MAR – Market expectations are for record-high Uniform ROA, but management’s concerns about RevPAR and cost savings imply this may be unwarranted

• Marriott International, Inc. (MAR:USA) currently trades near historical highs relative to UAFRS-based (Uniform) Earnings, with a 31.0x Uniform P/E, implying bullish expectations for the firm. However, given the firm’s concerns about RevPAR and cost savings, this may be unwarranted
• Specifically, management appears concerned about expected RevPAR declines in their MEA geography, and may lack confidence in their ability to drive RevPAR growth of 1%-2% in North America. Moreover, they may lack confidence in their ability to achieve $250mn in annualized cost savings by the second half of 2018. Should the firm fail to sustain Uniform ROA growth at current rates, as management sentiment suggests, multiple compression and equity downside would be warranted