Good morning. My name is Jennifer, and I will be your conference operator today. At this time, I would like to welcome everyone to the Marriott International's Second Quarter 2018 Earnings Conference Call. Thank you. I will now turn the conference over to Mr. Arne Sorenson, President and Chief Executive Officer. Please go ahead

Good morning everyone. Welcome to our second quarter 2018 earnings conference call. 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 of Investor Relations. First 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, August 7, 2018 and will not be updated as actual events unfold. You can find slides for today's discussion on our website at www.marriott.com/investor or in our 8-K filing. In our discussion today about the income statement, we will talk about results excluding merger-related costs, reimbursed revenues and related expenses, the year-to-date net adjustment to the tax charge related to the U.S. Tax Cuts and Jobs Act of 2017 and the year-to-date adjustment to the Avendra gain. Of course you can find our earnings release and reconciliations of all non-GAAP financial measures referred to in our remarks also on our website. So let's get started. Our second quarter was terrific. Adjusted earnings per share rose 56% to $1.73 with better than expected fee revenue, owned, leased results and G&A expenses. Adjusted EBITDA increased 15% and cash returned to shareholders totaled nearly $1 billion. As an encore to our first quarter strength worldwide system wide RevPAR rose 3.8% in the quarter at the high end of our guidance. In North America we continue to see strength in leisure and corporate demand, particularly in the energy,…

Thank you, Arne. For the second quarter of 2018 adjusted diluted earnings per share totaled $1.73, 56% over the prior year quarter and $0.38 over the midpoint of our guidance. Roughly $0.02 of the outperformance came from better than expected gross fee revenue; $0.02 came from better than expected performance on the owned, leased line, largely termination fees; $0. 07 came from better than expected general and administrative expenses, including lower than expected profit-sharing contribution and favorable timing; $0.24 came from gains on the sale of assets, including the sale of a hotel in a joint venture; and $0.03 came from favorable discrete tax items. In the second quarter, gross fee revenues totaled $951 million, a 12% increase year-over-year, largely from unit growth, RevPAR gains and higher incentives and branding fees. Credit card fees alone totaled $93 million compared to $59 million in the prior year while other non-property fees, including timeshare fees and residential branding fees declined 3% to $38 million. With a weaker U.S. dollar, second quarter fee revenue benefited from $7 million favorable impact from foreign exchange net of hedges. Compared to our expectations, fee revenue outperformed by $11 million at the midpoint, largely due to better than expected performance of franchise hotels and stronger than expected incentive fees in North America and Europe. Worldwide house profit margins for company operated hotels improved 60 basis points in the second quarter on a 4.1% increase in managed hotel RevPAR. Our teams around the world have done a fantastic job as we continue to recognize property level cost savings from procurement, productivity and other merger synergies. Owned, leased and other revenue net of expenses totaled $89 million in the second quarter, a 9% decline from the prior year. Property dispositions reduced owned, leased results in the quarter by $21…

Your first question is from Harry Curtis with Instinet.

Most of the questions we've been getting surround the reduced NUG growth estimate. And I wonder if you could give us more detail on a couple of things, which include, first of all, is this do you think kind of a one-time surge in deletions, how long might this last? It sounds to me like you feel that the deletion rate normalizes next year, but to what degree do you have confidence in that? How much visibility have you got there?

Thanks, Harry and good morning. Let me maybe first say NUG I think you're referring to net unit growth as opposed to another brand. We have a few brands, but NUG is, I think, not one of them. But you're right to raise the question, obviously, from our guidance a quarter ago we have assumed a higher level of deletions this quarter than we did then. And it's important, I think, that we all try and understand what's driving that. I think the place I would start is not about deletions, but is about development, because I think the core question which should be addressed here is, what does it say, if anything, about our owning partners' appetite to grow with us and to affiliate their hotels with us. And what we're seeing on the development side is a much more powerful indication of the strength of our brands than anything that the deletion data would tell you. In Q2, for example, we added 40,000 new rooms to the pipeline, in newly approved deals or newly signed deals that had not been counted before, 241 hotels. If you do the math that's adding a hotel a little more frequently than once every nine hours. And that shows you that around the world our owners are saying these are brands that we want to affiliate with and we're prepared to put substantial capital behind that desire. What's happened though in the last quarter or so is, we've continued to make progress on a number of things which ultimately impact deletions. And, of course, each hotel has its own story. The deletions in the second quarter were only about 18 hotels, but they are the most recent ones that left our system. And what we see is about 20% of them, by…

That's helpful. Maybe just a little bit more history here, when you acquired Starwood the brand that seemed to be the most in need of attention was the Sheraton brand. Perhaps you could help us by giving your perspective on a scale of 1 to 10 where do you believe the Sheraton brand is relative to where you want it to be within the next year or so?

We're making great progress on Sheraton. And we obviously have lots of dialogue with our Sheraton owners around the world. About a year ago, we settled on a sort of prototype for the regular guest room in the Sheraton brand. In June of this year we rolled out a new idea for the public space for the Sheraton brand, which we did at the Lodging Conference in New York, 1st of June and have had tremendous response from our owners and franchisees to what we're doing with the brand. When we look at the portfolio around the world what we see is about 75% of the Sheraton portfolio is on its way towards meeting those brand standards. Now that includes those that are already there as well as hotels which are scheduled for renovation or maybe even under renovation leaving about a quarter, which we're in discussions with most of those owners to see if we can get to a place where the renovation is going to be done to bring it up to brand standards. And obviously it's in that bucket that we have some deletions from the system which we're certainly happy to take because long-term we think we're going to strengthen the brand. RevPAR index for the brand is now above fair share which it's moved a bit since we closed. I think it's got a significant movement ahead of it if we can deliver the kind of capital and reinvention of the brand that's necessary. So I think we feel really good about the momentum we've got for plans for the hotels. I think in terms of the customer experience we've got to get more of these renovations actually completed and available to customers before they will start to see the average experience of the Sheraton's move materially.

Very helpful. Appreciate it. Thank you.

You bet.

Your next question is from David Beckel with Bernstein Research.

Hey. Thanks for the question.

Hey, David.

Hey. Thanks. I'll just ask a high level question about RevPAR expectations this time relative to last quarter. Obviously, a lot has happened geopolitically. Are you hearing anything from executives that would cause you to be more concerned about the back half relative to last time we spoke?

Yeah. So good question and we were very deliberate about using the phrase, steady as she goes, in the prepared remarks. I think we could probably describe good news and bad news here. So for the optimists who are showing up this call and saying okay we had a 4% GDP print in the United States in Q2 that should drive faster RevPAR growth maybe even in Q2. Maybe you should build that into your Q3 or Q4 numbers. We have not seen that higher GDP growth show up in higher demand either in our system or in the industry. In fact you look at Smith Travel data, rooms sold in the United States, which is obviously demand, in Q1 demand was up 3, in Q2 demand was up 3.1%. So essentially identical. And in many respects our system very much shows the same thing. When you adjust for the calendar anomalies, I think, our first two quarters, one was 2.3% and one was 2.5% RevPAR growth, so essentially identical numbers. Similarly, and this is repeating what we said in the prepared remarks, but when we look at Q3 and Q4, if you're worried that the 1.5% to 2% U.S. system-wide number is concerning, don't. It is not a sign of softening. It is very much an impact of the calendar or comparison anomalies. July 4th mid-week, obviously, you've already heard about from other companies in this space, we've got some shifting holidays, but probably the most significant pain in the back half of the year is the RevPAR comparisons get tougher because of the strength of the hurricane recovery efforts in Houston and Florida, particularly last year. And when you adjust for those things, what we're seeing in our guidance built-in is about a 2.5% RevPAR growth for the balance of the year. And so, it's very much steady as she goes. We see under that, probably still somewhat greater strength in the leisure segment. In the group space, the corporate group is stronger than the associate group. And the corporate transient is probably right in the middle.

That's very helpful. Thanks. And just as a quick follow-up to that, the group booking strength that you've seen and called out in your prepared remarks, how much of that relates to the reduction in commissions and folks wanting to try to book group activity in advance of that change?

Yeah. That's a really important point to raise. Our group bookings in the first quarter for all future periods were very, very strong. One of the reasons, perhaps the most significant reason for that was our reduced commission rates took effect April 1. And so, with the number of group intermediaries, they were accelerating their efforts to make sure they were booking before lower commission rates impacted them. I think similarly when you look across the industry you've had a number of other companies decide that they would reduce group commissions too, none of those lower group commission levels are in place yet, and I think they will be rolling in for some other companies effective in the fall or the first of the year. And so that will have a little bit of a dynamic to the way group business is booked. Having said that, I think, many of the end consumers for group business are maybe not ambivalent about what the group commission levels are, but they're going to be much more interested in where they should hold their meeting, both in terms of services and facilities and we think we'll continue to compete very well in that space.

Thanks so much.

You bet.

Your next question is from Smedes Rose with Citi.

Hi. Thanks. I wanted to...

Hey Smedes.

Hi. I just wanted to ask you with the loyalty program now on a path to be more fully integrated from the consumer perspective, it seems like the next phase of the Starwood acquisition maybe it's going to be measured by what happens on the revenue side versus on the expense side, which I guess is kind of largely behind you now. So how can you – will you think about kind of communicating to the Street your gains presumably in market share or RevPAR index? Or is that something that you can sort of provide now as a baseline so that we can measure or you can talk about a year from now kind of where that is?

Yeah. We love the optimism in your question and we have the same optimism. We think going to one set of channel platform, so that's the websites and the apps and the rest of it as well as one loyalty program, all of which happens August 18, will be a powerful positive for the system. As we mentioned, we won't get to one name for the loyalty program until sometime early in 2019 but we will have one program as of the 18th of August. That means of course that loyalty members can get credit for elite status or stays in the Marriott and Starwood Hotels. Previously, you had to earn your status in one platform or the other. It also means that points being earned and points being redeemed don't need to be transferred between accounts. And maybe most powerfully, it means that customers will show up on our website and they will see the whole portfolio instead of having to toggle back and forth between two different portfolios. We think all of those should drive increased share of wallet greater strength in the loyalty program. We'll be looking at measures like size of the loyalty program, number of members. We'll be looking at contribution of the loyalty program to hotels and we'll of course be looking at RevPAR index. It is a very hard thing to predict what the upside is going to be, but we're optimistic that we will see a greater strength from this stronger loyalty program and we'll do our best to communicate with you about the actual results we achieve. One other thing I'd mention. We don't think we're done on the cost side. Leeny mentioned the 60 basis points margin growth in both international markets and the U.S. market in Q2. That is we think very strong performance given the relatively modest RevPAR levels. We've also got some further cost synergies which we'll be rolling out to the hotels in the balance of 2018 and we know that we're going to deliver efficiencies into 2019 and 2020. So we want very much to drive both top line and margin improvement for the portfolio of hotels in the next couple of years.

Okay. That's helpful. And then I just wanted to ask one question. Some owners, the REITs have talked about core sales bookings at formerly managed Starwood Hotels transitions around the sales force. And I'm just wondering is that process largely finished now? Or is there any kind of additional detail that you can add maybe from your guys' perspective versus what we've heard from owners?

Yeah. So we've seen a few of those comments and seen a couple of references to this in some of the early notes that were published. And I'll try not to go on too long here, but I want to make sure that we talk about this a little bit. The best indication obviously about the way the hotels are performing is RevPAR index numbers. And as we've talked about for the last few years RevPAR index is a rollup of each hotel's performance against typically the five or six hotels that are most relevant in their competitive set. Typically those are going to be similarly positioned in the chain scales in the same geographic market. Sometimes, if they're in the luxury space, or they're in the group space the geography could be a little bit broader in order to get hotels that are similar. But they're the hotels that have been picked by Marriott and by the owners to say, okay, this is the group that is most germane to assessing the relative performance of this hotel. And as we said in our prepared remarks, we have increased index about 120 basis points over the last 12 months, which, with a portfolio of this size and the kind of work that's been underway on integration and all the other things that is underway here at Marriott is fabulously strong results. And again, the loyalty program has not been merged yet, so we think we've got upside ahead of us. I think, also, you can look at a little less precise data, but you can look at RevPAR growth for the Legacy-Marriott Hotels and the Legacy-Starwood Hotels, because interesting to note that the Legacy-Starwood Hotels are posting RevPAR growth numbers that are comparable, if not, even a little bit higher…

Thanks a lot for that detail.

You bet.

Your next question is from Felicia Hendrix with Barclays.

Hi. Good morning.

Hi, Felicia.

Hi, Felicia.

So, just kind of along those lines, just in terms of the puts and takes of the RevPAR results in the second quarter, to what extent were they impacted? What would have you RevPAR looked like if you wanted to kind of smooth out for the sales force transition? And then also, as you're thinking about your guidance for the third quarter, how much have you accounted for in that or maybe for just the second half?

Okay. So I won't repeat everything I just said Felicia but...

No I don't want you to.

We do not think there was any impact...

Okay.

...I mean we do not think there is any impact in Q3 or Q4. So to the extent anybody's thinking the Q3 or Q4 guidance numbers we've put out there are somehow lower than they would be because of integration concerns, that is not the case.

Okay. You're talking about – I heard you talk about index and I heard all of that. I just didn't know if there was a different way to translate it. Okay. Let's move on then. Just I wanted to get just again on the net unit growth, because I was just – in the quarter there seemed to – you gave guidance in April, so something happened in the quarter right. So just wondering how much of the greater than expected deletions was due to the Dubai hotels and then also looking to 2019, can we expect that you get back to that net unit growth of closer to 5.5% to 6%?

Yeah. So a few questions in there. But interestingly and maybe a little bit ironically, the deletions we actually experienced in Q2 were half as many rooms as we experienced in Q1. And so as much as we would – it might be more concrete to be able to look at the higher deletion number and what actually happened in Q2, the higher deletion guidance, we've given you is really based on what we anticipate in Q3 and Q4. The Dubai hotels that you referenced are not in the Q2 numbers because they actually were not de-flagged until July 1, if I remember right or July 31. Actually we're at August 8 – we're in August now right. So yeah, end of July, so that will be a Q3 number. What we're anticipating in Q3 and Q4 and it's based on discussions underway as much as some decisions that have already been made and implemented is that for a mix of reasons we're going to see a bit higher deletions. The two – we've tried to call out and I maybe babbled on too long a little bit and clouded this, but product quality is certainly a piece of it and we are being tougher on that. I think another – a point that we have called out is there were a number of workout discussions that Starwood had not resolved, I think in part simply because of the pendency of our deal or the sale of that company. And our teams have been working with owners to try and get those resolved. And those discussions sometimes lead to hotels leaving the system as opposed to staying in. The only last thing I'd say, I think and I don't want to be Pollyannaish about this, but when you look at something like what happened in Dubai, we are confident that each of the three brands we had represented there will be replaced with product that we can be very proud of in that market in the fairly near-term.

Okay. That's helpful. But as we just for modeling purposes are you more comfortable in 2019 with that 5% number or with where you've been more recently?

We don't have a 2019 number for you right now.

Okay.

We obviously haven't built our 2019 budget. I do think that the deletions at 2% are likely to go back down into that 1% to 1.5% range and you should not view 2% as being the sort of new expectation.

Okay. Great. Thank you.

You bet.

Thanks.

Your next question is from David Katz with Jefferies.

Hi. Good morning.

Hi, David.

So I think we've covered the unit growth discussion fairly well. But one of the issues I wanted to address is we've always looked at the Marriott brand and where it sits in the hierarchy with Sheraton and Westin and the degree to which those are either overlapping or bumping up against each other in the development community. Can you just give us a little color around how that is progressing? I know there was some repositioning around Marriott early on – rather Sheraton early on?

Yeah. I hope I understand your question, Dave. And I mean, we've got, obviously, Marriott, Sheraton, Westin, we've also got JW Marriott and Delta all in the upper upscale full service space. Obviously, those brands come from two different legacy portfolios and they were often competing head-to-head. Now each of those brands would have said that they were better than the competitors' brands in the same space. They're all now part of ours and if what you're getting at is, how do we essentially target each of those brands to minimize both customer confusion and, I guess, the overlap, that's what our brand teams are hard at work at. And they're hard at work at it with our owners and franchise partners. Sheraton is the one we've talked about the most, because Sheraton has needed it the most. And I think what we're seeing is good buy-in from our owners and franchisees to move the average quality of the Sheraton portfolio up meaningfully from what it was when we closed on the acquisition of Starwood. It probably, on average, will be a fraction lower than where the core Marriott brand is. But that – stress the words on average, because depending on the market we will have one that's positioned a little bit differently than another. That's the – obviously, by definition, full service hotels have been opened and developed over many decades and location will still feel quite important to this. And that's a comment that could easily be applied to the brands that have got a bit more of a lifestyle flavor too. We've got Renaissance and Méridien that are both, also, in this full service space and they are each being positioned true to the heritage that they've had. And again, I think we're making really good progress on it. And you can look at this and say it's a monumental task to get these brands with some distinctions between them. But we can also look at them and say, it's an extraordinary opportunity to have this kind of distribution in an economically significant space and a space which is really important for our loyalty members and our group customers to have some choice and to have the kind of product and services that we can deliver across this portfolio. So we wouldn't want to be without any single one of these brands.

Great. Thank you very much.

You bet.

Your next question is from Patrick Scholes with SunTrust.

Hi. Good morning. Just a quick question. On the previous earnings call you had noted that your group revenue booking pace for luxury and upper upscales was up 1% to 2% for the second half of this year. What does that comparable figure stand at today?

It's about the same.

Unchanged?

Yeah.

Okay. Thank you.

Your next question is from Robin Farley with UBS.

Great. Thanks.

Hi Robin.

Two questions. One is just – hi. On the effacement (54:45) unit growth, just looking at in the slides where you show conversions as a percent of your pipeline, it shows about 2%. And one of your other large competitors is talking about conversions being about 20% of their pipeline. I don't know if you and they are sort of measuring it in different ways, but that's such a big difference. I don't know if you have any thoughts on why your conversion – are you not capturing conversions or something or you're just measuring it differently in these two metrics?

Sure. I think certainly definitionally I'm not going to pretend to know how they're included. As you know conversions can wander into your pipeline and stay there for a year-and-a-half, if there's a meaningful amount of work that needs to be done before it opens or it can literally flip overnight. So we're still in the land where we think a 15% to 20% of our room openings come from conversions, which has been consistent over time that that's the way it's been, when you think about our Autograph brand as a terrific example and our other soft brands are just terrific pipeline for us. But again in those situations they very often don't enter into the pipeline.

Okay. That's helpful. Thanks. And then my other question was just when you look at guidance for the second half adjusting for what you've previously quantified as the impact of holiday shifts and the impact of the hurricane driven demand, it looks like even though you're giving the same RevPAR guidance for Q3 and Q4 if you back out the comps from the prior year that you're maybe expecting an acceleration in underlying demand in Q4. I don't know if you can just give any color around what gives you that or what do you think would be driving that?

I wouldn't interpret what we've said as expecting an acceleration. What we're expecting is very much steady as she goes. Adjusted for calendar and comparison issues we see RevPAR for the first two quarters and the last two quarters of 2018 as essentially equivalent at about 2.5%.

And I guess I'm just thinking Q4 versus Q3. So I definitely understand what you're saying about second half versus first half. But I guess the impact of hurricane driven demand and holiday shifts were greater in Q4. So if we back that out, for Q4 to be at the same rate as Q3?

Well, we've got the July 4th timing in Q3 and there may be some – can't remember where the Jewish holidays are hitting and exactly how they're hitting. I know our pinpoint calculation for Q3 and Q4 are 0.2 apart which to be fair is a smaller gap than our accuracy.

Okay. That's good. That's helpful. Thank you.

You bet.

And believe it or not, there can also be quarter-to-quarter a day of week shift just in terms of how many Tuesday nights there are versus how many Sunday nights there are and that also is a little bit of a factor between Q3 and Q4.

Sure. Okay. Thanks.

Your next question is from Bill Crow with Raymond James. Bill A. Crow - Raymond James & Associates, Inc.: Good morning. Thanks.

Hey, Bill. Bill A. Crow - Raymond James & Associates, Inc.: Arne, I think you mentioned in the formal remarks that part of the pipeline issue was or something that weighed on the pipeline was taking hotels out of the pipeline that had yet to commence construction in a timely matter. And I'm just – I recall back to the days when a lot of Starwood's peers were suspicious about the actual strength of their pipeline. I'm just wondering whether you've called – fully called the Starwood portfolio and pulled out any of the maybe phantom deals that were in there.

Yeah. And I wouldn't attribute that mostly to a Legacy-Starwood portfolio. I think that the – what 14,000 rooms we deleted I think in the quarter? I think we should pull that out. 13,000 or 14,000 that we pulled out of the pipeline and our team calls through that. I won't say necessarily that every quarter is as intense as the last one. But we were pretty aggressive in this quarter in going through and found in both the Legacy-Starwood brands and Legacy-Marriott brands that there were projects that had not moved fast enough. And so, we pulled them out of the portfolio. And it does a few – in some respects this is not – it's a little bit bigger number than a typical quarter would be, maybe meaningfully bigger. But it's not a totally unusual thing to discover that, the best laid plans maybe are not coming to fruition with an owner someplace. And I think in the environment that we're in today, we've got still plenty of available capital to invest in new projects. Availability of debt probably is still plentiful, but equity requirements are maybe a little bit higher than they were before. And construction costs are a little bit higher than they were before. And so you end up with some folks who maybe signed that deal a-year-or-two ago and they haven't moved forward and ultimately they tell us they're not planning to move forward on it. We just assume, call it out so that we've got that market to pursue with somebody else. Bill A. Crow - Raymond James & Associates, Inc.: Okay, great. And then the follow up, I guess, NH Hotels appears to be in play. I'm not going to ask you specifically about that, but just your thought now that you've made such progress on the integration of Starwood, are you ready to get back into the consolidation theme or do you think Marriott's set for a while?

We will continue to look at opportunities that are available. I think as it relates to NH in particular, what – looks like Hyatt discovered is Bill Heinecke has that company reasonably well tied up. So I don't think there's much point in talking about that one, as if we would anyway. Bill A. Crow - Raymond James & Associates, Inc.: Sure.

But we'll see. We're, obviously, appreciative of the way the Starwood deal has gone so far. We're also very appreciative of the way the organic growth story is going. But as we sit here today, our share of the global hotel business is still not particularly huge. And so, I think there's plenty of opportunity to continue to grow. Bill A. Crow - Raymond James & Associates, Inc.: Great. Thank you.

Your next question is from Joe Greff with JPMorgan.

Good morning, everybody.

Hi, Joe.

Hi, Joe.

Two questions for you, on the room deletions commentary. Relative to a quarter ago what is the amount of forgone fees relative to that incremental deletion amount and if you could break that out between the workout category and say the other category? I would imagine the incremental fees or lost fees, forgone fees is relatively low, but that could be perspective, couldn't it?

Leeny may have something specific on this, but let me just say, on the short term a hotel leaving the system, we may lose management or franchise fees, we may gain in the short-term termination fees. And so, when you look at it, for example, in 2018 I'm not sure there's much impact. You look at it longer term, obviously, there is impact because those fees have left the system. I don't know, Leeny, if you've got the numbers.

So a couple of numbers for you, Joe. And we're certainly – kind of diving down into how much is from workouts versus product, we don't have that level of detail. And as you know, there are a whole host of different reasons. But let's just kind of talk broadly. Termination fees have generally run, call it, $15 million to $20 million a year. I think this year we are likely to be as much as double that, maybe even a little bit more based on the numbers that you heard us talk about today. So from that perspective you're clearly getting the extra kick. In the back half of the year, we did reduce our fees by close to $5 million as a result of the terminations that we expect to have this year. So that is impacting this year's earnings. When you then think about full year 2019 just to give you a broad sense of what the full year terminations could impact. If you're talking about again call it very roughly 2% then you could imagine that it could impact hotel fees next year by a bit less than that because some of these hotels aren't necessarily giving a lot of fees, so somewhere between 1% to 2% of hotel fees that will be lost as a result of 2% terminations this year.

Understood. And then on the group pace for this year, is there a huge difference or meaningful difference between Starwood legacy properties and Marriott legacy properties?

No. The numbers are very close.

Great. Thank you.

Your next question is from Thomas Allen with Morgan Stanley. Thomas G. Allen - Morgan Stanley & Co. LLC: Hey. Good morning. Two questions for me. First on G&A, you highlighted the Starwood synergies a couple of times. How is that tracking versus your $250 million guidance?

Sure. So if you kind of take the 2015 full year combined company adjusted for inflation and then using our current expectation for the full year of 2018 and adjust out for the $55 million, it's pretty much close to on the button in terms of hitting the $250 million. Thomas G. Allen - Morgan Stanley & Co. LLC: Thanks Leeny. I guess follow-up to that is do we think there could be incremental G&A synergies? And then my second question just to throw it now, you touched on how you've outperformed your asset sale goal. You still own some Legacy-Starwood Hotels. How should we think about the plans with what's left? Thank you.

Sure. All right. Let me do the second one first and then I'll talk about the synergies. Today, we own 14 hotels. They're split half and half between Legacy MI and Legacy-Starwood. We are as you know still completely devoted to our asset-light model and continue to be engaged in selling those hotels. They are as you might imagine not predictable in terms of the timing of those. So that's why as usual we leave those out of any guidance going forward, but we certainly are still going at it. On the G&A synergy side, I think the low hanging fruit has definitely been taken. When we look forward if you look at a global economy continuing to stay strong, clearly around the world you've got some wage pressure that you have to take into consideration when you look at kind of how it might go in 2019. Certainly, as I talked about on the last quarter's call when you take out the $55 million – when you include the $55 million this year you can imagine that next year G&A is lower than this year's printed number. But you also kind of finding other big chunks of synergies I think is probably not realistic, but I think continuing to be more and more efficient is. So we will continue to go after that. Thomas G. Allen - Morgan Stanley & Co. LLC: Perfect. Thank you.

Your next question is from Shaun Kelley with Bank of America.

Hey, good morning, guys. I think a lot of everything has been covered here. So just one high level one, but I do think it's something that's come up some. So there's been a lot of press reports recently going into the August 18, kind of, combination on the loyalty program side. So Arne, could you just talk at maybe a high level of, kind of, what you're doing to I think keep the highest level SPG members, kind of, pleased and happy through this whole process? I mean, I know, that it's a very difficult balancing act, but I would say that from the consumer side and obviously you have to think about multiple constituents here, but from the consumer side that was a kind of a core asset of Starwood when you acquired them. So just, kind of, what are you doing to keep that kind of customer happy throughout the program throughout the transition?

Yeah. So it's a good question. It's obviously something we've been focused on, not just since we closed the deal, but since we announced the deal. And at the moment we announced in the fall of 2015, we heard loud and clear from the SPG loyalists, we love this program and make sure you protect it for us. And it has been a steady set of decisions and conversations since then, which have been aimed very much at doing that. Even before we closed on Starwood, we did a couple of things to the Marriott Rewards Program to send the message to the SPG loyalists that we were going to protect some of their benefits. And they included things like late checkout, which had not existed on the Marriott Rewards side before, but we said rather than simply say it to the SPG folks that we're going to do it, they would believe it more if we actually did it on the Marriott Rewards side. And there were other similar decisions that we made in that sort of timeframe. I think when we got to the day of closing we also did a number of things. I think one of the most important was the 3:1 points conversion ratio between SPG and Marriott Rewards, which I think the SPG members looked at and said, you know that's a very fair conversion and it does well for us and so we appreciate that. And then I think in the last, what, nine months or so probably most intensively, we have focused on the economics of the program, which very much depend also on the economics of the credit cards. And with better credit card deals we have found that we can deliver great value to the elite members and the basic members of both loyalty programs. We can deliver it at reduced expense to the hotels, therefore benefiting the hotel owners and franchisees. And Marriott obviously can experience an increase in the credit card contribution to its own P&L. And while it would be too much to say that every single Marriott Rewards or SPG member has stood up and applauded, I think what we've heard from the bulk of that community is you've made a collection of decisions that caused us to feel very good about that program. And that's what we've intended and I think we'll prove it in the way that ultimately it is used by our well over 100 million members and growing.

And maybe just to stay on kind of the same idea like, at the very highest kind of level, the Ambassador program for Starwood, take that for instance, is the value of that guest as – like when you guys think about it from your side as high as maybe some of these kind of the super frequent people? Like is there some – I guess is it – it's hard to articulate, but is there some exceptional value to that guest or is everything sort of long and extreme because they also cost more to service and other things? So how are you kind of balancing just that ultimate kind of elite member? Because I think when we read some of the reviews and the blogs and some of the things like this and some of the articles they've been written that's where probably the most discussion about the program comes up.

Yeah, no. We love those elite folks and the Ambassador program we've expanded into the Marriott side of the equation too because we think it is exactly the right kind of step for these most valuable customers. And so we're doing that. And again, you take this a day at a time in some ways and we won't really have proven it until we get to one program and have it working. But I think the decisions that have been made are exactly the right ones. And I think the community as a whole is responding extraordinarily well to it.

Thank you very much.

You bet.

Your next question is from Jared Shojaian with Wolfe Research.

Good morning.

Good morning, everyone. Thanks for taking my questions. So I want to ask you, you called out the $67 million impact for the asset sales in 2018, but can you give us what the number would look like for 2019 just based on the sales you've done so far this year? And I'm assuming that's a net number that includes the Sheraton and Phoenix purchase, is that right?

So first of all, I'll say we haven't done our budgets yet for 2019, so it would be interesting to give you an expectation for the actual – the lost revenue overall for owned, leased. But on the hotels that we're selling this year, we can get you that number. I don't have a total here. We'll work on it and get it to you.

Okay. Thank you. And that is, net number does include the Sheraton and Phoenix?

Yeah, no.

Okay. And then I just want to ask switching gears on China. I think your Asia-Pacific RevPAR guidance is still pretty strong. But maybe you can just comment on if you're seeing anything in China. I know you're talking about steady as she goes throughout the entire business. But maybe you can just comment on what you're seeing especially in light of all the trade talk right now.

Yes obviously, we're all listening to the trade talk, I think and it is anxiety producing in many respects. I think what we've seen in terms of trading conditions for open hotels in China has been very comforting, performing well. There's no sign that the trade conversation is impacting performance. And what we've seen on the development side has equally been reassuring, in that in part undoubtedly because of strong hotel performance for existing and open hotels, there continues to be a development appetite for Chinese real-estate investors. Remember our business is substantially Chinese in that of the hotels we have opened in China, I can think of one that's not owned by a Chinese company. And so the book of the economics are very much driven for the benefit of Chinese investors, real-estate investors. They are often government affiliated companies but not always. And as a consequence, we may be in a somewhat different place in a trade kind of conversation than the typical industry. I think personally my larger fear about the trade war potential is what it could do to GDP growth in the United States and to some extent what it could do to the cost for construction materials in the United States and in other markets around the world. And that certainly has not seemed to manifest itself yet in U.S. GDP numbers. It probably is starting to manifest itself in terms of some materials that are used for construction, but it's early on in that process, we'll have to see how it evolves.

All right. Thank you very much.

You bet.

Your next question is from Rich Hightower from Evercore ISI.

Hi. Good morning, everybody.

Good morning.

We've covered a lot of ground, obviously. So thanks for taking the question here. So I want to hit back on the Starwood sales force integration issues from the last quarter. We've heard from, at least, a handful of owners, so not really just one or two, but at least a handful and we have yet to hear from your largest owner of course so that's...

Yeah.

...granted that.

That's tomorrow presumably, right?

Exactly. So at the same time, I mean, everybody's got their own version of sort of what may have led to weakness of the individual hotels during the second quarter or whichever period we're talking about. I guess, if you had to fairly articulate the view of those owners with respect to this issue, what do you think a fair representation really is, just so we kind of get clarity on this point?

Well, I mean, you've heard from them directly, obviously, and I'd be – be inappropriate for me to speak for all of them, because I think their views are not monolithic. Interesting to note that one of the companies we heard talk about this in their public call had never raised the performance of the hotel that they raised in the call with us. So as a consequence, our team hadn't really had a chance to engage in the dialogue with them. I think generally, though, and even what we've seen in the conversations over the last week or two, generally you see, even in those comments that the impact is viewed as transitory. They remain supportive of the transaction. They remain supportive of the notion that this transaction is going to deliver a significant value to them from top line and bottom line synergies. And even, I think, more of this concern has been raised with respect to Legacy-Starwood Hotels and I think a number of those folks have said, we still believe that the Legacy-Starwood Hotels may benefit disproportionately from Marriott and Starwood coming together. And so, we don't hear this as – obviously, we hear something. We hear the words that are being used and we don't want to say that there can't be instances in which there is some impact or there shouldn't be conversations to make sure we understand this as well as we possibly can understand it. But when you look at the system as a whole, we do not see it showing up in our data. We don't see it in the RevPAR index numbers. We don't see it in the RevPAR year-over-year growth numbers. We don't see it in what the customers are telling us about the way they're booking. And we'll do everything within our power to make sure that that continues to be the case. And then in the meantime we'll deal with the owners who called out concerns with respect to particular hotels and say, let's make sure we understand them and make whatever decision needs to be made in order to have those hotels perform as well as they can perform.

Got it. Thanks for that color.

You bet.

Your next question is from Carlo Santarelli with Deutsche Bank.

Hey. Thank you. I just have one quick one. As it pertains to the deletions that you talked about, if you go back to your March of 2017 Analyst Day and kind of frame maybe the change in the magnitude of the deletions from what your expectations were at that point relative to kind of what you're currently seeing, is that possible?

Yeah. I'm not sure it is. I think we can say that we've been talking about 1% to 1.5% deletions for a while. I think actually last year we were closer to 1% than 1.5%. And so in a sense, we were positively surprised and maybe this is a little bit of a reversion to the mean in 2018. But I'm not sure, we can say much more than what we've already said. I think 1% to 1.5% for now and again we will get to a point where we share a multiyear plan with you all again at some point here. But until we get to next year's budget or until we get to a analyst conference, I think 1% to 1.5% still should be your expectation for the foreseeable future.

Great. Thank you. And if I could just ask one quick follow-up on the group pace for all future periods that you stated plus 17% that's the comparable number is that right the 17%?

No, no, no that is group bookings year-to-date for all future periods.

For all future. Got it. Thanks very much.

But that booking is done in 2018 for the first six months, that's not pace for all bookings from all time for future periods.

Understood. Thank you.

Your next question is from Vince Ciepiel with Cleveland Research.

Thanks for taking my question. I wanted to touch on something; I don't know if it's come up today, but the Tribute Portfolio for booking homes in London I think as of the last call, you're only a few weeks in. Just curious now that you have a few more months, what are your early learnings there? And then would it surprise you to have other cities outside of London on that platform maybe by this time next year?

Yeah. So thanks for raising it. Just as a reminder for everybody we launched about 90 to 120 days ago maybe a pilot in London under the name Tribute Homes. It is a relatively small pilot in a sense that there are about 200 homes that are connected to our system. And they are bigger than studio apartments. They're bigger than hotel rooms, they're whole home products. So it's a product which feels different to us from both what we have in the traditional hotel space and what the typical product is that a number of the home-sharing companies are focused on. And we wanted to provide loyalty linkage and we wanted to provide a set of services that would make it more predictable and more consistent with sort of a brand promise if you will. So, not just key delivery services, but housekeeping services and designing the core services which are delivered by our partner in London. And it we think allows us to distinguish a little bit both in terms of size and in quality from sort of the average home sharing thing, small pilot though. So far it's going great. Our loyalty customers seem to like it. Not surprisingly, it is predominantly a leisure buy. Not surprisingly, because it's a leisure buy, it's only London obviously it is a bit longer stay than we anticipated. So the stay we're experiencing is closer to five nights on average which is a little bit longer than we anticipated. And the customer feedback has generally been quite good. So we don't have anything to announce yet in terms of other markets, but it's certainly something we'll take a look at.

Great. And then second what percentage of the bookings are currently made through marriott.com, SPG.com and the apps combined when you roll it all up? And as you move to one platform, are you expecting that that percent which I think is growing each year to accelerate in growth?

When you look at – if you add property to it, it's about three-quarters of our business. It's coming through our channels. Maybe 70% would be our channel. So that would be calling the hotel, calling our call centers and our digital platforms whether they'd be the dotcom sites or the apps. I think what we've seen over the last number of years is that the digital channels have grown substantially. The voice channels including our own voice channels have declined, we're likely to see those trends continue and we do think for the reasons we discussed earlier about share of wallet having all the hotels show up in one platform that we should be able to drive enhanced growth in the digital platforms because everything will be there. We don't have a forecast for you on where those numbers are going.

Thanks.

And your final question is from Stuart Gordon with Berenberg. Stuart J. Gordon - Joh. Berenberg, Gossler & Co. KG (United Kingdom): Good morning. Net unit growth obviously there's two sides of the equation and everybody's been focused on the deletions. But I was wondering on the gross side you've materially increased both the number of proportion of rooms and construction. So is there an opportunity for you to do better than the 285,000 to 300,000 gross addition number you gave at the Capital Markets Day?

Well, there's a few questions in there. I would say, first, that we've been positively surprised by how strong the development pipeline is. I think when – there's a conversation we've been having for a few years, but we would have thought that U.S. signings and approvals probably would not be as strong as they are today. We thought that 2016 was sort of the peak organic growth and probably still is the peak organic growth. I don't think necessarily we're going to see the numbers move up from there, but our partners in the United States continue to want to do more deals with us and that's been really quite good. The world obviously is a big place. Some markets continue to perform quite robustly. Some are essentially moribund in the development space either for economic reasons or for geopolitical reasons. I think you look at all those averages and compare it to what we shared at the Analyst Conference, we would say that deletions might be just a little bit higher than we had before, but we'd have to go back and look at those three years. And openings have shifted back by a quarter or two and that's because of life of the construction cycle. And I think that latter factor is more likely to cause us to miss that 285,000 to 300,000 room number we used a year-and-a-half ago, when was that conference?

March of 2017.

March of 2017. More likely to miss it than we are to exceed it. Stuart J. Gordon - Joh. Berenberg, Gossler & Co. KG (United Kingdom): Okay. Thanks. And just a follow-up, you've given some color before on the number of credit card customers you've got. Could you give us an update in how that has improved with the better terms and also the cross-selling opportunities that you have as a larger group?

Well, it's still new in the process. JPMorgan Chase has rolled out the new Visa Card and the customer response has been great. They're in market. Amex will not roll out its new product until later this month. I think roughly the end of August. I don't remember precisely the date. And so, we don't have the customer reaction there yet. But all things considered we feel quite good about the strength of the program and the likelihood that it's going to grow in the future.

All right. Well, thank you very much. Thank you everybody for your time and attention on the call. We appreciate your interest in Marriott and look forward to welcoming you into our hotels wherever your travel takes you.

Thank you, ladies and gentlemen. This does conclude today's conference call. You may now disconnect.