Transcript

May 31, 2007

Moderator:  Joseph Volpe

SpongeBob:  Hello. Ladies and gentlemen. Welcome to the big announcement you have all been waiting for. Please take your seats. As our conference is about to begin. Please welcome Chairman of the board and Chief Executive Office Mr. Marriott Jr.

Mr. Bill Marriott:  Thank you so much, SpongeBob, it's great to be here. I want to thank all of you today for coming. Today we are really excited to officially announce that Marriott, Nickelodeon and Miller Global Properties are launching a new family resort brand, "Nickelodeon Resorts by Marriott." Nickelodeon is the number one kids and family entertainment brand and Miller Global is a leading worldwide real estate developer. Marriott delivers superior service and operational excellence at nearly 3,000 hotels around the world. This to me is an unbeatable combination. We expect to have 20 new resorts in development by 2020. Miller global will be our primary owner and developer and all properties will be managed by Marriott. The first resort will be a 650-room property at Liberty Station in San Diego, California. Other locations being considered are here in the United States, The Caribbean, Mexico, United Kingdom and Europe, Asia, Australia, and the Middle East. Almost the whole world. We know kids love playing in the water, so the resort's focal point will be a huge water park. The resort will also offer live Nickelodeon entertainment with some of my grandkids' favorite characters, like Dora the Explorer and SpongeBob. Even the guest rooms and the restaurants will be built and themed with kids in mind. And we haven't forgotten the parents. We'll have spas and lounges too. Besides being a great new destination resort for families, we believe that these exciting properties will also attract younger adults and the young-at-heart. We'll also have some extensive group meetings facilities, so we are expecting the resorts to fill a very important segment of the market place. And we're very enthusiastic about the new prospects. Now, it's my pleasure to introduce Judy McGrath, Chairman and CEO of MTV Networks and Cyma Zarghami, President of Nickelodeon and MTV Networks Kids and Family Group. Judy and Cyma.

Judy McGrath:  Good afternoon. Thanks Bill, and thank you all for coming to see us here in tourist world. We are right next door and its high season so we are all enjoying the crowds and visitors to the Marriott, and to the neighborhood. But today, as you were just told, we are here to unveil the next great chapter for Nickelodeon connecting with kids and families everywhere. It's a terrific next step forward with a world-class partner for our booming recreation business. The Nickelodeon brand is number one on television. It's a leader On Demand, the internet, mobile phones, DVDs, and consumer products. We have done it by executing on one great big idea. To be everywhere the kids and families want us to be. Cut to today. There is not a gadget or screen where kids can't get to their best friends Dora and Diego, El Tigre, Drake and Josh, the Neopets or the Naked Brothers Band. And now they can share the good times with all of us on another frontier, the wildest adventure of them all, the family vacation. With Marriott and Miller Global, we are giving kids and their parents their own place, with their own spaces to play, to chill out, or just be together- in some pretty terrific destinations. These hotels mark another smart, successful way for families to love and to literally live the Nickelodeon brand. And I can guarantee that the parents won't hear any groans when the kids get a weekend with SpongeBob instead of another show of the Colonial Williamsburg. We are so proud to be standing here today with our new partners. I want to introduce now the mother of invention, Cyma Zhargami, who has led Nick's charge to number one around the whole world to take you through the big idea behind rebooting the family vacation. Thank you. Cyma…

Cyma Zargahmi:  This is really exciting for us because we did this research a couple of years ago, and I talk about this all time. So if you spend any time with me, you have heard these stories. Actually, after we opened the hotel in Orlando we said to kids in a focus group, "we have boxes here -- there is a box from Nickelodeon, there is a box here from Disney, and there is a box here from the Cartoon Network," because we only want to know how we stand with our competitors, which is usually much better. We said, "what do you think is in the box?" And they actually said, "hopefully a trip to the Nickelodeon hotel or a ticket to the Kid's Choice Awards." And what that said to us at that moment, and the army of people who do this by the way; was that the bringing to life in a physical manifestation the Nickelodeon brands and all its fabulous attributes, which are playful, surprising, fun, and kids, was really an opportunity for us so we needed to make it bigger. So the pilot in Orlando was really just a great experience for us. The research that we've done since then and down there has been really great learning for us. This new adventure with Marriott by our side and Miller Global still by our side is actually going to be really exciting. We are expanding Nickelodeon around the world and so the new hotels are incredibly exciting and we think that these couldn't be better partners for us. The first generation of Nickelodeon families will have a place to go and this couldn't be a better time for Nickelodeon and everything that means. So, it's my pleasure now to bring up Eyal Ofer, the Co-Chairman of Miller Global Properties.

Eyal Ofer:  Thank you, Cyma. For the past three and a half years, Miller Global has enjoyed a positive relationship with Nickelodeon. We have gained the total appreciation of Nickelodeon's prominence as the world's number one provider of entertainment for kids of all ages. We are proud to be a partner with the best kids' brand in the world. And for many years, Miller Global have enjoyed a continually expanding positive relationship with Marriott. We are well aware of Marriott's worldwide leadership in all aspects of the hospitality industry. Marriott has a great consumer base, including group business, a great reservation system, and the best frequent stay program in the industry. It was, therefore, logical for Miller Global to bring together these two industry world leaders. By combining Marriott's hotel expertise with Nickelodeon's entertainment expertise, we will provide a worldwide opportunity for people of all ages to enjoy a unique and exciting hotel experience. With the best Hotel Operator and the Best Kids' brand in the world, we are confident that we have a winning combination that is sure to be both a commercial and economic success. I want to congratulate Marriott and Nickelodeon on this new venture. Miller Global is pleased to have served as a catalyst for this partnership. I would like to recognize my Co-Chairman Micky Miller, Jim Miller, Dave Johnstone, George Chelwick, Gary Roffe, and Wendy Mosler, my Miller Global partners and associates who are here today, for their creativity and hard work on this endeavor. We'd like to give you some details about the breadth of this partnership will entail and give you an idea of what some of our hotels will encompass. I'd like to introduce Jim Miller, President of Miller Global Properties, Howard Smith Senior Vice President of Nickelodeon Recreation, and Rick Hoffman, Executive Vice President, Mergers, Acquisitions and Business Development for Marriott international. Thank you.

Jim Miller:  Thank you, Eyal. I am Jim Miller, I am president of Miller Global and together with my new partners Rick and Howard, we get the pleasure of telling you what this new resort complex and new hotels are going to be all about. As our distinguished speakers mentioned before me, we are extremely excited to be a part of this truly international new partnership. We expect to have 20 hotels open by the year 2020, all over the world. Although we were considering Colonial Williamsburg as our first place, that's not where we are going to open our first hotel, I am sorry Judy. But we are considering locations as I said all over the world; the Caribbean, Mexico, the United Kingdom and throughout Europe, Asia, Australia, and of course, here in the United States. And we had to determine the best place to open our first Nickelodeon resort by Marriott. We wanted a market that was already well established for family travel and group business. We wanted a nice climate, we wanted fun attraction and we searched around and think we found the perfect city. San Diego. San Diego, California has all those things including wonderful beaches and we were extremely fortunate to find what we believe is the perfect location in San Diego. An area called Liberty Station is currently being redeveloped. It was an old naval yard and we were able to secure 18 acres right in the heart of Liberty Station. As you can see it's surrounded by San Diego Harbor, has beautiful views of the harbor and Marina, and it has tremendous access to the airport as well as to all the fun attractions in the San Diego area. So with that we began our design efforts. Everyone knew we had to start with a big splash, and yes that was supposed to be a pun. So it's my pleasure to unveil to you a rendering of our first ever Nickelodeon Resort by Marriott. A very exciting 650-room hotel with underground parking, wonderful rooms and meeting spaces, and of course the center piece for all of our new Nickelodeon resort project is a fantastic water park and activities area with an activity desk. It is now my pleasure to turn this over to Rick Hoffman of Marriott to describe in more detail what our hotels are going to offer.

Rick Hoffman:  Thank you Jim. First, I want to join everyone here from Marriott in sharing with you all our excitement about this new venture with Nickelodeon and Miller Global. As Jim said, each unit we plan on building together will be an exiting destination resort. Besides being a great new family destination, we believe Nick Resort by Marriott would attract young adults, the young-at-hearts, and meeting travelers. Especially people who travel on business with their families and groups that like to encourage participants to bring their families along as younger baby boomers Gen X enter their prime. They are telling us their clear preference is to effortlessly have business and pleasure to be able to work and have fun with their families at the same time, and their desire would be perfectly met by all our planning Nickelodeon prime area. First, what I would like to do is show you some of the features at the hotel. The hotels will feature Nickelodeon Marriott guest rooms and suites which cares for the unique needs of families traveling together. All the rooms will have Marriott signature bedding, bright wall colors, flat screen high definition televisions, and the new Marriott plug-in technology for computers, iPods, and other electronic devices. And I promise you, even if the parents don't know how to use them, the kids will. Also, there will be upscale bathrooms in every room that we provide. As well as the fact that all the rooms will be oversized and have a special space for kids in all the hotels, there will be a large number of multi beds to sleep, the "kids' suites." They will be seeing Nick's most popular characters, creating an environment that gives kids a place to call home when they are traveling on the road. Each hotel will also have meeting spaces as Jim mentioned. They will be comprehensive to business services. Marriott knows how to appeal to group business. Our research is telling us that there are large numbers of meeting planners and groups looking for high energy, differentiated experiences that go beyond what most hotels today provide. We will provide that at Nickelodeon Marriott Resort. At our initial property in San Diego, we will have about 30,000 square feet of meeting space. We will offer facilities accommodating two 300-person groups, and smaller meeting spaces to accommodate people in a boardroom setting. Of course after a busy day of activities at the resort, resort guests will have the opportunity to pamper themselves with luxurious spas and fitness centers. This will be a great place for adults to unwind while the kids are engaged in the many activities the hotels have to offer. We also plan on having spa services available that are appropriate for children too so that parent and child can share in that experience together. Each hotel will have a variety of dining options, including full service upscale restaurants as well as a separate bar area for adults to go without their children. There will be simple menu options in a buffet area as well as a busy "grab and go" area. Both of the random food outlets will offer a variety of simple meal choices for kids including healthy food options that will become a Marriott signature, as well as an on site convenience store for guests on the move. For those of you who follow our industry, you know there has been a lot of publicity recently about water park hotels. Our partnership between Marriott, Nickelodeon, and Miller Global will create a leading brand name in this new category. We are going to be taking water parks to another level with integrated activities, live entertainment and some of the most popular characters in the World. These resorts will be much more than a hotel with a pool, they are going to create an unforgettable family travel experience. To describe that to you some more I would like to turn it over to Howard Smith of Nickelodeon, to provide you with some additional information on the entertainment options that would be available at our hotel. Thanks.

Howard Smith:  Thank you Rick, I want to acknowledge the fact that Rick and Jimmy and I along with Sarah, who is siting here in the front row, our Chief Operating Officer of Nickelodeon has spent the past year talking about this relationship and negotiating the deal and doing all types of development work. So this is a very special time for Nickelodeon. We are thrilled to be here to announce and celebrate the launch of this new concept together with everybody here and thank you for coming. As Rick said this is a marriage of two global brands and global development company. We think this is going to create a brand new concept and we've spent a lot of time talking to kids and families about what they are looking for in the vacation experience. One thing that everybody tells us is you have to have the best pools in the World and that's what we plan to give them. So as you can see here in this slide, the center piece of pools are going to be climbing structures, zero entry depth pools for preschoolers, all types of tanks and slides and attractions that you will find in any terrific water park. In addition to all the attractions that you will find at the pool, we shall also be doing a lot of pool side entertainment featuring games and stunts from popular Nickelodeon shows. And of course we will bring a little mess along with us and one of our most signature elements, green slime, by the Pool; it doesn't get much better than that. Now, if you are a parent, this just may be a little bit too much energy for you so we are going to create definition for parents where they can relax and wine. We will have a lap pool where they can spend their time and relax while their kids are out enjoying all the attractions and entertainments at the hotel. We will also have poolside Cabanas that would be available for families. One of the key things that we hear from kids all the time is that they want to be a part of the Nickelodeon experience. So within each resort we will have our own studio Nick which will be a state-of-the-art facility. We will produce live entertainment every evening and this entertainment will allow kids to be part of Nickelodeon and participate in the game, like on the channel. One of the signature elements as I mentioned before is green slime, and we will be sliming kids all night long in studio Nick. Green Slime, for those who aren't familiar with it, is Nickelodeon's highest honor. Some of the most famous people on the planet have been slimed by Nickelodeon including Tom Cruise, Bill Cosby, Steven Spielberg, and many others and now kids will have the opportunity to experience it first-hand. In addition to the branded activities we are going to have lots of standard entertainment options as well. For kids we are going to have sports courts, basketball courts, a climbing rock wall, we'll have one of the largest game rooms with the latest video games, and terrific table top games for families. So if you are not interested in pool activities we will have a lot of other things here to do. The hotel will also be designed to be production friendly and TV ready so when we want to shoot a show with the hotel, it will allow us to do that in a moment's notice. Last but not least it wouldn't be a Nickelodeon hotel if we didn't have our popular characters there. Every morning we will be hosting a character breakfast where kids and families can come down and dine with their favorite characters. Throughout the resort these characters will be available for meet and greet so that they can greet families as they arrive at the hotel. So I want to introduce you to some of those characters that you will see at the future Nickelodeon Resorts by Marriott. So please welcome everybody's pre-school character from around the world, Dora the Explorer. And now please welcome straight from the Bikini Bottom, everybody's favorite is also the number one television show for kids on television. It's SpongeBob Square Pants. Now what we would like to do is open up the floor to questions. We have folks standing by on the isles with microphones. If you have a question just raise your hands. We also have people on webcast on conference calls, they will be acknowledged as well and if you could please state your name and which organization you are with when you ask questions that would be great.

Oliver Staley:  Hi, my name is Oliver Staley, Bloomberg News. Given the emphasis you are placing on the water parks, does this limit your locations to warm water, warm weather climate cities?

Rick Hoffman:  Let me take that. No, we have planned indoor water parks for wherever the climate suggests that indoor is better. Frankly most of the world's indoor water parks are a major development in our industry and when we are more talking about taking these hotels to the next level, we are definitely considering indoor water parks as well; we expect probably more than half of these to be indoor water parks. We are looking at areas right now that you could never do one of these outside.

Male Speaker:  Does someone else have a microphone? We have question down here.

Mike Rosenwald:  Hi, Mike Rosenwald from the Washington Post, can you talk a little bit from Marriott's perspective about the importance of adding this kind of brand to your overall capable brands and where this fits into your overall strategy, and particularly going after the Gen X market in a sort of unique way?

Rick Hoffman:  I could throw that to my boss over there, but I guess I can answer. Marriott's segmentation started many years ago, it came out with "Courtyard" Marriott in the 1980s, and we have come out with a great number of brands. This is an extension for us that make perfect sense, this market has been going, and there is the ability to focus on family travel and leisure travel, in a way that existing hotel brands do not. So, we think it's a great way to extend our company. It's also a great way of introducing people traveling with their families to our products. Somebody mentioned in the introduction that we have the industries leading frequent guest program and Marriott rewards, and these awards will be a great way the introduce people to these hotels, businessmen who have cumulative points traveling with there families. So, I think what we believe this is just a great extension of what we already do and taking us to another dimension of leisure travel, the feel for them.

Female Speaker:  We, have a question back here from the web, "when will the first one be built, how many, how often will future ones be built?"

Jim Miller:  We expect to break ground on the San Diego Hotel in January of next year, January of 2008, and expect that to be opened in early 2010. We are hoping that we will get many of these hotels under construction and under development as quickly as we can. As we said, we are looking at several locations, we have a few that we are really horning in on, very seriously our goal is to have at least five of these under construction within the next couple of years and as we said earlier we would like to have 20 of these either open or under construction by the year 2020.

Bruce Serlen: Bruce Serlen, Hotel Business Magazine, "Does this announcement change anything with the Orlando Hotels, what is the status of that change?"

Jim Miller:  I will also address that one. For the time being it is not, our hotel in Orlando which was the first ever Nickelodeon hotel is under a franchise agreement with Holiday Inn, and that agreement expires in March of 2009, so until March of 2009, we intend to continue to operate that. Our group actually manages that hotel, Miller global is the Manager of that hotel, and we don't expect to change anything with that hotel until March of 2009. But, in the mean time we are exploring, and we will look at lots of different options to figure out the best way to use that tremendous asset in our new partnership. We believe it's a fabulous asset and we have got to figure out as I said, the best way that we can incorporate that hotel into our new partnership.

Male Speaker:  Another question, yes sir.

Emmanuel:  Hi Emmanuel from CNN. I was just wondering if you guys had any idea how much it's going to cost for the payments to go, I know it's really early but, are you guys trying to target median or are they more expensive?

Male Speaker:  Would your family like to go, because we can arrange that.

Male Speaker:  Does anybody on the conference call, have a question?

Male Speaker:  We don't know yet, you know we want to make sure that these hotels are affordable and that families of all economic classes can afford to be there. On the other hand, it's really going to be an upscale and unique experience, and as you can see from the renderings and our plans at San Diego, these are not going to be inexpensive hotels to develop, so we also have to make sure that they are economically profitable, but I would guess that it would be equivalent to what a family would spend on any other exciting fun family vacation, except they will be able to do this all in one place, and have an experience they can't get any place else.

Male Speaker:  Let me add one thing to that. One of the unique things about these properties that we will be able to capitalize on is that all of the rooms are going to be designed for multi person occupancy. So in your family traveling, especially if you have a lot of kids, you used to have to get two or three rooms and pay for that. In these resorts we will have a large number of rooms where an entire family, four or five kids can stay in one suite room. So the per room price might be higher than it used to be, but we think it will be a great value proposition for the families. For one, they will have the ability to stay together, have the fun of that experience together, but two; they will be able to get one room, so when you look at the room rate, you have to be careful, because it is comparable to in a traditional hotel perhaps getting two or three different rooms.

Female Speaker:  Here one more question back here from the web from Lorraine. "Will Marriott or Miller look at acquiring the water park hotels that would fit the brand that would allow this brand to grow?"

Male Speaker:  We never say never. Suppose we are starting out, but if a property comes up, it's available, and it fits a profile and came with investments that could be made into a hotel and is acceptable to both of us, sure that we would happy to look on that.

Howard Smith:  Okay, so we have one last really difficult question to ask. And to answer it I'm going to need Mr. Marriott, David Marriott, David's wife Carrie and kids to come up on stage.

Howard Smith:  Okay, so who has got that last question?

Dora:  Hello everybody! My name is Dora. This is so exciting. Nickelodeon and Marriott! Felicitaciones! I have a question… Nickelodeon is famous for something green and gooey; do you know what it is?

Howard Smith:  I believe its green slime Dora.

Female Speaker:  Do you know what it is?

Howard Smith:  Green slime! Mr. Marriott, do you like green slime? I can't hear you.

David Marriott: I like slime, do you guys like slime. Everybody likes slime and its Nickelodeon's honor to slime individually. Dad, you ready to receive the highest honor from Nick? On the count of three. Three…two…one…

Dora:  That's better.

Howard Smith:  Hi, guys I don't see that coming on. Oh that is great. Very well.

(Background discussion that is indiscernible.)

Howard Smith:  So thank you all for coming today, we appreciate your time.