look at fee growth, are we looking at fee growth that maybe the best case scenario or the most optimistic scenario is that fee growth approximates net unit growth? Or do you think we can get fee growth in excess of net rooms growth?

Well, okay. So I think on both those questions we should start by warning you we don't have a budget for next year. So we do have in this headquarters building someplace, I'm sure, a detailed schedule of when we think hotels are going to open. But we're not rolling that up necessarily in a way that's very digestible by quarter. Having said that, I would think to the earlier question about when supply growth will peak. I suspect we are continuing to see, on average, that we're opening more next year than this year. And we're probably opening more in 2018 than in 2017, which would suggest that there will be some back-end skewing to next year. I don't think it will be profound though. Obviously, we've opened a lot of hotels this year. We've missed a little bit this year, and those are slipping into 2017. But they'll be in early 2017. And so, I think the year as a whole should be fairly robust in terms of its openings. But again, I'd suspect fourth quarter will have more than the first quarter did, simply because we continue to ramp. On fee growth, obviously the two biggest inputs to the year-over-year fee growth is unit growth and RevPAR. And with 6% unit growth and 0% to 2% RevPAR growth, both can drive an increase in the top line, although it's obvious that the rooms growth will drive more top line growth than the rev growth, unless we're wildly conservative in that 0% to 2% number. The next piece of that is what happens with incentive fees. And I think there you end up in a 0% to 2% market with the real need to say, okay, what's happening in the high incentive fee markets for the company like New York, like Washington, like London and other markets around the world. And until we do the budgets, that's going to be a hard thing to give you much guidance on.

Thank you.

You bet.

Okay. I think we have exhausted all of you. But we thank you very much for your keen attention this morning. We wish you all, again, a happy election day. Get out and vote. And then get on the road and come stay with us. Thank you.

This concludes today's conference call. You may now disconnect.