TONY CAPUANO: No, so it's really interesting. These-- well, New York is a little bit different because there is so much leisure demand, which is propping us up. But if you look at business transient trends here in the US, we're at-- for corporate demand, we're at about 50% of where we were pre-pandemic. But again, if you slice and dice the data a bit, if you look at just secondary and tertiary markets, we're closer to 80%.

So what that tells you is in the big urban markets, we're well below pre-pandemic levels. But again, that's why we're so focused on the fall. When most of the schools have reopened, kids are back in school, parents are returning to the office, that gives us some measured optimism about what business will look like in the fall.

BRIAN SOZZI: You are-- you've hit the road again. You're back--

TONY CAPUANO: I have.

BRIAN SOZZI: --doing your thing, traveling around.

TONY CAPUANO: It's fabulous.

BRIAN SOZZI: Why are you-- why is it so important to get back out there? Why is important to get off the Zoom calls?

TONY CAPUANO: For a whole host of reasons. I think if you look at our business model, we're a business that's built on putting our people first. I want to get out and see our folks. I want to thank them for the incredible work they've done over the last 16 or 17 months. I want to visit with our owners and franchisees. As you know, we've got 7,600-ish hotels. We own less than a dozen. I want to get out there and hear from our owners. How are we doing? And helping them work their way out of the challenges that have been created by the pandemic.

Our net unit or our unit growth continues to be strong. I know you heard in our first quarter earnings call, we opened 24,000 rooms in the first quarter. Our pipeline has held relatively steady at about half a million rooms. And we've got about a quarter of a million rooms under construction.

So I want to get out there and talk to our partners, see how they're thinking about development, and maybe in the short term, more importantly, how they're thinking about conversions. Of those 24,000 rooms we opened, about a third were conversions. And I think until the debt markets for new construction really start to open, conversions will be an increasingly part of our growth story.

BRIAN SOZZI: I think I remember those first quarter earnings. I interviewed you from inside my kitchen.

TONY CAPUANO: You did. And I think I was in my attic.

BRIAN SOZZI: Yeah, talk about the new normal. Staying on the construction, is there too much capacity in the hotel industry after the pandemic?

TONY CAPUANO: Well, time will tell. I mean, even in headier times, you heard industry experts say the industry is not overbuilt. It's underdemolished. And I think one of the things you've seen over the last year and a half is some changes in use. So you've seen some hotels used on a temporary basis, maybe a permanent basis, to help homeless find shelter. With the strong demand for multifamily, you've seen some conversion of hotels to multifamily apartment types of uses. You've seen some condo conversions.

Obviously, you could argue that in the short term, we have overcapacity because demand has not fully returned to pre-pandemic levels. On a global basis in May, we were at about 50% occupancy. In the US and Canada, a bit higher, about 55. That's still probably 40% below where we were before the pandemic unfolded.

BRIAN SOZZI: I'm surprised to see how the stock has reacted. And you're telling us you had a good July 4th weekend. Leisure travel is back to where it needs to be. Convince investors that the business travel will come back to where it needs to go.

TONY CAPUANO: Well, there are-- as you know, there are lots and lots of opinions about the future of business travel. You've heard people saying half of it will never come back. You've heard some-- it'll come back stronger than it was before, and lots of opinions in between. It won't shock you that I'm optimistic about the future of business travel, but not just because this is what I do for a living. There are about 700 corporate travel managers who we talk to weekly.

And I think we reached a real important inflection point in April when the CDC came out and said, if you are fully vaccinated, there's very low risk to travel. That, in turn, almost immediately saw them open up some of the booking channels. And that gives us some confidence.

Two other factors, though, that I think are encouraging for us. Number one, we've seen this phenomenon over the last year and a half of a blending of trip purpose. So in the old days, you could sit in the lobby and say that's a business traveler, or that's a leisure traveler, or that's a group [INAUDIBLE].

BRIAN SOZZI: They kind of look like us, suit and tie.

TONY CAPUANO: Well, that's right. Today, it would be harder to do that, but that's good news for our business. You're seeing folks that have learned, while it's not optimal, I can work from almost anywhere. And so if my family's going on a trip, where in the past, I might have looked at my calendar, said there's no way I can do this, I'll go along.

I did it last week. I went with my family to the West Coast. I got up at 5:00 AM every day to do Zoom calls in the lobby and then had some leisure time as well. And I think that that blending of trip purpose, what we hear from our customers, that will endure well beyond the end of the pandemic. And I think that's great for us.

The other thing, when we talk to our big customers, especially those that are in the client service business-- accounting firms, law firms, consultants-- they are anxious to get on the road and sit with their customers. But we ask them. We say, you used to travel. You were the ultimate road warriors, 200 plus days a year. Do you think you'll continue to travel at that pace? They said, some of the shorter one-night trips, we may do virtually. However, now, when we take trips, we may go with a longer length of stay. And I think that's great news for business travel as well.

BRIAN SOZZI: So the leisure traveler, they had their vacation. They have been cooped up for the past year and a half. They had their trip. How do you convince them to come back again?

TONY CAPUANO: For leisure or for business?

BRIAN SOZZI: For leisure.

TONY CAPUANO: Well, the amount of cash that's been stockpiled, the amount of loyalty points that have been stockpiled, and the clamoring from their families to get out of the house and get on the road, coupled with some of the promotions we're doing on Marriott Escapes, some of the point bonuses we're doing through the Bonvoy program, and some of the things we're doing just to communicate with those 150 million members about which markets are open, some of the new properties we've added over the last 18 months. I think we're building real enthusiasm around travel.

BRIAN SOZZI: So this hotel we're in, it was-- it recently reopened on June 1st. And the one nearby, I believe, opened in early May. Were you able to get enough workers for this hotel? And the workers that have come back, have you had to retrain them?

TONY CAPUANO: Well, the good news is, this is a brand that has a lot of passionate associates. So we were able to bring back many of our well-trained edition associates. But labor in markets where demand is accelerating rapidly is a bit of a challenge for us. So if you look at Florida, Texas, Arizona, California, the good news is, there's lots of leisure demand in those markets. And we're seeing demand rise rapidly.

But we are competing with labor. We're competing with our traditional hotel competitors. And there are some industries that have thrived during the pandemic. And they need more workers as well.

BRIAN SOZZI: Have you had to raise wages?

TONY CAPUANO: In some markets, we have.

BRIAN SOZZI: Hm. By how much?

TONY CAPUANO: It varies from market to market.

BRIAN SOZZI: That's interesting. So you took over right in the middle-- pretty much right in the middle of the pandemic from really one of the greatest CEOs that I have known. That is Arne Sorenson.

TONY CAPUANO: Me, too.

BRIAN SOZZI: What has that transition been like? And what is your five-year plan?

TONY CAPUANO: The transition, I suppose on the positive side-- which is not a great way to describe. But on the positive side, as you well know, oftentimes, changes in the CEO chair are because investors and/or the board have lost confidence in the leader or in the strategy that that leader has articulated. That couldn't be further from the case here. We have a well-articulated strategy, a well-articulated growth plan that was embraced by the investment community, as evidenced by the performance of the stock. It was embraced by the board, embraced by Bill Marriott.

And part of the way we work through the grief over the loss of our friend and leader is to continue moving the company down that path. My experience has been, our people are remarkable. As I'm out on the road now and I'm talking to our frontline associates, it would have been easy for them to get discouraged or frustrated-- quite the opposite. They view it as their responsibility an opportunity to help the company and our owners climb out of the hole created by the pandemic. They are passionate. They are incredibly adaptable. And they take on every day's challenges, really, with alacrity. And it is inspiring to see.

I also have been comforted by the long tenure and the-- what I've called battle tested nature of the company's senior leadership. One of the great things about our culture is that team has been together for years and years. And we've worked through conventional recessions, post 9/11, the Great Recession, Arne's diagnosis, the unfolding of the pandemic. And it's a team that really understands what it takes to navigate the company through a crisis.

BRIAN SOZZI: All right, we'll leave it there. Marriott CEO, Tony Capuano, good to see you-- finally see you in person.

TONY CAPUANO: It's about time.

BRIAN SOZZI: All right, let's get out of here.

TONY CAPUANO: Let's do it again soon.

BRIAN SOZZI: Let's go enjoy this penthouse.