Q3 2023 Marriott International Inc Earnings Call
Good day, everyone and welcome to today's Marriott International third quarter 2023 earnings call.
At this time all participants are in a listen only mode.
Later, you will have the opportunity to ask questions. During the question and answer session.
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Maybe it yourself by pressing star two.
Please note today's call will be recorded and I'll be standing by if you should need any assistance.
It's now my pleasure to turn the call over to Jacky mechanical. Please go ahead.
Thank you.
Morning, and welcome to Mary our third quarter 2023 earnings call on the call with me today are Tony Capuano, President and Chief Executive Officer, Legal Meredith, Chief Financial Officer, and Executive Vice President Development, and Betsey, Johnson, Vice President of Investor Relations.
Before we begin I would like to remind everyone that many of our comments today are not historical facts and are considered forward looking statements under federal Securities laws.
Statements are subject to numerous risks and uncertainties as described in our SEC filings.
And can cause future results to differ.
You really expressed.
Bye bye.
Please also note that unless otherwise stated our revpar occupancy and average daily rate comments reflect systemwide constant currency results for comparable hotels.
Statements in our comments in the press release, we issued earlier today are effective only today and will not be updated as actual events unfold.
You can find our earnings release and reconciliations of all non-GAAP financial measures referred to in our remarks today on our Investor Relations website.
And now I will turn the call over to Tony.
Thanks, Jackie Thank you all for joining us today.
We reported a terrific third quarter results. This morning.
All the bands for travel remains strong worldwide brand part of the quarter was 9% versus 2022.
Our increased over 4% in the U S and Canada, and 22% and international driven by significant gains across Asia Pacific.
Robust revpar growth combined with nearly 5% year over year room's growth.
<unk> adjusted EPS of $2 11 ships of 25% from 2022.
The third quarter tends to see a seasonally higher level of leisure transient travel which accounted for 45%.
What room nights during the quarter down.
Four percentage points above the first half.
Globally demand in this segment was again quite strong with room nights up 7% over the 2022 third quarter, leading to 9% leisure transient revenue.
In the U S and Canada leisure revenues rose, 4% from the year ago quarter, even as many domestic guests traveled to international locations, particularly in Europe and Asia Pacific.
In the third quarter.
Leisure room nights from U S and Canadian guests traveling outside the region were up nearly 25% of last year when the cross border travel was still constrained by Covid related restrictions.
Business transient demand to college for 32% of global room nights in the quarter.
While certain industries like technology, and snaps saw a nice sequential improvement in demand during the quarter.
The overall growth of the segment remain slow and steady with business transient revenues rising 4% versus 2022 in the U S and Canada.
Global Group room nights share stood at 23% in third quarter.
Compared to the year ago quarter group revenues rose, 9% globally and 5% in the U S.
The performance improved coming out of the pandemic has been remarkable and the segment is expected to continue to be a meaningful driver of revenue growth going forward in.
In the U S and Canada fourth quarter 2023 group revenues were pacing up 12% year over year at the end of September leading to full year revenue pacing up 19%.
Of course, we have the most visibility into group given the longer book very pleased that adds up the end of the third quarter.
U S and Canada group revenue on the books for 2024, we're pacing up 14% versus 2023, driven by a 9% rise in room nights and a 5% increase in average rates.
Cross border travel continued to strengthen helping drive revpar growth in the third quarter.
Asia Pacific again saw the most meaningful quarterly increase in international visitors.
Aided by global events like the women's World Cup and improved Arabist.
The percentage of global room nights from cross border gas was about one percentage point below 2019 levels of approximately 20%.
The most upside is still expected to come in Asia Pacific as international Airlift to China.
International Airlift in greater China was roughly 15% of 2019 capacity at the end of the third quarter and is expected to improve to around 60% by the end of the year.
Turning to our powerful envoy loyalty program, we remain focused on driving membership and fostering an engagement with our 192 million members.
Through our multiyear company wide digital and technology transformation, we are increasingly leveraging the power of our modern platform to create more seamless engaging digital experiences for our members adoption of our Marriott bond Y mobile App, which has become the channel of choice for the majority of our elite members.
<unk> continues to grow with third quarter, app downloads, increasing 19% versus the same quarter last year.
We also continue to drive engagement score bottom boy collaborations, including Uber eat around town and our co branded credit cards, which are currently in 11 countries. We're very excited about the opportunities our bonds by customers will receive from our Mg a strategic licensing arrangement, which is now expected.
It to launch in early 2024.
As we think about our net rooms growth.
Full year 2023 growth is now expected to be four two to four 5% higher than our previous expectation excluding the additional 37000 Mcf.
The MGM timing shift does not act three year net rooms growth CAGR of five to five 5% through 2025 that we've laid out in our financial model at our September Alastair. We are pleased that over the next few years, our net rooms growth is anticipated to be squarely in the.
Mid single digit range.
During the quarter, our pipeline reached a new record high of nearly 557000 rooms.
Our record even excluding the energy.
Strong interest in conversions continues including multi unit opportunities.
<unk> represented 20% of signings and nearly 30% of all things in the quarter.
As we outlined at our analyst day, we are very excited about the global opportunity for mid scale, we have real momentum with the city Express brand and Kalla for express in Europe and studio race in the U S with terrific interest across the development.
We already have 10 signed letters of intent for city Express in tableau nine of which are in new countries for the brand for signed deals for four points Express in Turkey, I didn't want them.
We're in numerous additional discussions for both brands.
And while we just recently issued the franchise disclosure documents for studio risk we're already in talks for deals and over 300 markets across the U S. We expect there will be shovels in the ground for studio <unk> projects in the next few months.
As a global company, we are keenly aware that we are living in a time of heightened geopolitical tensions.
We're heartbroken by the devastating loss of so many innocent lives in Israel last conflict.
Our thoughts are with everyone impacted by this tragic war as well as the ongoing war in Ukraine, and we remain hopeful piece.
I'll now turn the call over to leading to discuss our financial results in more detail. Thank you Tony.
Our strong third quarter results reflect solid momentum in our business around the world and came in ahead of our expectations.
Nowadays worldwide Revpar grew 9% above the top end of our guidance led by meaningful gains in Asia Pacific.
Global occupancy in the quarter reached 72% three percentage points higher than a year ago and global ADR continue to rise growing 4%.
Total company gross fee revenues totaled $1 2 billion in line with our guidance and 13% above the prior year quarter fees would've been supplier given our revpar performance, but to the negative impact of the wildfires in Maui, which primarily affected our IMS total IMS.
Still grew meaningfully rising 35% to 143 million in the quarter International IMS rose nearly 16% benefiting from another quarter of significant revpar increases in Asia Pacific.
Our non revpar related franchise fees grew 8% to 208 million boosted by another strong quarter for our co brand credit cards, partially offset by lower residential branding fees co brand credit card fees rose, 11% in the quarter driven by another quarter of robust global.
Card spend and new card acquisitions, our owned leased and other revenue net of direct expenses reached $70 million in the quarter given continued improved performance at our owned and leased hotels.
When the operating leverage inherent in our business adjusted EBITDA rose, 16% to $1 4 billion. After another quarter of meaningful share buybacks diluted adjusted EPS grew 25% year over year to $2.11.
Our powerful asset like business model continues to generate a large amount of cash and our capital allocation philosophy has not changed we're committed to our investment grade rating and investing in growth that is accretive to shareholder value, while returning excess capital to shareholders through a combination of a biased.
Cash dividend and share repurchases.
And the first nine months of this year, we returned $3 4 billion to shareholders over the last seven years, which included two years of no share repurchases as a result of Covid, we have reduced our outstanding share count by 23% while at the same time investing meaningfully in innovation.
And growth.
Now, let's talk about our fourth quarter and full year of 2023 Alpha and full details of which are in our earnings press release.
Well there is heightened geopolitical risk and continued macroeconomic uncertainty.
<unk> is still generally holding up well and our forward bookings through the end of the year in most regions around the world remains solid we are raising our full year revpar guidance to incorporate the better than anticipated third quarter results as well as higher expectations for the fourth quarter.
In the fourth quarter Revpar growth is expected to remain higher internationally than in the U S and Canada, where we've seen a return to more normal seasonal patterns and year over year Revpar growth is stabilizing we now anticipate fourth quarter revpar growth of 3% to 4% the U S and Canada and 14% to <unk>.
16% internationally this would lead to global Revpar growth of six to seven 5% in the fourth quarter and 14% to 15% for the full year.
We now expect full year total gross fee revenues could rise temperature to 18% with fourth quarter flows fees benefiting a bit from the higher revpar expectation.
This is expected to be partially offset by lower expected residential branding fees due to anticipated completion of certain projects slipping into next year as well as a bit softer results in Israel and surrounding countries.
You're starting to see some cancellations and softer demand for our hotels in Israel as well as for the 27 hotels in Lebanon, Jordan and Egypt.
Fees for these four countries made up less than 1% of total company gross fees in full year 'twenty two.
We've not seen a meaningful impact on demand in the rest of the middle East, we're keeping a close eye on the situation and working closely with our teams on the ground as events unfold.
Total non revpar related fees are expected to increase around 5% full year benefiting from credit card is rising roughly 10%. Thanks to robust growth in average spent and the number of cardholders, partially offset by meaningfully lower residential branding fees. This year.
Versus our peak levels in 2022 residential.
Residential piece are tied to the sales of new units and tend to be lumpy as <unk>.
<unk> enter sales and closings phases.
And once leased and other net is now expected to be around $330 million for the full year.
Low end of our previous guidance range, primarily due to the restructuring of an existing lease on a hotel in New York that recently flipped to franchise.
We expect 2023, and G&A expenses to be around $935 million at the high end of our prior range, primarily due to higher compensation and legal expenses and to a lesser extent emptying out of the integration costs compared to 2022 full year adjusted EBITDA could increase.
19% to 20% and adjusted EPS could rise, 27% to 28% we.
We expect to return between $4 3 billion and $4 5 billion to shareholders for the full year 2023. This now assumes both of your investment spending of $900 million to $950 million, which includes the $100 million spent on the acquisition of the city Express brand portfolio.
<unk> comes from Sean Kelly with Bank of America. Please go ahead.
Hi, Good morning, everyone. Thank you for taking my questions Tonioli need just wanted to maybe start with either the development side. Obviously the pipeline number what was very strong. It did look like the in construction number I think slipped very modestly quarter on quarter. So could you maybe help first of all I'll just comment.
Big picture, Tony on what you're seeing on the development side, particularly in the U S. And then secondarily you know just have any comments on how we should expect maybe that in construction portion to evolve just as a again the development environment and kind of levels off it levels off here a little bit. Thank you.
Sure sure and I'll try to talk maybe macro and then I might esquina Energised, we haven't with some perspective on.
Second climate, particularly here in the U S and maybe some perspective on Europe cause those tend to be the the two markets, where our development partners rely most heavily on conventional death financing in the markets, where we are seeing the most constriction in the the availability of financing for new construction.
With that said the the ebb and flow of under construction is is both good and bad right as as hotel is open and we had a good quarter of openings you see under construction hotels leave the pipeline because they enter the system is opening hotels and that's good news for US we have to talk.
Over the last couple of quarters about albeit a steady increase in the number of construction starts which is good news for us, but that constriction in the debt markets that I talked about including us from getting back to where we were in pre pandemic in terms of the the pace of new construction.
<unk> stars.
You're only here in the U S.
At the same time, we are encouraged by the the continue to increase in the pace of conversion activity. Both on individual conversions and portfolio versions and I think it's that that increased pace, coupled with a steady improvement in construction starts.
That gives us confidence in reaffirming the multi year net unit growth numbers, we shared with you last month during the security Analyst conference and maybe with that I'll ask when you need to just give a little more color on the Samsung environment. Yeah sure. So it's a couple of comments overhaul Sean one is just a reminder.
That the under construction component of our pipeline.
Also bearing typically includes conversions that may be going through some.
Some element of renovation before they open and so it's not quite the same as pre COVID-19, which had a lower percentage of conversions for the company overall, so as as we've talked about before we would expect for example, perhaps roughly 30% of the openings in 2024.
<unk> to be from conversions, which means they can be in the pipeline.
<unk> differently than the classic Newbuild timing for being in the pipeline. So I think the the nature of the the under construction pipeline could be perhaps a little bit different and pre COVID-19, but as as Tony was describing you've clearly got the reality that in Asia Pacific.
<unk> get a number of other markets. There is meaningfully less dependence on the depth markets and those markets are seeing much more stereotypical ah signings and progress into rooms under construction, while I'm in the U S. What do you see.
See is that there is clearly still an open financing market for strong brand strong market locations demonstrated a developer success and then notice we are absolutely continuing to see that the financing is happening and pick the rooms are getting under construction. The main difference I would say.
Hey, if they're taking a bit longer to actually get under construction, but as we kind of look going forward. The ones that are getting under construction or moving forward and then opening right on time, So as tennis, Tony said overall, we're pleased to see the <unk>.
For example that we actually raised a bit for 2023, reflecting continued strong demand for our brands and also rooms getting finished and open as well as really strong signings going into the pipeline. So so overall, we're actually quite.
Pleased on the new room spot.
Thank you very much.
Thank you. Our next question will come from Joe grip with J P. Morgan. Please go ahead.
And Joe Your line is open. Please go ahead with your question.
Are you a new Dell.
Okay, Let's go to the next question.
Yes, we'll take our next question from Stephen Grambling with Morgan Stanley. Please go ahead.
Hey, there can you hear me.
Yes, good morning statement.
Good morning would love if you could put a little bit more meat on the bone for the 2024 Rep Park commentary specifically if you can give any color on how you're thinking through North America versus other regions and how these assumptions may impact incentive management feed your other fees in the next year. Thank you.
Yeah sure. Thanks, very much and as I mentioned in my comments, we continue to feel good about the 3% to 6% range that we discussed at the security analysts meeting.
It's worth noting however, Stephen that we're smack in the middle of the process of building the budget set the hotel level when moving up so we're not prepared to give kind of formal guidance at this point, but when we look broadly speaking at at seeing continued demand for travel and as.
We talked about the U S. We would expect that that will remain in this more normalised seasonal patterns that we've now come to saying you've seen our guidance for queue for being 3% to 4%, which reflects that but you know we've got some basic strong fundamentals low supply growth for seven.
Several years, which looks to continue to be the way of going into 24, and that's reflected in our higher percentage of conversions and we do expect to see another year of strong growth in our special corporate right on top of very strong.
Growth in that right in twenty-three as we talked about and seen our group pace, which is up 14%. That's actually got strong both rooms growth as well as strong right growth in the U S, which does also.
Well for continued sustained <unk> a D R and I, you know I'm, probably throw in one extra which is that a luxury.
You can probably remember we talked about that having in queue to Ah Rev par was down.
Down ever so slightly in our luxury U S and Canada properties, just down by a percent in Q2, but that actually moved positive account in Q3 and was actually up 2%. So.
Goes together and of course this does depend greatly on the overall macroeconomic conditions and we will need to see where that goes but given what we looked at right now we continue to feel good about the fundamentals.
Helpful. Thanks, so much.
Thank you. Our next question will come from Sweets roads with city. Please go ahead.
Alright, Thanks, Uhm, given given those comments you you've made with sort of like a kind of a <unk>.
<unk> 10 to 24.
I just wanted to ask you about maybe how we should think about capital return I mean is it fair to assume that you would try to reach you know at least <unk> this year and may be more careful.
So the average levels to remain below longer term targets.
I think this at this stage of the game since we're really working through all of the the budget work and I'm kind of looking at investment spending et cetera again, the broad guidelines that we provided at the security analysts meeting remain consistent you will remember that we talked about an expectation.
Of having the shared in Grand Chicago put.
To marry in 24, which which will be of use of cash we would expect at the end of 24 and that was on top of the investment spending levels that were more normalized but I think the philosophy speeds remains exactly the same which is to say we do.
Like where we are in terms of our credit ratios being at the lower end of our adjusted that to adjusted EBITDA <unk> and would expect to remain in that territory given the the various Ah.
Kind of uncertainties that are out there, but but other than that the <unk>.
Sick equation that you have seen us use for quite a number of years I would expect to be similar which would then result in substantial amounts of capital being returned to our shareholders.
Great. Okay. Thank you.
Thank you. Our next question will come from David Cats with Jeffrey. Please go ahead.
Good morning, and thank you for taking my question earlier I appreciate it alright.
I wanted to ask something a bit more strategic because there's been so much noise around the.
The lower end train scales in the competitive landscape there the competition for conversions and the launch of new brands et cetera.
That we've all heard uhm I'd.
I'd love to talk about your.
Strategy, and where you are focusing more of your resources competitively and is that just based on the assets that you have is that strategic caught where are you putting more of your attention into your growth.
Yeah, Great question.
Maybe the way I would answer that is I like to describe those discussions as Deborah being binary we don't look at it and say, let's pay is at our focus away from our luxury leadership for instance towards focus on mid scale. They are not.
Usually exclusive as I mentioned in my opening remarks, we are very excited about the early returns.
The focused resources, we've put a guest are entry in the mid scale. The fact that we're already seeing letters contempt signed for city Express even in almost 10, new countries that we've got signed deals very early in the launch a 4.6 breaths and we've got hundreds of Identa.
Five markets for studio Reds.
<unk> the ink is drying on the S. T D here in the U S and so that's extraordinarily exciting for us, but that does not require us to hit the pause button on extending our lead is a very valuable luxury segment and so that's a long winded way of saying our strategy is.
To continue to strengthen our leadership position in luxury of an offer upscale falling spending our growth potential in a new segment for us which is mid scale and so as we roll out mid scale, you've got products like City Express, which I think at least initially will be <unk>.
Sweaty Nubile I think the same is true for studio Rez on the other hand, you work at a platform like four points to express we think there are extraordinary opportunities to rollout conversions under that platform and as we mentioned during the the analyst.
<unk>, we will continue to look at every market we operate in and determine is there an opportunity for mid scale and if so is it a new build of opportunity that's version of opportunity or both.
Thank you I permitted a follow up I I I would ask about the mid scale stuff just to be clear that way you're not finding.
You're not finding that you have to do more either in hard and soft.
Cost in order to capture deals there and the competition level is not <unk>.
Intensifying meaningful your noticeably there at all right.
No I mean, obviously it is early.
But what I will tell you is we have a a pretty extraordinary group of franchise partners, who are are brimming with excitement about our entry into this tier and and.
We're engaged with them on every continent talking about opportunities for mid scale. So we don't find ourselves from deal term perspective, or a capital participation perspective doing anything out of the ordinary.
Perfect. Thank you all so much.
Thank you.
Thank you. Our next question will come from Robyn Farley with UBS. Please go ahead.
Great Uhm. Thank you I I wanted to ask about unit gross next year and I know, you're not giving specific I didn't <unk>, but if we if we used <unk>. When you saw at M. G. M was gonna be in 2023 kind of implied the each of the next two years would be in the four to five per cent range. So with M. G M.
Shifting into 2024.
Is it.
Would something then in that sort of six to seven and a half per cent range righteous kind of adding M. G M into four to five per cent.
Is that the range, we should think about for unit Cross next year. Thank you.
Sure Sir Thanks, Robin as as we talked about in our comments and at the security Analyst meeting I think when you got a deal like M. G M or city express things can be a little lumpy in terms of that specific year over year rhythms growth and so I do think it's much more important.
To be looking more broadly at the two to three year canker.
Sort of numbers and they are clearly with.
2.4% higher ruin count as a result of M. G. M. That's obviously going to help 2024 is number alive and you saw that are 2023 number came down although.
It actually went up apart from M. G M compared to a quarter ago. So I think the main thing I would focus on is that we continue to feel really good about the 5% to 5.5% net rooms growth over the 22 325 time period, and we will have.
<unk>, we get too full.
Budget details when we get February will be more specific but I I think again the <unk>.
Basic earnings equation and growth model of the company is exactly as we described in September at the security analysts Phoenix.
Okay, I guess, so it sounds like you're saying your expectations for <unk> outside of M. G. M. For next year have not changed is that is that the.
Conclusion, again again again as I described we have talked about continuing to feel very confident about the three year five to five and a half and are please to see the 20th 23 number goes up.
A quarter of a point compared to a quarter ago, but we are in the middle of that process as we speak and we'll be able to be more specific when we get to February.
Okay. Thank you very much thanks.
Thank you we'll take our next question from Richard Clarke with Bernstein. Please go ahead.
Alright, Thanks for taking my question, just the only incentive management fees it looks like in the North American market down to 23%.
Down year on year is that all down to this Hawaii, maybe you can just clarify exactly what that was or is there. Some other discretion in there about how much you the crude for the cool with that uhm and if I'd been out a little follow up just wanted to know if the if the M. G. M delay is that any impact on anything other than <unk> guidance.
<unk> EBITDA guidance with you for as well.
You're a little money on the side of the actual call. So vanilla and then some of your some of the words Olympic Let me try to see what I can do what I can do with with what you asked.
<unk>.
Alright, let's just talk rodrick speaking on IMS, which is to say that overwhelmed with a company, we are meaningfully and U as in Canada and year to date two three.
194 million comparing to 167.
Sorry, two 221.
For the full year in 2022, so I would say, we're gonna end up higher and meaning to my higher than in 2019, and we were impacted as we talked about from the Maui fires in our IMF spied, you know close to $10 million, which obviously are gonna impact your high enough. So.
When I think about the percentage of hotels that are earning incentive fees and then U as in Canada.
We have.
Let's see here the date U S and Canada is 31%.
And that compares to hear the day and 22 of 26%.
And so I think from that standpoint, we're really pleased with some origin work that's been done.
In the U S and frankly around the world and the only other thing I would point out is that I M. S for for the year and $537 million a year to the day are higher than I am asked for the full year in 2022 already just turned three quarters. So again.
And stare I think show really well was there a second and then Richard I think on your second question. If I heard it right. The way you want to think about the the brief delay and make integration of <unk> is the way you described it if I can hear you clearly which is that's principally an impact on.
On the timing of the <unk> Act.
Packed on fees or EBITDA, if that was your question as to many of us.
That was my question, thanks, very much for clarifying.
You're welcome thank you.
Thank you we'll take our next question from chat Beynon with Mcquary. Please go ahead.
Good morning, Thanks for taking my question just in terms of the group booking trends I believe you said, 9% for 24 in terms of the number of rooms, we're still trying to get a sense of some of the the current and future bookings are deferred or ketchup or if this is becoming you know kind of the new norm kind of <unk>.
Foundational level, so any color into her in terms of you know multi your bookings maybe up to 25 or if you've been able to kind of crack that code. If this is the new base level of of group. Thanks.
I'm talking about a couple of stats and then N. Toni may want to add anything kind of from up.
More broad perspective, just one thing that's worth noting is that group is back to being about the same percentage of our business that it was pre COVID-19. So so very squirrely for almost a quarter of the business is related to groups. So I I think you are seeing it normalizing.
There and the numbers that we've talked about in the U S and Canada, a 14%. That's obviously on a business that is really settled down into a more normal seasonal pattern rather than still having lots of revenge travel I think one of the interesting things.
Is there while some of the special corporate business has not returned in exactly the same form that it was pre COVID-19 I think there is also the reality that companies are recognizing the value of getting together and are doing it in groups may.
Not in quite the same way they were doing some business trains yet.
So when you look at the the overall proportion of the business is really leisure and business transient thing was swapped a little bit while group Ah remains quite consistent to the way it was pre COVID-19.
And maybe the only other color I would add while it doesn't speak to 25 in my opening remarks, I talked about group revenue growth in the quarter, both globally and for the U S and Canada.
Leaning and I've been traveling around the world I mean, one of the things that's really encouraging.
Continue forward bookings strengths, we're seeing growth is not simply a U S and Canada phenomenon, we're seeing strong pick up around the world.
Thank you very much appreciate it.
Of course.
Thank you. Our next question comes from Michael Bellisario with Bird. Please go ahead.
Thank you good morning.
One of them just want I, just want to dig into group a little bit more could you maybe pull out corporate group meetings and incentive travel and are you seeing the same strength there and is there any change maybe in the booking window that reflects some more of the layoff announcements that we've seen recently more broadly thank you.
And no no particular trends of notice relative to.
Kind of your point about more.
Kind of some trends and companies, we do have longer glued booking windows overall, which reflect the fact that people are finding with the hotels are full and that they need to get some groups on the books in that part remains consistent I would not say that we see any kind of known.
Difference between.
Leisure group and business group, either kind of in the past several months or frankly over the last several years. There is a steady diet of both of those.
Thank you very much.
Thank you. Our next question will come from Bill Crowe with Raymond James. Please go ahead.
Good morning, and thanks.
Tony there's a difference between normalization and leisure demand and the consumer <unk> I guess, given your broad scope cross price points globally, where do you see in the consumer weekend.
Well I you know.
Macro basis that consumer continue we continue to see fairly consistent strength and the consumer.
We've seen a little bit of train down we obviously compete across price points, but as <unk> pointed out in response to one of the earlier questions in the third quarter. We saw some strength in right in the luxury tier which suggests that maybe that's an <unk>.
<unk> is two a multi quarter trend.
Uhm.
We do think there is a value driven consumer than perhaps we we're not capturing before which is one of the reasons were so enthusiastic about entering in the mid scale here for the first time, we think that's a segment of the travelling public that perhaps we had been priced out of capturing.
<unk> in the past, but beyond that.
You know that we continue to see strength really across the consumer the one thing that's gonna be really interesting to watch I think I mentioned in my opening remarks, therefore within a percentage point of getting back to pre pandemic levels of cross border travel and you.
You'll recall, we had lots of good conversations back and forth in 19 about.
Emerging middle classes and markets around the world and their appetite for cross border travel much of the recovery we've seen in international markets has been on the shoulders of domestic demand and as international air lift recover as one of the things we are watching closely is hell.
Strong as at Middle class consumer and how strong is their appetite for cross border travel.
I realize that's a bit of a rash like answer, but I remember watching strength of the consumer around the world and <unk> and what we're seeing is either encouraging or wait and see and I think wait C applies to that cross border question, but what were the early returns are encouraged.
The only thing I would add is that if this trend around experiences versus goods, which we continue to see a really positive element of demand. So whether it is for music concerts or professional sports games or for youth athletics or.
Are all of those pieces of People's lives that that continues to be a great driver.
Demand for travel and and really is is quite cold war. So again kind of a realization on the part of people that travel is a fundamental part of life and one that is very much appreciate it and it'll just build on that point.
We talk to our credit card partners, who obviously have rich consumer spending data.
The trend that leading just described was much more prevalent in the younger generations pre pandemic. When you look at current credit card spending data. It appears that that's a trend that really spans generations now which is obviously great news for our business.
Alright, Thank you very much.
<unk>.
Thank you. Our next question comes from Connor Cunningham with Amelia to research. Please go ahead.
Hi, everyone. Thank you I just wanted to talk a little bit about your expectation for for a recovery enlarge manage corporate you know you see you talked about solid games and and lagging industries in the third corner.
Just curious on how your ear longterm expectation has changed Ah March manage like I realized that small and medium has been quite strong but this is a full recovery and large man it's still possible at this point. Thank you.
Yeah. So.
We've had a version of this conversation in the past it often starts with a question do you think business travel is permanently in the air and I'll give you a version of the answer I've given in the past, which is I absolutely don't think travel is permanently an error I just think it's going to work a little different the small.
Medium we've talked about AD nauseum that has been recovered now for a number of quarters and continues to show strength.
There are a number of factors that are impacting some of the big corporates, whether that the concerns they have about macroeconomic conditions with her that the the sustainability goals that they set for themselves whatever it might be it is having some impact on the pace at which there.
Travel volumes recover.
We're seeing offsets to that impact on the strengths that you've heard when you need to describe and group. We're also seeing offsets in the amount of blended travel that's driving for instance, the extraordinary recovery recovery excuse me, we saw on Sundays, and Thursdays and so I think that.
The day of the week looks a little different segments walk a little different but the overall volumes are quite encouraged.
Okay I appreciate it thank you.
<unk>.
Thank you. Our next question comes from Meredith Jensen with H S. B C.
Good morning, I was wondering if you could discuss a little bit about partnerships like crappy and it.
That kind of collaboration might be a model for additional partnerships that will see going forward in any color you could get to that and and how that might compared to your to other thanks.
Yeah, Great question short answers I hope, so Bon voyage, such an extraordinarily powerful platform for us so platform that strengthens the connectivity to our gas ties together the breath of our brand portfolio and partnerships like rap.
Give us a greater stickiness with the platform N N allow us to connect more deeply and in the case of Rapids in markets like Latin America. They asked to make sense for both sides to be obvious, but <unk> gives us a terrific opportunity to explore.
Or create and take advantage of those sorts of partnerships and so we will absolutely continue to work for those sorts of opportunities.
Great. Thank you.
Well.
Thank you at this time, we have no further questions in queue I'll now turn the call back over to Tony cap of 102 closest <unk>. Please go ahead.
Alright, well. Thank you again for all your interest in great questions. This morning. We appreciate your continued interest in Merrick and look forward to seeing you on the road and have a great afternoon.
This does conclude today's call. We thank you for your participation you may disconnect at anytime.
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