BETHESDA, Md., Feb. 14, 2018 /PRNewswire/ —

HIGHLIGHTS

  • Fourth quarter reported diluted EPS totaled $0.54, a 13 percent decrease from prior year results. Fourth quarter adjusted diluted EPS totaled $1.12, a 32 percent increase over fourth quarter 2016 adjusted results. Adjusted results exclude merger-related adjustments. Adjusted fourth quarter 2017 results also exclude the gain on the disposition of the company’s ownership interest in Avendra and the provisional tax charge resulting from the U.S. Tax Cuts and Jobs Act of 2017;

  • Full year 2017 reported diluted EPS totaled $3.61, a 37 percent increase from prior year results. Full year 2017 adjusted diluted EPS totaled $4.36, a 32 percent increase over full year 2016 combined results. Adjusted full year 2017 results exclude merger-related adjustments, the gain on the disposition of the company’s ownership interest in Avendra and the provisional tax charge resulting from the U.S. Tax Cuts and Jobs Act of 2017. Combined full year 2016 results assume Marriott’s acquisition of Starwood and Starwood’s sale of its timeshare business had been completed on January 1, 2015;

  • Worldwide comparable systemwide constant dollar RevPAR rose 4.6 percent in the 2017 fourth quarter, while North American comparable systemwide constant dollar RevPAR rose 3.9 percent;

  • Worldwide comparable systemwide constant dollar RevPAR rose 3.1 percent for full year 2017, while North American comparable systemwide constant dollar RevPAR rose 2.1 percent;

  • The company added over 76,000 rooms during 2017, including roughly 11,000 rooms converted from competitor brands and nearly 30,000 rooms in international markets;

  • At year-end, Marriott’s worldwide development pipeline increased to approximately 2,700 hotels and more than 460,000 rooms, including nearly 34,000 rooms approved, but not yet subject to signed contracts;

  • Fourth quarter reported net income totaled $201 million, an 18 percent decrease from prior year results. Fourth quarter adjusted net income totaled $415 million, a 24 percent increase over prior year adjusted results;

  • Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) totaled $808 million in the quarter, a 7 percent increase over fourth quarter 2016 adjusted EBITDA;

  • For full year 2017, Marriott repurchased 29.2 million shares of the company’s common stock for $3.0 billion, including 7.4 million shares for $925 million during the fourth quarter. To date in 2018, the company has repurchased 2.3 million shares for $315 million.

Marriott International, Inc. (NASDAQ: MAR) today reported fourth quarter 2017 results.

The discussion in the first section below reflects reported results for the fourth quarter in accordance with U.S. generally accepted accounting principles (GAAP).  To further assist investors, the company is also providing adjusted results for the 2017 and 2016 fourth quarters that exclude merger-related adjustments associated with the company’s acquisition of Starwood Hotels & Resorts Worldwide (Starwood) on September 23, 2016.  In addition, the company has adjusted results for the 2017 fourth quarter to exclude the gain on the disposition of the company’s ownership interest in Avendra (Avendra gain) and the provisional charge resulting from the U.S. Tax Cuts and Jobs Act of 2017 (Tax Act). 

Branding fees from credit cards and residential sales are reported in the Franchise fees line on the income statement.  Prior to the first quarter of 2017, those fees were reported in Owned, leased, and other revenue.  Reported results for the 2016 periods on pages A-1 and A-2, adjusted results on page A-3, and combined results on page A-4 have been reclassified to conform to the current reporting.

Arne M. Sorenson, president and chief executive officer of Marriott International, said, “2017 was a terrific year.  We made great progress on the integration of Starwood, capturing significant property and corporate overhead cost synergies while also increasing our worldwide RevPAR index.  We entered into a joint venture with Alibaba to better engage with Chinese customers and invested in PlacePass to provide our guests with even more experiential travel opportunities.  We also signed strategic new credit card agreements that will allow us to strengthen our customer offerings, generate significant benefits for our owners and franchisees, and provide higher branding fees for Marriott. 

“In the first full year after acquiring Starwood, solid RevPAR gains, strong rooms growth, and property-level margin improvement combined to deliver record fee revenue.  With our owners and franchisees, we opened over 76,000 rooms during the year to reach over 1.25 million rooms.  Significant new signings drove our development pipeline to a record 460,000 rooms, over 80 percent of which are in the upscale, upper upscale or luxury tiers.  Compared to combined full year 2016 results, worldwide systemwide RevPAR rose 3 percent during the year; adjusted operating income increased 13 percent; and adjusted earnings per share increased 32 percent.  We returned $3.5 billion to shareholders in share repurchases and dividends during the year.

“In 2018, we anticipate our number of rooms will increase roughly 7 percent gross, while rooms deletions should total 1 to 1.5 percent during the year.  We also continue to expect global RevPAR will increase by 1 to 3 percent.  As a result of U.S. tax reform, we expect our effective tax rate in 2018 will decline meaningfully to approximately 22 percent.  Not including incremental asset sales, we expect to return roughly $2.5 billion to shareholders in share repurchases and dividends in 2018.

“Our company was founded on the principle of taking care of our associates, so they take care of our guests, who then keep coming back.  For 2018, we plan to invest in our workforce by offering an additional one-time contribution to the Marriott International retirement savings plans.  Structured as a $5-to-$1 company match of up to $1,000, the vast majority of participating associates should receive this incremental company contribution.  This contribution will be available to eligible associates at company-operated hotels, as well as those in corporate and regional offices, in the U.S.  We also expect to invest in global associate support programs.” 

Fourth Quarter 2017 GAAP – Financial Results As Reported

Marriott reported net income totaled $201 million in the 2017 fourth quarter, an 18 percent decrease from 2016 fourth quarter net income of $244 million.  Reported diluted earnings per share (EPS) was $0.54 in the quarter, a 13 percent decrease from diluted EPS of $0.62 in the year-ago quarter.

Base management and franchise fees totaled $695 million in the 2017 fourth quarter, an 11 percent increase over base management and franchise fees of $624 million in the year-ago quarter.  The year-over-year increase in these fees is primarily attributable to higher RevPAR, unit growth, higher branding and relicensing fees, and higher other property-level sales.

Fourth quarter 2017 worldwide incentive management fees increased to $170 million, a 14 percent increase compared to incentive management fees of $149 million in the year-ago quarter.  The year-over-year increase was largely due to higher net house profit at full-service properties in North America and the Asia Pacific region.

Owned, leased, and other revenue, net of direct expenses, totaled $95 million in the 2017 fourth quarter, compared to $109 million in the year-ago quarter.  The year-over-year decrease largely reflects the negative impact from sold hotels, partially offset by stronger results at a few North American owned and leased hotels.

General, administrative, and other expenses for the 2017 fourth quarter totaled $259 million, compared to $234 million in the year-ago quarter.  The year-over-year increase was largely due to higher incentive compensation and $7 million of litigation reserves, partially offset by general and administrative cost savings.  General, administrative, and other expenses in the 2016 fourth quarter benefited from an $8 million favorable legal settlement.

Gains and other income, net, totaled $657 million in the 2017 fourth quarter, largely reflecting the $659 million Avendra gain.

Interest expense, net, totaled $58 million in the fourth quarter compared to $62 million in the year-ago quarter.  The decrease was largely due to the maturity of Series I Senior Notes.

Equity in earnings for the 2017 fourth quarter totaled $10 million, compared to $2 million in the year-ago quarter.  The year-over-year increase largely reflects a $5 million gain on the sale of a hotel in a North American joint venture.

The provision for income taxes totaled $978 million in the fourth quarter, an 83.0 percent effective tax rate, compared to $139 million in the year-ago quarter, a 36.3 percent effective tax rate.  With the enactment of the Tax Act, the fourth quarter 2017 tax provision includes a $567 million charge.  The charge is the net of a $745 million transition tax on accumulated foreign earnings, which will be paid over eight years, a $159 million tax benefit related to the revaluation of the company’s net deferred tax liabilities at lower rates, and $19 million of other tax benefits.  This tax charge is based on the company’s initial analysis of the Tax Act and may be adjusted in future periods.  The fourth quarter 2017 tax provision also includes $259 million of taxes related to the Avendra gain, a $34 million reduction of tax benefits related to lower merger-related costs and charges year-over-year and $17 million of taxes related to the increase in earnings.  These charges were partially offset by $21 million of tax benefits due to higher proportion of earnings in lower tax jurisdictions, a $10 million tax benefit resulting from the adoption of Accounting Standards Update 2016-09 (the stock-based compensation standard), which changes the GAAP reporting of excess tax benefits associated with employee stock-based compensation, and $7 million of net favorable discrete tax items. 

Fourth Quarter 2017 Financial Results As Adjusted

Fourth quarter 2017 adjusted net income totaled $415 million, a 24 percent increase over 2016 fourth quarter adjusted net income of $334 million.  Adjusted net income for the fourth quarters of 2017 and 2016 exclude $59 million ($47 million after-tax) and $136 million ($90 million after-tax) of merger-related adjustments, respectively.  Adjusted net income for the fourth quarter of 2017 also excludes the $659 million ($400 million after-tax) Avendra gain and the $567 million provisional charge resulting from the Tax Act described above.  Adjusted diluted EPS in the fourth quarter totaled $1.12, a 32 percent increase from adjusted diluted EPS of $0.85 in the year-ago quarter.  See page A-3 for the calculation of adjusted results.

Base management and franchise fees totaled $695 million in the fourth quarter of 2017, an 11 percent increase over base management and franchise fees of $624 million in the year-ago quarter.  The year-over-year increase in these fees is primarily attributable to higher RevPAR, unit growth, higher branding and relicensing fees, and higher other property-level sales.

Fourth quarter 2017 worldwide incentive management fees increased to $170 million, a 14 percent increase compared to incentive management fees of $149 million in the year-ago quarter.  The year-over-year increase was largely due to higher net house profit at full-service properties in North America and the Asia Pacific region.

Owned, leased, and other revenue, net of direct expenses, totaled $95 million in the 2017 fourth quarter, compared to $109 million in the year-ago quarter.  The year-over-year decrease largely reflects the negative impact from sold hotels, partially offset by stronger results at a few North American owned and leased hotels.

General, administrative, and other expenses for the 2017 fourth quarter totaled $259 million, compared to $234 million in the year-ago quarter.  The year-over-year increase was largely due to higher incentive compensation and $7 million of litigation reserves, partially offset by general and administrative cost savings.  General, administrative, and other expenses in the 2016 fourth quarter benefited from an $8 million favorable legal settlement.

Interest expense, net, totaled $58 million in the fourth quarter, compared to net expense of $62 million in the year-ago quarter.  The decrease was largely due to the maturity of Series I Senior Notes.

Equity in earnings for the 2017 fourth quarter totaled $10 million, compared to $2 million in the year-ago quarter.  The year-over-year increase largely reflects a $5 million gain on the sale of a hotel in a North American joint venture.

The adjusted provision for income taxes totaled $164 million in the fourth quarter, a 28.3 percent effective rate, compared to the adjusted provision for income taxes of $185 million in the 2016 fourth quarter, a 35.6 percent effective rate.  The adjusted provision for the fourth quarter of 2017 includes $21 million of tax benefits due to higher proportion of earnings in lower tax jurisdictions, a $10 million tax benefit resulting from the adoption of the stock-based compensation standard and $7 million of net favorable discrete tax items, partially offset by $17 million of taxes related to the increase in earnings. 

For the fourth quarter, adjusted EBITDA totaled $808 million, a 7 percent increase over fourth quarter 2016 adjusted EBITDA of $756 million.  Compared to the prior year, adjusted EBITDA for the fourth quarter of 2017 reflects a $16 million negative impact from sold hotels.  See page A-12 for the adjusted EBITDA calculations.

Fourth Quarter 2017 Financial Results Compared to November 7, 2017 Guidance

On November 7, 2017, the company estimated total fee revenue for the fourth quarter would be $825 million to $835 million.  Actual total fee revenue of $865 million in the quarter was higher than estimated, largely reflecting RevPAR above the high end of the guidance range and higher than anticipated hotel operating margins, higher than expected branding and relicensing fees, and the recognition of $3 million of previously deferred incentive management fees. 

The company estimated owned, leased, and other revenue, net of direct expenses, for the fourth quarter would total approximately $90 million.  Actual results of $95 million in the quarter were higher than estimated, largely due to $3 million of termination fees.

The company estimated general, administrative, and other expenses for the fourth quarter would total $240 million to $245 million.  Actual expenses of $259 million in the quarter were higher than expected largely due to $7 million of litigation reserves and $5 million of higher than anticipated development expenses.

The company estimated interest expense, net, for the fourth quarter would total approximately $65 million.  Actual net expense of $58 million in the quarter was lower than expected due to lower commercial paper balances and the reversal of discount reserves resulting from early loan repayments.

The company estimated equity in earnings for the fourth quarter would total approximately $5 million.  Actual earnings of $10 million in the quarter were higher than expected, largely due to a $5 million gain on the sale of a hotel in a North American joint venture.

Selected Performance Information

The company added 132 new properties (21,061 rooms) to its worldwide lodging portfolio during the 2017 fourth quarter, including the Marriott Santa Cruz de la Sierra Hotel, the company’s first hotel in Bolivia, the Bulgari Resort Dubai, and the Delta Hotel Shanghai Baoshan, the first Delta Hotel in the Asia Pacific region.  Thirteen properties (2,786 rooms) exited the system during the quarter.  At year-end, Marriott’s lodging system encompassed 6,520 properties and timeshare resorts with nearly 1,258,000 rooms.

At year-end, the company’s worldwide development pipeline totaled 2,708 properties with more than 460,000 rooms, including 1,136 properties with roughly 201,000 rooms under construction and 165 properties with nearly 34,000 rooms approved for development, but not yet subject to signed contracts.

In the 2017 fourth quarter, worldwide comparable systemwide constant dollar RevPAR increased 4.6 percent (a 5.3 percent increase using actual dollars).  North American comparable systemwide constant dollar RevPAR increased 3.9 percent (a 4.1 percent increase using actual dollars), and international comparable systemwide constant dollar RevPAR increased 6.2 percent (an 8.4 percent increase using actual dollars) for the same period. 

Full year 2017 comparisons to combined 2016 information presented below assume Marriott’s acquisition of Starwood and Starwood’s sale of its timeshare business had been completed on January 1, 2015.

The company added 473 new properties (76,589 rooms) to its worldwide lodging portfolio during 2017.  Sixty-nine properties (12,952 rooms) exited the system during the year.

For full year 2017, 71 percent of worldwide company-managed hotels earned incentive management fees compared to 70 percent in 2016.  In North America, 60 percent of company-managed hotels earned incentive management fees in 2017 compared to 60 percent a year ago.  Outside North America, 80 percent of company-managed hotels earned incentive management fees in 2017, compared to 78 percent in 2016.  In addition, the company earned 62 percent of its incentive management fees in 2017 at properties outside North America, compared to 61 percent a year ago.

Worldwide comparable company-operated house profit margins increased 80 basis points for full year 2017, largely due to higher RevPAR, better productivity, solid cost controls, and synergies from the Starwood acquisition.  House profit margins for comparable company-operated properties outside North America rose 130 basis points and North American comparable company-operated house profit margins increased 40 basis points over 2016. 

Balance Sheet

At year-end, Marriott’s total debt was $8,238 million and cash balances totaled $383 million, compared to $8,506 million in debt and $858 million of cash at year-end 2016.

Marriott Common Stock

Weighted average fully diluted shares outstanding used to calculate both reported and adjusted diluted EPS totaled 369.9 million in the 2017 fourth quarter, compared to 394.0 million shares in the year-ago quarter.

The company repurchased 7.4 million shares of common stock in the fourth quarter at a cost of $925 million at an average price of $124.99.  For full year 2017, Marriott repurchased 29.2 million shares of common stock at a cost of $3.0 billion at an average price of $103.66.  To date in 2018, the company has repurchased 2.3 million shares for $315 million at an average price of $139.02.

OUTLOOK

In the 2018 first quarter, the company plans to adopt Accounting Standards Update 2014-09 (the new revenue standard), which changes the GAAP reporting for revenue and expense recognition for franchise application and relicensing fees, contract investment costs, the quarterly timing of incentive fee recognition, and centralized programs and services, among other items.  While the new revenue standard will result in changes to the reporting of certain revenue and expense items, Marriott’s cash flow and business fundamentals will not be impacted.  A discussion of expected revenue recognition changes can be found in the company’s Third Quarter 2017 Form 10-Q filed on November 8, 2017.  The Form 10-Q is available on Marriott’s Investor Relations website at http://www.marriott.com/investor.

Within the next few months, the company expects to provide full retrospective 2017 quarterly and full year statements of income as if the new revenue standard had been adopted on January 1, 2016. 

Marriott’s earnings guidance for 2018 reflects adoption of the new revenue standard.  The company estimates a $50 million negative impact on 2018 operating income as a result of adopting the new revenue standard, not including the possible impact from centralized programs and services.  Centralized programs and services revenues include owner reimbursements for items such as reservations, loyalty, and sales and marketing, and are included in the Cost reimbursements line on the income statement.  The costs of providing those centralized programs and services are reflected in the Reimbursed costs line on the income statement.  The company provides these centralized programs and services on a breakeven basis, which will not change under the new revenue standard.  However, timing differences between the incurrence of the costs of these programs and services and the receipt of the related reimbursement to the company may increase or decrease operating and net income from quarter to quarter as a result of implementing the new revenue standard, as those timing differences will now be reflected on the income statement rather than the balance sheet.  The company will not change the operation of these programs and services nor will the cash flow of these expenses and reimbursements change.  Going forward, the company does not expect to provide earnings guidance for the impact of these timing differences and expects it will provide results that are adjusted to exclude Cost reimbursements and Reimbursed costs.

While the company does not expect a change in the amount of its annual incentive management fees due to the adoption of the new revenue standard, recognition of incentive fees may occur in different quarters over the year as compared to prior years. 

The after-tax proceeds of the Avendra gain will be invested in Marriott’s hotel system over time.  The new revenue standard requires the expensing of any future spending of those proceeds when made.

The following outlook for full year 2018 does not include Cost reimbursements, Reimbursed costs, Merger-related costs and charges, nor the expenses related to the spending of Avendra proceeds, which the company cannot precisely forecast. 

Due to meaningful changes resulting from adopting the new revenue standard and the first quarter 2018 migration to a single financial reporting platform, the company is providing abbreviated guidance for the first quarter of 2018.  The company expects to resume providing fulsome quarterly guidance in its May 2018 earnings press release.

For the 2018 first quarter, Marriott expects comparable systemwide RevPAR on a constant dollar basis in North America will be flat to up 2 percent.  The company’s guidance for first quarter RevPAR growth in North America reflects the unfavorable shift of the Easter holiday and tough comparisons to the 2017 U.S. Presidential Inauguration and Women’s March in Washington, D.C.  The company expects first quarter comparable systemwide RevPAR on a constant dollar basis will increase 3 to 5 percent outside North America and 1 to 3 percent worldwide.

The company expects to realize an approximately $45 million gain in the 2018 first quarter associated with the sale of the Sheraton Buenos Aires Hotel & Convention Center and Park Tower, a Luxury Collection Hotel.

For the full year 2018, Marriott expects comparable systemwide RevPAR on a constant dollar basis will increase 1 to 2 percent in North America, 3 to 5 percent outside North America, and 1 to 3 percent worldwide.

Marriott anticipates gross room additions of roughly 7 percent and room deletions of 1 to 1.5 percent for full year 2018.

The company assumes full year 2018 fee revenue will total $3,535 million to $3,620 million, which includes $360 million to $380 million of credit card branding fees and reflects the impact of the new revenue standard.  The company anticipates full year 2018 incentive management fees will increase at a low single digit rate over 2017 full year incentive fees of $607 million.

Marriott expects full year 2018 owned, leased, and other revenue, net of direct expenses, could total $285 million to $295 million.  Compared to 2017 results, this estimate reflects the impact of the new revenue standard and the $55 million negative impact from sold hotels in 2017 and to date in 2018, but does not reflect additional asset sales in 2018. 

Marriott expects full year 2018 general, administrative, and other expenses could total $935 million to $945 million.  This estimate reflects the impact of the new revenue standard and assumes $70 million of spending for half of the estimated cost of the company’s investments in its workforce.  This expense will not recur in 2019.  The company plans to fund the remaining $70 million through proceeds from the sale of Avendra.

Marriott expects full year 2018 adjusted EBITDA could total $3,315 million to $3,420 million, reflecting the impact of the new revenue standard.  This estimate reflects the roughly $50 million negative impact of hotels previously sold in 2017 and to date in 2018, but does not reflect additional asset sales in 2018.  The company’s outlook reflects the adoption of the new revenue standard.  Excluding the impact of the new revenue standard, the company estimates 2018 adjusted EBITDA would be $60 million higher.  See page A-13 for the adjusted EBITDA calculation.

2018 Full Year Outlook Both Including and Excluding the Impact of the New Revenue Standard

Full Year 2018 Outlook1

Full Year 2018 Excluding the

Impact of the New Revenue Standard1

Fee revenues

$3,535 million to $3,620 million

$3,560 million to $3,645 million

Contract Investment Amortization

Approx. $55 million

Approx. $0

Owned, leased, and other 
     revenue, net of direct expenses

$285 million to $295 million

$310 million to $320 million

Depreciation, amortization, and 
     other expenses

Approx. $230 million

Approx. $295 million

General, administrative, and other 
     expenses

$935 million to $945 million

$925 million to $935 million

Operating income

$2,590 million to $2,695 million

$2,640 million to $2,745 million

Gains and other income

Approx. $45 million

Approx. $45 million

Net interest expense2

Approx. $305 million

Approx. $305 million

Equity in earnings (losses)

Approx. $40 million

Approx. $40 million

Earnings per share3

$5.11 to $5.34

$5.22 to $5.45

Tax rate4

22 percent

1The outlook provided in this table does not include the impact of merger-related adjustments that may be made, the expenses related to the spending of Avendra proceeds, nor the revenue and expense timing differences related to programs and services.

2Net of interest income

3Guidance for Full Year 2018 EPS includes the $0.11 expected favorable impact from employee stock-based compensation excess tax benefits. 

4The tax rate guidance for Full Year 2018 reflects estimated impacts of the Tax Act and includes the $39 million estimated excess tax benefits from employee stock-based compensation.   

The company expects investment spending in 2018 will total approximately $600 million to $700 million, including approximately $225 million for maintenance capital.  Investment spending also includes other capital expenditures (including property acquisitions), new mezzanine financing and mortgage notes, contract acquisition costs, and equity and other investments.  Assuming this level of investment spending and no additional asset sales, roughly $2.5 billion could be returned to shareholders through share repurchases and dividends in 2018.

The company plans to disclose adjusted results and EBITDA that exclude Merger-related costs and charges arising from the Starwood acquisition, and the expenses related to the spending of Avendra proceeds, as well as Cost reimbursements and Reimbursed costs.

Marriott International, Inc. (NASDAQ: MAR) will conduct its quarterly earnings review for the investment community and news media on Thursday, February 15, 2018 at 10:00 a.m. Eastern Time (ET).  The conference call will be webcast simultaneously via Marriott’s investor relations website at http://www.marriott.com/investor, click on “Events & Presentations” and click on the quarterly conference call link.  Slides that will be discussed on the call will be available in pdf format on the Events & Presentations page.  A replay will be available at that same website until February 15, 2019.

The telephone dial-in number for the conference call is 706-679-3455 and the conference ID is 86389676.  A telephone replay of the conference call will be available from 1:30 p.m. ET, Thursday, February 15, 2018 until 11:00 p.m. ET, Thursday, February 22, 2018.  To access the replay, call 404-537-3406.  The conference ID for the recording is 86389676.

Note on forward-looking statements:  This press release and accompanying schedules contain “forward-looking statements” within the meaning of federal securities laws, including our RevPAR, profit margin and earnings outlook and assumptions; the number of lodging properties we expect to add to or remove from our system in the future; our expectations about investment spending and tax rate; and similar statements concerning anticipated future events and expectations that are not historical facts.  We caution you that these statements are not guarantees of future performance and are subject to numerous risks and uncertainties, including those we identify below and other risk factors that we identify in our most recent quarterly report on Form 10-Q or annual report on Form 10-K.  Risks that could affect forward-looking statements in this press release include changes in market conditions; changes in global and regional economies; supply and demand changes for hotel rooms; competitive conditions in the lodging industry; relationships with clients and property owners; the availability of capital to finance hotel growth and refurbishment; the extent to which we can continue to successfully integrate Starwood and realize the anticipated benefits of combining Starwood and Marriott; changes to our provisional estimates of the impact of the U.S. Tax Cuts and Jobs Acts of 2017; and changes to our estimates of the impact of the new revenue recognition accounting standard.  Any of these factors could cause actual results to differ materially from the expectations we express or imply in this press release.  We make these forward-looking statements as of February 14, 2018.  We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Marriott International, Inc. (NASDAQ: MAR) is the world’s largest hotel company based in Bethesda, Maryland, USA, with more than 6,500 properties in 127 countries and territories. Marriott operates and franchises hotels and licenses vacation ownership resorts. The company’s 30 leading brands include: Bulgari®, The Ritz-Carlton® and The Ritz-Carlton Reserve®, St. Regis®, W®, EDITION®, JW Marriott®, The Luxury Collection®, Marriott Hotels®, Westin®, Le Méridien®, Renaissance® Hotels, Sheraton®, Delta Hotels by MarriottSM, Marriott Executive Apartments®, Marriott Vacation Club®, Autograph Collection® Hotels, Tribute Portfolio™, Design Hotels™, Gaylord Hotels®, Courtyard®, Four Points® by Sheraton, SpringHill Suites®, Fairfield Inn & Suites®, Residence Inn®, TownePlace Suites®, AC Hotels by Marriott®, Aloft®, Element®, Moxy® Hotels, and Protea Hotels by Marriott®. The company also operates award-winning loyalty programs: Marriott Rewards®, which includes The Ritz-Carlton Rewards®, and Starwood Preferred Guest®. For more information, please visit our website at www.marriott.com, and for the latest company news, visit www.marriottnewscenter.com and @MarriottIntl.

IRPR#1

Tables follow

 

MARRIOTT INTERNATIONAL, INC.

PRESS RELEASE SCHEDULES

QUARTER 4, 2017

TABLE OF CONTENTS

Consolidated Statements of Income – As Reported

A-1

Consolidated Statements of Income – Fourth Quarter Adjusted 2017 Compared to Adjusted 2016

A-3

Consolidated Statements of Income – Full Year Adjusted 2017 Compared to Combined 2016

A-4

Total Lodging Products

A-5

Combined Key Lodging Statistics

A-8

Adjusted EBITDA/ Combined Adjusted EBITDA

A-12

Adjusted EBITDA Forecast – Full Year 2018

A-13

Non-GAAP Financial and Performance Measures

A-14

 

 

MARRIOTT INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF INCOME – AS REPORTED

FOURTH QUARTER 2017 AND 2016

(in millions except per share amounts, unaudited)

As Reported

As Reported

Percent

Three Months Ended

Three Months Ended

Better/(Worse)

December 31, 2017

December 31, 2016

Reported 2017 vs. 2016

REVENUES

Base management fees

$                                           284

$                                           268

6

Franchise fees 1

411

356

15

Incentive management fees

170

149

14

  Total Fees

865

773

12

Owned, leased, and other revenue 2

453

476

(5)

Cost reimbursements 3

4,557

4,207

8

  Total Revenues

5,875

5,456

8

OPERATING COSTS AND EXPENSES

Owned, leased, and other – direct 4

358

367

2

Reimbursed costs

4,557

4,207

(8)

Depreciation, amortization, and other 5

72

71

(1)

Merger-related costs and charges

59

136

57

General, administrative, and other 6

259

234

(11)

  Total Expenses

5,305

5,015

(6)

OPERATING INCOME

570

441

29

Gains and other income, net 7

657

2

32,750

Interest expense

(72)

(75)

4

Interest income 

14

13

8

Equity in earnings 8

10

2

400

INCOME BEFORE INCOME TAXES

1,179

383

208

Provision for income taxes

(978)

(139)

(604)

NET INCOME

$                                           201

$                                           244

(18)

EARNINGS PER SHARE

  Earnings per share – basic

$                                          0.55

$                                          0.63

(13)

  Earnings per share – diluted

$                                          0.54

$                                          0.62

(13)

Basic Shares

365.1

387.9

Diluted Shares

369.9

394.0

1  Franchise fees include fees from our franchise agreements, application and relicensing fees, licensing fees from our timeshare, credit card programs, 

    and residential branding fees. Beginning in the 2017 first quarter, we reclassified branding fees for third-party residential sales and credit card licensing to 

    the “Franchise fees” caption from the “Owned, leased, and other revenue” caption. We adjusted prior amounts to conform to current period presentation. 

Owned, leased, and other revenue includes revenue from the properties we own or lease, termination fees, and other revenue.  

Cost reimbursements include reimbursements from properties for company-funded operating expenses.

Owned, leased, and other – direct expenses include operating expenses related to our owned or leased hotels, including lease payments and pre-opening expenses.

Depreciation, amortization, and other expenses include depreciation for fixed assets, amortization of capitalized costs incurred to acquire management, 

   franchise, and license agreements, and any related impairments, accelerations, or write-offs.

General, administrative, and other expenses include our corporate and business segments overhead costs and general expenses.

7  Gains and other income, net includes gains and losses on the sale of real estate, the sale or other-than-temporary impairment of joint ventures and

   investments, and results from cost method investments.

Equity in earnings include our equity in earnings or losses of unconsolidated equity method investments.

A-1

 

 

MARRIOTT INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF INCOME – AS REPORTED

FULL YEAR 2017 AND 2016

(in millions except per share amounts, unaudited)

As Reported

As Reported

Percent

Twelve Months Ended

Twelve Months Ended

Better/(Worse)

December 31, 2017

December 31, 2016

Reported 2017 vs. 2016

REVENUES

Base management fees

$                                        1,102

$                                           806

37

Franchise fees 1

1,618

1,169

38

Incentive management fees

607

425

43

  Total Fees

3,327

2,400

39

Owned, leased, and other revenue 2

1,802

1,126

60

Cost reimbursements 3

17,765

13,546

31

  Total Revenues

22,894

17,072

34

OPERATING COSTS AND EXPENSES

Owned, leased, and other – direct 4

1,427

900

(59)

Reimbursed costs

17,765

13,546

(31)

Depreciation, amortization, and other 5

290

168

(73)

Merger-related costs and charges

159

386

59

General, administrative, and other 6

894

704

(27)

  Total Expenses

20,535

15,704

(31)

OPERATING INCOME

2,359

1,368

72

Gains and other income, net 7

688

5

13,660

Interest expense

(288)

(234)

(23)

Interest income 

38

35

9

Equity in earnings 8

39

10

290

INCOME BEFORE INCOME TAXES

2,836

1,184

140

Provision for income taxes

(1,464)

(404)

(262)

NET INCOME

$                                        1,372

$                                           780

76

EARNINGS PER SHARE

  Earnings per share – basic

$                                          3.66

$                                          2.68

37

  Earnings per share – diluted

$                                          3.61

$                                          2.64

37

Basic Shares

375.2

290.9

Diluted Shares

379.9

295.7

1  Franchise fees include fees from our franchise agreements, application and relicensing fees, licensing fees from our timeshare, credit card programs, 

    and residential branding fees. Beginning in the 2017 first quarter, we reclassified branding fees for third-party residential sales and credit card licensing to 

    the “Franchise fees” caption from the “Owned, leased, and other revenue” caption. We adjusted prior amounts to conform to current period presentation. 

Owned, leased, and other revenue includes revenue from the properties we own or lease, termination fees, and other revenue.  

Cost reimbursements include reimbursements from properties for company-funded operating expenses.

Owned, leased, and other – direct expenses include operating expenses related to our owned or leased hotels, including lease payments and pre-opening expenses.

Depreciation, amortization, and other expenses include depreciation for fixed assets, amortization of capitalized costs incurred to acquire management, 

   franchise, and license agreements, and any related impairments, accelerations, or write-offs.

General, administrative, and other expenses include our corporate and business segments overhead costs and general expenses.

7  Gains and other income, net includes gains and losses on the sale of real estate, the sale or other-than-temporary impairment of joint ventures and

   investments, and results from cost method investments.

Equity in earnings include our equity in earnings or losses of unconsolidated equity method investments.

A-2

 

 

MARRIOTT INTERNATIONAL, INC.

ADJUSTED STATEMENTS OF INCOME

FOURTH QUARTER ADJUSTED 2017 COMPARED TO ADJUSTED 2016

(in millions except per share amounts, unaudited)

Percent

As Reported

Less:

Less:

As Adjusted **

As Reported

Less:

As Adjusted **

Better/(Worse)

Three Months Ended

Merger-related 

Other

Three Months Ended

Three Months Ended

Merger-related 

Three Months Ended

Adjusted 2017 vs.

December 31, 2017

Adjustments 9

Adjustments 10

December 31, 2017

December 31, 2016

Adjustments 9

December 31, 2016

Adjusted 2016

REVENUES

Base management fees

$                          284

$                        –

$                              –

$                          284

$                          268

$                        –

$                          268

6

Franchise fees 1

411

411

356

356

15

Incentive management fees

170

170

149

149

14

  Total Fees

865

865

773

773

12

Owned, leased, and other revenue 2

453

453

476

476

(5)

Cost reimbursements 3

4,557

4,557

4,207

4,207

8

  Total Revenues

5,875

5,875

5,456

5,456

8

OPERATING COSTS AND EXPENSES

Owned, leased, and other – direct 4

358

358

367

367

2

Reimbursed costs

4,557

4,557

4,207

4,207

(8)

Depreciation, amortization, and other 5

72

72

71

71

(1)

Merger-related costs and charges

59

59

136

136

General, administrative, and other 6

259

259

234

234

(11)

  Total Expenses

5,305

59

5,246

5,015

136

4,879

(8)

OPERATING INCOME / (LOSS)

570

(59)

629

441

(136)

577

9

Gains (losses) and other income, net 7

657

659

(2)

2

2

(200)

Interest expense

(72)

(72)

(75)

(75)

4

Interest income 

14

14

13

13

8

Equity in earnings 8

10

10

2

2

400

INCOME / (LOSS) BEFORE INCOME TAXES

1,179

(59)

659

579

383

(136)

519

12

(Provision) benefit for income taxes

(978)

12

(826)

(164)

(139)

46

(185)

11

NET INCOME / (LOSS)

$                          201

$                    (47)

$                         (167)

$                          415

$                          244

$                    (90)

$                          334

24

EARNINGS PER SHARE

  Earnings per share – basic

$                         0.55

$                         1.14

$                         0.63

$                         0.86

33

  Earnings per share – diluted

$                         0.54

$                         1.12

$                         0.62

$                         0.85

32

Basic Shares

365.1

365.1

387.9

387.9

Diluted Shares

369.9

369.9

394.0

394.0

** Denotes non-GAAP financial measures. See pages A-14 and A-15 for more information about these non-GAAP measures.

1  Franchise fees include fees from our franchise agreements, application and relicensing fees, licensing fees from our timeshare, credit card programs, and residential branding fees. Beginning in the 2017 first quarter, we reclassified

   branding fees for third-party residential sales and credit card licensing to the “Franchise fees” caption from the “Owned, leased, and other revenue” caption. We adjusted prior amounts to conform to current period presentation. 

Owned, leased, and other revenue includes revenue from the properties we own or lease, termination fees, and other revenue.  

Cost reimbursements include reimbursements from properties for company-funded operating expenses.

Owned, leased, and other – direct expenses include operating expenses related to our owned or leased hotels, including lease payments and pre-opening expenses.

Depreciation, amortization, and other expenses include depreciation for fixed assets, amortization of capitalized costs incurred to acquire management, franchise, and license agreements, and any related impairments, accelerations, or write-offs.

General, administrative, and other expenses include our corporate and business segments overhead costs and general expenses.

7  Gains (losses) and other income, net includes gains and losses on the sale of real estate, the sale or other-than-temporary impairment of joint ventures and investments, and results from cost method investments.

Equity in earnings include our equity in earnings or losses of unconsolidated equity method investments.

9  The adjusted consolidated statements of income are presented before the impact of merger-related adjustments.

10  Other adjustments include the gain on the sale of our ownership interest in Avendra and our provisional estimate of the impact of the U.S. Tax Cuts and Jobs Act of 2017.

A-3

 

 

MARRIOTT INTERNATIONAL, INC.

ADJUSTED/COMBINED STATEMENTS OF INCOME

FULL YEAR ADJUSTED 2017 COMPARED TO COMBINED 2016

(in millions except per share amounts, unaudited)

Percent

As Reported

Less:

Less:

As Adjusted **

Combined11 **

Better/(Worse)

Twelve Months Ended

Merger-related 

Other

Twelve Months Ended

Twelve Months Ended

Adjusted 2017 vs.

December 31, 2017

Adjustments 9

Adjustments 10

December 31, 2017

December 31, 2016

Combined 2016

REVENUES

Base management fees

$                            1,102

$                                   –

$                                   –

$                            1,102

$                            1,072

3

Franchise fees 1

1,618

1,618

1,438

13

Incentive management fees

607

607

562

8

  Total Fees

3,327

3,327

3,072

8

Owned, leased, and other revenue 2

1,802

3

1,799

1,931

(7)

Cost reimbursements 3

17,765

17,765

17,480

2

  Total Revenues

22,894

3

22,891

22,483

2

OPERATING COSTS AND EXPENSES

Owned, leased, and other – direct 4

1,427

1,427

1,505

5

Reimbursed costs

17,765

17,765

17,480

(2)

Depreciation, amortization, and other 5

290

1

289

313

8

Merger-related costs and charges

159

159

General, administrative, and other 6

894

(2)

896

964

7

  Total Expenses

20,535

158

20,377

20,262

(1)

OPERATING INCOME / (LOSS)

2,359

(155)

2,514

2,221

13

Gains (losses) and other income, net 7

688

659

29

(22)

232

Interest expense

(288)

(288)

(312)

8

Interest income 

38

38

41

(7)

Equity in earnings 8

39

39

25

56

INCOME / (LOSS) BEFORE INCOME TAXES

2,836

(155)

659

2,332

1,953

19

(Provision) benefit for income taxes

(1,464)

39

(826)

(677)

(652)

(4)

NET INCOME / (LOSS)

$                            1,372

$                              (116)

$                              (167)

$                            1,655

$                            1,301

27

EARNINGS PER SHARE

  Earnings per share – basic

$                              3.66

$                              4.41

$                              3.35

32

  Earnings per share – diluted

$                              3.61

$                              4.36

$                              3.30

32

Basic Shares

375.2

375.2

388.7

Diluted Shares

379.9

379.9

394.4

** Denotes non-GAAP financial measures. See pages A-14 and A-15 for more information about these non-GAAP measures.

1  Franchise fees include fees from our franchise agreements, application and relicensing fees, licensing fees from our timeshare, credit card programs, and residential branding fees. Beginning in the 2017 first quarter, we reclassified

   branding fees for third-party residential sales and credit card licensing to the “Franchise fees” caption from the “Owned, leased, and other revenue” caption. We adjusted prior amounts to conform to current period presentation. 

Owned, leased, and other revenue includes revenue from the properties we own or lease, termination fees, and other revenue.  

Cost reimbursements include reimbursements from properties for company-funded operating expenses.

Owned, leased, and other – direct expenses include operating expenses related to our owned or leased hotels, including lease payments and pre-opening expenses.

Depreciation, amortization, and other expenses include depreciation for fixed assets, amortization of capitalized costs incurred to acquire management, franchise, and license agreements, and any related impairments, 

   accelerations, or write-offs.

General, administrative, and other expenses include our corporate and business segments overhead costs and general expenses.

7  Gains (losses) and other income, net includes gains and losses on the sale of real estate, the sale or other-than-temporary impairment of joint ventures and investments, and results from cost method investments.

Equity in earnings include our equity in earnings or losses of unconsolidated equity method investments.

9  The adjusted consolidated statements of income are presented before the impact of merger-related adjustments.

10  Other adjustments include the gain on the sale of our ownership interest in Avendra and our provisional estimate of the impact of the U.S. Tax Cuts and Jobs Act of 2017.

11For basis of presentation of 2016 combined financial information, see the Form 8-K relating to our unaudited combined financial information that we filed with the U.S. Securities and Exchange Commission on February 15, 2017.  

A-4

 

MARRIOTT INTERNATIONAL, INC.

TOTAL LODGING PRODUCTS

As of December 31, 2017

North America

Total International

Total Worldwide

Units

Rooms

Units

Rooms

Units

Rooms

Managed

827

251,621

1,065

284,752

1,892

536,373

JW Marriott

16

10,059

48

19,125

64

29,184

The Ritz-Carlton

39

11,256

55

15,134

94

26,390

The Ritz-Carlton Residences

35

4,650

10

925

45

5,575

The Ritz-Carlton Serviced Apartments

5

697

5

697

W Hotels

26

7,950

24

5,661

50

13,611

W Residences

9

1,078

4

471

13

1,549

The Luxury Collection 

5

2,294

49

8,617

54

10,911

St. Regis 

10

1,990

31

7,048

41

9,038

St. Regis Residences

7

585

6

516

13

1,101

EDITION

2

567

2

699

4

1,266

EDITION Residences

1

25

1

25

Bulgari

4

357

4

357

Bulgari Residences

1

5

1

5

Marriott Hotels 

131

69,234

164

47,546

295

116,780

Sheraton 

29

24,010

184

63,011

213

87,021

Sheraton Residences

2

262

2

262

Westin 

46

25,127

68

21,788

114

46,915

Westin Residences

1

65

1

264

2

329

Renaissance

28

12,128

52

16,601

80

28,729

Le Meridien 

4

720

75

20,701

79

21,421

Autograph Collection

4

1,204

6

1,456

10

2,660

Delta Hotels

25

6,764

25

6,764

Gaylord Hotels 

5

8,108

5

8,108

Marriott Executive Apartments 

29

4,270

29

4,270

Tribute Portfolio 

3

559

3

559

Courtyard 

241

38,517

84

18,044

325

56,561

Residence Inn  

108

16,519

6

643

114

17,162

Fairfield Inn & Suites 

6

1,432

18

2,578

24

4,010

SpringHill Suites 

30

4,854

30

4,854

Four Points 

1

134

62

15,201

63

15,335

TownePlace Suites 

16

1,841

16

1,841

Aloft 

1

330

29

6,906

30

7,236

Protea Hotels 

36

4,265

36

4,265

Element 

1

180

4

933

5

1,113

Moxy

3

469

3

469

A-5

 

MARRIOTT INTERNATIONAL, INC.

TOTAL LODGING PRODUCTS

As of December 31, 2017

North America

Total International

Total Worldwide

Units

Rooms

Units

Rooms

Units

Rooms

Franchised

3,881

564,543

462

98,668

4,343

663,211

JW Marriott

10

4,425

6

1,624

16

6,049

The Ritz-Carlton

1

429

1

429

The Ritz-Carlton Residences

1

55

1

55

The Luxury Collection 

11

2,683

37

6,861

48

9,544

The Luxury Collection Residences

1

91

1

64

2

155

Bulgari

1

85

1

85

Marriott Hotels 

213

66,435

50

13,776

263

80,211

Sheraton 

161

47,765

59

16,799

220

64,564

Westin 

81

26,522

24

7,432

105

33,954

Westin Residences

2

201

2

201

Renaissance

57

16,065

27

7,437

84

23,502

Le Meridien 

18

4,286

15

4,022

33

8,308

Autograph Collection

74

15,903

45

10,838

119

26,741

Delta Hotels

24

5,609

1

339

25

5,948

Tribute Portfolio 

16

4,727

8

787

24

5,514

Courtyard 

734

97,995

61

11,391

795

109,386

Residence Inn  

641

75,926

3

287

644

76,213

Fairfield Inn & Suites 

889

81,267

6

1,157

895

82,424

SpringHill Suites 

358

41,092

358

41,092

Four Points 

140

21,478

46

7,167

186

28,645

TownePlace Suites 

322

32,431

322

32,431

Aloft 

96

14,235

12

1,928

108

16,163

Protea Hotels 

45

3,353

45

3,353

Element 

27

3,847

2

293

29

4,140

Moxy

4

1,076

13

3,028

17

4,104

Owned/Leased

30

8,241

37

10,028

67

18,269

JW Marriott

1

496

1

496

The Ritz-Carlton

2

553

2

553

W Hotels

1

509

2

665

3

1,174

The Luxury Collection 

3

468

3

468

St. Regis 

1

238

1

160

2

398

Marriott Hotels 

3

1,664

5

1,625

8

3,289

Sheraton 

2

1,299

6

2,866

8

4,165

Westin 

1

1,073

1

246

2

1,319

Renaissance

1

317

3

749

4

1,066

Tribute Portfolio 

1

135

1

135

Courtyard 

19

2,814

3

645

22

3,459

Residence Inn  

1

192

1

140

2

332

Protea Hotels 

9

1,415

9

1,415

Unconsolidated Joint Ventures

31

5,288

98

12,371

129

17,659

Autograph Collection

6

419

6

419

AC Hotels by Marriott 

31

5,288

92

11,952

123

17,240

Timeshare*

70

18,281

19

3,873

89

22,154

Marriott Vacation Club

51

11,249

15

2,406

66

13,655

Vistana 

19

7,032

4

1,467

23

8,499

Grand Total

4,839

847,974

1,681

409,692

6,520

1,257,666

*Timeshare property and room counts are included on this table in their geographical locations.  For external reporting purposes, these counts are captured in the Corporate segment.

A-6

 

 

MARRIOTT INTERNATIONAL, INC.

TOTAL LODGING PRODUCTS

As of December 31, 2017

North America

Total International

Total Worldwide

Total Systemwide

Units

Rooms

Units

Rooms

Units

Rooms

 Luxury 

176

48,884

293

70,231

469

119,115

 JW Marriott 

26

14,484

55

21,245

81

35,729

 The Ritz-Carlton 

40

11,685

57

15,687

97

27,372

 The Ritz-Carlton Residences 

36

4,705

10

925

46

5,630

 The Ritz-Carlton Serviced Apartments 

5

697

5

697

 W Hotels 

27

8,459

26

6,326

53

14,785

 W Residences 

9

1,078

4

471

13

1,549

 The Luxury Collection  

16

4,977

89

15,946

105

20,923

 The Luxury Collection Residences 

1

91

1

64

2

155

 St. Regis  

11

2,228

32

7,208

43

9,436

 St. Regis Residences 

7

585

6

516

13

1,101

 EDITION Hotels  

2

567

2

699

4

1,266

 EDITION Residences 

1

25

1

25

 Bulgari 

5

442

5

442

 Bulgari Residences 

1

5

1

5

 Full Service 

927

339,361

834

243,793

1,761

583,154

 Marriott Hotels  

347

137,333

219

62,947

566

200,280

 Sheraton  

192

73,074

249

82,676

441

155,750

 Sheraton Residences 

2

262

2

262

 Westin  

128

52,722

93

29,466

221

82,188

 Westin Residences 

3

266

1

264

4

530

 Renaissance 

86

28,510

82

24,787

168

53,297

 Le Meridien  

22

5,006

90

24,723

112

29,729

 Autograph Collection 

78

17,107

57

12,713

135

29,820

 Delta Hotels 

49

12,373

1

339

50

12,712

 Gaylord Hotels  

5

8,108

5

8,108

 Marriott Executive Apartments  

29

4,270

29

4,270

 Tribute Portfolio  

17

4,862

11

1,346

28

6,208

 Limited Service 

3,666

441,448

535

91,795

4,201

533,243

 Courtyard  

994

139,326

148

30,080

1,142

169,406

 Residence Inn   

750

92,637

10

1,070

760

93,707

 Fairfield Inn & Suites  

895

82,699

24

3,735

919

86,434

 SpringHill Suites  

388

45,946

388

45,946

 Four Points  

141

21,612

108

22,368

249

43,980

 TownePlace Suites  

338

34,272

338

34,272

 Aloft  

97

14,565

41

8,834

138

23,399

 AC Hotels by Marriott  

31

5,288

92

11,952

123

17,240

 Protea Hotels  

90

9,033

90

9,033

 Element  

28

4,027

6

1,226

34

5,253

 Moxy 

4

1,076

16

3,497

20

4,573

 Timeshare* 

70

18,281

19

3,873

89

22,154

 Marriott Vacation Club 

51

11,249

15

2,406

66

13,655

 Vistana  

19

7,032

4

1,467

23

8,499

 Grand Total 

4,839

847,974

1,681

409,692

6,520

1,257,666

*Timeshare property and room counts are included on this table in their geographical locations.  For external reporting purposes, these counts are captured in the Corporate segment.

A-7

 

 

MARRIOTT INTERNATIONAL, INC.

COMBINED KEY LODGING STATISTICS

In Constant $

Comparable Company-Operated North American Properties

Three Months Ended December 31, 2017 and December 31, 2016

REVPAR

Occupancy

Average Daily Rate

Brand

2017

vs. 2016*

2017

vs. 2016*

2017

vs. 2016*

JW Marriott

$158.01

2.5%

72.3%

1.4%

pts.

$218.52

0.5%

The Ritz-Carlton

$259.41

7.3%

72.9%

3.8%

pts.

$355.70

1.8%

W Hotels

$253.42

0.4%

81.1%

0.1%

pts.

$312.50

0.3%

Composite North American Luxury1

$243.79

4.2%

75.4%

1.8%

pts.

$323.26

1.7%

Marriott Hotels

$141.61

5.4%

72.5%

2.1%

pts.

$195.45

2.3%

Sheraton

$149.76

2.8%

74.2%

0.8%

pts.

$201.87

1.6%

Westin

$167.38

1.2%

73.4%

-0.1%

pts.

$227.89

1.3%

Composite North American Upper Upscale2

$146.34

3.9%

73.0%

1.3%

pts.

$200.41

2.1%

North American Full-Service3 

$163.44

4.0%

73.4%

1.4%

pts.

$222.56

2.0%

Courtyard

$96.41

3.4%

69.4%

1.2%

pts.

$138.86

1.7%

Residence Inn

$114.25

2.3%

75.6%

0.3%

pts.

$151.20

2.0%

Composite North American Limited-Service4

$100.80

3.4%

71.6%

1.1%

pts.

$140.78

1.9%

North American – All5

$144.23

3.9%

72.9%

1.3%

pts.

$197.92

2.0%

Comparable Systemwide North American Properties

Three Months Ended December 31, 2017 and December 31, 2016

REVPAR

Occupancy

Average Daily Rate

Brand

2017

vs. 2016*

2017

vs. 2016*

2017

vs. 2016*

JW Marriott

$160.87

4.1%

73.2%

2.2%

pts.

$219.89

1.0%

The Ritz-Carlton

$259.41

7.3%

72.9%

3.8%

pts.

$355.70

1.8%

W Hotels

$253.42

0.4%

81.1%

0.1%

pts.

$312.50

0.3%

Composite North American Luxury1

$231.12

4.7%

75.1%

2.0%

pts.

$307.63

1.9%

Marriott Hotels

$119.02

4.5%

68.7%

1.2%

pts.

$173.21

2.6%

Sheraton

$110.95

3.4%

69.1%

0.8%

pts.

$160.49

2.1%

Westin

$150.66

2.2%

72.2%

0.3%

pts.

$208.71

1.7%

Composite North American Upper Upscale2

$125.32

3.7%

70.0%

1.0%

pts.

$179.04

2.3%

North American Full-Service3 

$136.39

3.9%

70.5%

1.1%

pts.

$193.38

2.3%

Courtyard

$95.09

4.1%

69.6%

1.9%

pts.

$136.59

1.2%

Residence Inn

$108.52

2.9%

76.0%

1.4%

pts.

$142.78

0.9%

Fairfield Inn & Suites

$74.75

4.1%

67.5%

2.1%

pts.

$110.81

0.9%

Composite North American Limited-Service4

$91.73

4.0%

71.1%

1.9%

pts.

$129.02

1.3%

North American – All5

$111.55

3.9%

70.8%

1.5%

pts.

$157.46

1.7%

* The 2016 statistics used to calculate change from the 2016 period to the 2017 period assume Marriott’s acquisition of Starwood and 

  Starwood’s sale of its timeshare business had been completed on January 1, 2015.

1 Includes JW Marriott, The Ritz-Carlton, W Hotels, The Luxury Collection, St. Regis, and EDITION.

2 Includes Marriott Hotels, Sheraton, Westin, Renaissance, Autograph Collection, Delta Hotels, Gaylord Hotels, 

  and Le Méridien.  Systemwide also includes Tribute Portfolio.

3 Includes Composite North American Luxury and Composite North American Upper Upscale.

4 Includes Courtyard, Residence Inn, Fairfield Inn & Suites, SpringHill Suites, Four Points, TownePlace Suites, and AC Hotels 

  by Marriott.  Systemwide also includes Aloft and Element.

5 Includes North American Full-Service and Composite North American Limited-Service.

A-8

 

 

MARRIOTT INTERNATIONAL, INC.

COMBINED KEY LODGING STATISTICS

In Constant $

Comparable Company-Operated International Properties

Three Months Ended December 31, 2017 and December 31, 2016

REVPAR

Occupancy

Average Daily Rate

Region

2017

vs. 2016*

2017

vs. 2016*

2017

vs. 2016*

Greater China

$98.59

9.0%

73.8%

4.1%

pts.

$133.54

2.9%

Rest of Asia Pacific

$124.36

5.4%

75.2%

1.6%

pts.

$165.27

3.2%

Asia Pacific

$107.63

7.5%

74.3%

3.2%

pts.

$144.80

2.8%

Caribbean & Latin America

$137.91

6.7%

67.6%

3.6%

pts.

$203.87

1.0%

Europe

$131.30

5.9%

71.5%

1.6%

pts.

$183.55

3.6%

Middle East & Africa

$122.91

6.0%

69.4%

2.0%

pts.

$177.09

3.0%

International – All1

$118.62

6.7%

72.2%

2.6%

pts.

$164.25

2.8%

Worldwide2

$131.64

5.1%

72.6%

2.0%

pts.

$181.44

2.3%

Comparable Systemwide International Properties

Three Months Ended December 31, 2017 and December 31, 2016

REVPAR

Occupancy

Average Daily Rate

Region

2017

vs. 2016*

2017

vs. 2016*

2017

vs. 2016*

Greater China

$98.70

9.1%

73.3%

4.2%

pts.

$134.61

2.9%

Rest of Asia Pacific

$124.15

5.3%

75.6%

1.7%

pts.

$164.27

2.9%

Asia Pacific

$109.50

7.2%

74.3%

3.1%

pts.

$147.42

2.7%

Caribbean & Latin America

$107.04

5.6%

64.9%

2.6%

pts.

$164.93

1.4%

Europe

$121.06

5.4%

71.5%

1.5%

pts.

$169.33

3.1%

Middle East & Africa

$116.85

5.7%

68.8%

1.7%

pts.

$169.89

3.0%

International – All1

$113.72

6.2%

71.5%

2.4%

pts.

$159.04

2.7%

Worldwide2

$112.18

4.6%

71.0%

1.8%

pts.

$157.92

2.0%

* The 2016 statistics used to calculate change from the 2016 period to the 2017 period assume Marriott’s acquisition of Starwood and 

  Starwood’s sale of its timeshare business had been completed on January 1, 2015.

1 Includes Asia Pacific, Caribbean & Latin America, Europe, and Middle East & Africa.

2 Includes North American – All and International – All.

A-9

 

 

MARRIOTT INTERNATIONAL, INC.

COMBINED KEY LODGING STATISTICS

In Constant $

Comparable Company-Operated North American Properties

Twelve Months Ended December 31, 2017 and December 31, 2016

REVPAR

Occupancy

Average Daily Rate

Brand

2017

vs. 2016*

2017

vs. 2016*

2017

vs. 2016*

JW Marriott

$171.94

2.5%

76.3%

1.1%

pts.

$225.46

1.0%

The Ritz-Carlton

$264.45

4.9%

74.4%

2.2%

pts.

$355.44

1.8%

W Hotels

$244.44

-0.7%

82.2%

0.0%

pts.

$297.52

-0.7%

Composite North American Luxury1

$244.19

2.5%

77.5%

1.1%

pts.

$314.90

1.0%

Marriott Hotels

$146.14

2.3%

76.1%

1.1%

pts.

$192.09

0.9%

Sheraton

$150.75

2.4%

77.3%

0.3%

pts.

$195.10

2.0%

Westin

$173.29

1.4%

77.0%

-0.2%

pts.

$224.99

1.6%

Composite North American Upper Upscale2

$149.68

2.3%

76.2%

0.6%

pts.

$196.46

1.5%

North American Full-Service3 

$166.28

2.4%

76.4%

0.7%

pts.

$217.56

1.4%

Courtyard

$103.27

0.6%

73.0%

0.0%

pts.

$141.42

0.7%

Residence Inn

$123.88

2.4%

79.6%

0.7%

pts.

$155.53

1.5%

Composite North American Limited-Service4

$107.99

1.4%

75.2%

0.2%

pts.

$143.65

1.1%

North American – All5

$148.40

2.2%

76.0%

0.5%

pts.

$195.15

1.4%

Comparable Systemwide North American Properties

Twelve Months Ended December 31, 2017 and December 31, 2016

REVPAR

Occupancy

Average Daily Rate

Brand

2017

vs. 2016*

2017

vs. 2016*

2017

vs. 2016*

JW Marriott

$173.27

3.1%

76.9%

1.2%

pts.

$225.32

1.4%

The Ritz-Carlton

$264.45

4.9%

74.4%

2.2%

pts.

$355.44

1.8%

W Hotels

$244.44

-0.7%

82.2%

0.0%

pts.

$297.52

-0.7%

Composite North American Luxury1

$232.19

2.8%

77.3%

1.2%

pts.

$300.34

1.2%

Marriott Hotels

$126.00

1.8%

72.6%

0.4%

pts.

$173.49

1.2%

Sheraton

$115.99

1.5%

73.2%

0.1%

pts.

$158.50

1.4%

Westin

$159.00

1.8%

76.5%

-0.2%

pts.

$207.74

2.0%

Composite North American Upper Upscale2

$131.11

2.0%

73.7%

0.3%

pts.

$177.87

1.5%

North American Full-Service3 

$141.70

2.1%

74.1%

0.4%

pts.

$191.25

1.6%

Courtyard

$102.15

1.4%

73.3%

0.6%

pts.

$139.45

0.6%

Residence Inn

$116.11

1.7%

79.3%

0.3%

pts.

$146.47

1.3%

Fairfield Inn & Suites

$80.86

3.1%

71.5%

1.6%

pts.

$113.15

0.9%

Composite North American Limited-Service4

$98.29

2.0%

74.6%

0.7%

pts.

$131.74

1.0%

North American – All5

$117.56

2.1%

74.4%

0.6%

pts.

$158.05

1.3%

* The 2016 statistics used to calculate change from the 2016 period to the 2017 period assume Marriott’s acquisition of Starwood and 

  Starwood’s sale of its timeshare business had been completed on January 1, 2015.

1 Includes JW Marriott, The Ritz-Carlton, W Hotels, The Luxury Collection, St. Regis, and EDITION.

2 Includes Marriott Hotels, Sheraton, Westin, Renaissance, Autograph Collection, Delta Hotels, Gaylord Hotels, 

  and Le Méridien.  Systemwide also includes Tribute Portfolio.

3 Includes Composite North American Luxury and Composite North American Upper Upscale.

4 Includes Courtyard, Residence Inn, Fairfield Inn & Suites, SpringHill Suites, Four Points, TownePlace Suites, and AC Hotels 

  by Marriott.  Systemwide also includes Aloft and Element.

5 Includes North American Full-Service and Composite North American Limited-Service.

A-10

 

 

MARRIOTT INTERNATIONAL, INC.

COMBINED KEY LODGING STATISTICS

In Constant $

Comparable Company-Operated International Properties

Twelve Months Ended December 31, 2017 and December 31, 2016

REVPAR

Occupancy

Average Daily Rate

Region

2017

vs. 2016*

2017

vs. 2016*

2017

vs. 2016*

Greater China

$90.26

8.4%

71.5%

6.0%

pts.

$126.33

-0.7%

Rest of Asia Pacific

$119.10

6.1%

75.4%

3.1%

pts.

$158.02

1.6%

Asia Pacific

$100.39

7.4%

72.8%

5.0%

pts.

$137.85

0.1%

Caribbean & Latin America

$130.48

3.9%

66.5%

2.6%

pts.

$196.31

-0.2%

Europe

$138.70

6.9%

73.5%

2.0%

pts.

$188.69

3.9%

Middle East & Africa

$106.33

1.9%

65.7%

1.5%

pts.

$161.95

-0.5%

International – All1

$113.32

6.0%

71.2%

3.5%

pts.

$159.14

0.8%

Worldwide2

$131.14

3.8%

73.7%

2.0%

pts.

$178.02

1.0%

Comparable Systemwide International Properties

Twelve Months Ended December 31, 2017 and December 31, 2016

REVPAR

Occupancy

Average Daily Rate

Region

2017

vs. 2016*

2017

vs. 2016*

2017

vs. 2016*

Greater China

$90.37

8.5%

70.9%

6.0%

pts.

$127.47

-0.7%

Rest of Asia Pacific

$118.36

5.1%

74.8%

2.5%

pts.

$158.21

1.6%

Asia Pacific

$102.27

6.8%

72.6%

4.5%

pts.

$140.94

0.2%

Caribbean & Latin America

$104.10

4.0%

64.3%

2.1%

pts.

$161.91

0.6%

Europe

$123.44

7.2%

71.9%

2.7%

pts.

$171.72

3.2%

Middle East & Africa

$101.98

2.0%

65.4%

1.5%

pts.

$155.90

-0.4%

International – All1

$108.78

5.9%

70.3%

3.2%

pts.

$154.71

1.1%

Worldwide2

$115.02

3.1%

73.2%

1.4%

pts.

$157.12

1.2%

* The 2016 statistics used to calculate change from the 2016 period to the 2017 period assume Marriott’s acquisition of Starwood and 

  Starwood’s sale of its timeshare business had been completed on January 1, 2015.

1 Includes Asia Pacific, Caribbean & Latin America, Europe, and Middle East & Africa.

2 Includes North American – All and International – All.

A-11

 

 

MARRIOTT INTERNATIONAL, INC.

NON-GAAP FINANCIAL MEASURES

ADJUSTED EBITDA/ COMBINED ADJUSTED EBITDA

($ in millions)

Fiscal Year 2017

First
Quarter 

Second
Quarter

Third
Quarter

Fourth
Quarter

Total

Net income, as reported

$             365

$             414

$             392

$             201

$           1,372

Interest expense 

70

73

73

72

288

Tax provision

120

178

188

978

1,464

Depreciation and amortization

65

85

68

72

290

Depreciation classified in reimbursed costs

32

33

28

33

126

Interest expense from unconsolidated joint ventures 

1

3

2

4

10

Depreciation and amortization from unconsolidated joint ventures

11

10

10

11

42

EBITDA **

664

796

761

1,371

3,592

Gain on asset dispositions and impairments, net

(24)

(659)

(683)

Merger-related costs and charges

51

21

28

59

159

Share-based compensation (including share-based compensation reimbursed by third-party owners)

35

41

42

37

155

Adjusted EBITDA **

$             750

$             834

$             831

$             808

$           3,223

Increase over 2016 Adjusted EBITDA **

64%

69%

64%

7%

46%

Increase over 2016 Combined Adjusted EBITDA **

10%

8%

7%

7%

8%

Fiscal Year 2016

First
Quarter

Second
Quarter

Third
Quarter

Fourth
Quarter

Total

Net income, as reported

$             219

$             247

$               70

$             244

$             780

Interest expense 

47

57

55

75

234

Tax provision

107

97

61

139

404

Depreciation and amortization

31

30

36

71

168

Depreciation classified in reimbursed costs

14

14

15

33

76

Interest expense from unconsolidated joint ventures 

1

1

1

4

7

Depreciation and amortization from unconsolidated joint ventures

3

3

4

10

20

EBITDA **

422

449

242

576

1,689

Merger-related costs and charges

8

14

228

136

386

Share-based compensation (including share-based compensation reimbursed by third-party owners)

28

31

36

44

139

Adjusted EBITDA **

$             458

$             494

$             506

$             756

$           2,214

Starwood pre-acquisition and other adjustments

225

279

269

773

Combined Adjusted EBITDA **

$             683

$             773

$             775

$             756

$           2,987

** Denotes non-GAAP financial measures. Please see pages A-14 and A-15 for information about our reasons for providing these alternative financial measures and the

   limitations on their use.

A-12

 

 

MARRIOTT INTERNATIONAL, INC.

NON-GAAP FINANCIAL MEASURES

ADJUSTED EBITDA FORECAST

FULL YEAR 2018

($ in millions)

Range

Estimated
Full Year 2018

Net income

$              1,843

$              1,924

Interest expense 

330

330

Tax provision

527

551

Depreciation and amortization

230

230

Contract investment amortization

55

55

Depreciation classified in reimbursed costs 1

145

145

Interest expense from unconsolidated joint ventures 

10

10

Depreciation and amortization from unconsolidated joint ventures

40

40

EBITDA **

3,180

3,285

Gain on asset disposition

(45)

(45)

Share-based compensation (including share-based compensation reimbursed by third-party owners)

180

180

Adjusted EBITDA **

3,315

3,420

Estimated net impact of ASU 2014-09 on 2018 Adjusted EBITDA 2

60

60

Estimated 2018 Adjusted EBITDA before ASU 2014-09 2**

$              3,375

$              3,480

** Denotes non-GAAP financial measures. See pages A-14 and A-15 for more information about these non-GAAP measures.

1Guidance excludes merger-related costs and charges, cost reimbursement revenue, and reimbursed expenses, which the company cannot accurately

   forecast for the full year, except for depreciation classified in reimbursed costs, which is included in the table above.

2In the 2018 first quarter, we will adopt ASU 2014-09. We estimate that the application of ASU 2014-09 will lower 2018 Adjusted EBITDA by 

  approximately $60 million. We include this impact in the table above for comparison to 2017 Adjusted EBITDA on page A-12 under legacy GAAP.

A-13

 

MARRIOTT INTERNATIONAL, INC.
NON-GAAP FINANCIAL AND PERFORMANCE MEASURES

In our press release and schedules, and on the related conference call, we report certain financial measures that are not required by, or presented in accordance with, United States generally accepted accounting principles (“GAAP”). We discuss management’s reasons for reporting these non-GAAP measures below, and the press release schedules reconcile the most directly comparable GAAP measure to each non-GAAP measure that we refer to. Although management evaluates and presents these non-GAAP measures for the reasons described below, please be aware that these non-GAAP measures have limitations and should not be considered in isolation or as a substitute for revenue, operating income, income from continuing operations, net income, earnings per share or any other comparable operating measure prescribed by GAAP. In addition, we may calculate and/or present these non-GAAP financial measures differently than measures with the same or similar names that other companies report, and as a result, the non-GAAP measures we report may not be comparable to those reported by others.

Adjusted Measures That Exclude Merger-Related and Other Adjustments. Management evaluates certain non-GAAP measures, as presented on pages A-3 and A-4, because those non-GAAP measures allow for period-over period comparisons of our ongoing operations before the impact of the following items: transaction and transition costs and purchase accounting adjustments associated with the Starwood merger, the gain on the sale of our ownership interest in Avendra, and our provisional estimate of the impact of the Tax Cuts and Jobs Act of 2017. Non-GAAP adjusted net income and its components and adjusted EPS are not, and should not be viewed as, substitutes for net income and EPS as reported under GAAP.

Combined Financial Information. The 2016 unaudited combined financial information presented on pages A-4 and A-12 gives effect to Marriott’s acquisition of Starwood, and Starwood’s sale of its timeshare business, as if these two transactions (the “Transactions”) had occurred on January 1, 2015, and is presented to facilitate comparisons with our results following our acquisition of Starwood. The unaudited combined financial information also uses the estimated fair value of assets and liabilities on September 23, 2016, the closing date of the acquisition (the “Merger Date”), and makes the following assumptions: (1) removes merger-related costs and charges; (2) adjusts income taxes to reflect the Company’s combined 2016 effective tax rate of 32.5%; (3) adjusts weighted-average shares outstanding to include shares issued to Starwood shareholders; and (4) adjusts debt to reflect borrowing under our Credit Facility and issuance of our Series Q and R Notes on January 1, 2015.

Marriott presents the combined financial information for informational purposes only and the combined financial information is not necessarily indicative of what the combined company’s results of operations would have been had the Transactions been completed on the date indicated.

Combined net income includes adjustments that are not prescribed by Article 11 of Regulation S-X. The following table presents a reconciliation of pro forma net income in accordance with Article 11 to combined net income. (For the 2016 fourth quarter, amounts are as reported.)

2016

(in millions)

First Quarter

Second Quarter

Third Quarter

 Fourth Quarter

As Reported

Total

Pro forma net income under Article 11

$                  291

$                  209

$                  179

$                  244

$                  923

Merger-related costs and charges

3

16

220

136

375

Income taxes 1

(4)

17

(55)

(46)

(88)

Loss on cumulative translation adjustment

91

91

Combined net income

$                  290

$                  333

$                  344

$                  334

$               1,301

For the 2016 first, second, and third quarters, combined net income applies an effective income tax rate of 32.5%. For pro forma net income under

   Article 11, we applied the historical effective tax rates for Marriott and Starwood.

A-14

 

Earnings Before Interest Expense, Taxes, Depreciation and Amortization (“EBITDA”), Adjusted EBITDA, and Combined Adjusted EBITDA. EBITDA reflects net income, excluding the impact of interest expense, depreciation, amortization, and provision for income taxes. Our non-GAAP measure of Adjusted EBITDA further adjusts EBITDA to exclude the pre-tax transaction and transition costs associated with the Starwood merger, which we recorded in the “Merger-related costs and charges” caption of our Consolidated Statements of Income (our “Income Statements”), gains and losses on asset dispositions, including the gain on the sale of our ownership interest in Avendra, and share-based compensation expense for all periods presented.

Our 2016 non-GAAP measure of Combined Adjusted EBITDA also includes Starwood pre-acquisition and other adjustments, which assume the Transactions had been completed on January 1, 2015. These adjustments reflect Starwood’s EBITDA, adjusted for merger-related costs and charges, net loss on asset dispositions, loss on cumulative translation adjustment, share-based compensation, and an assumed effective income tax rate for the combined company of 32.5% for the periods prior to the Merger Date.

MARRIOTT INTERNATIONAL, INC.
NON-GAAP FINANCIAL AND PERFORMANCE MEASURES

We believe that Adjusted EBITDA and Combined Adjusted EBITDA are meaningful indicators of our operating performance because they permit period-over-period comparisons of our ongoing core operations before these items and facilitate our comparison of results before these items with results from other lodging companies. We use such measures to evaluate companies because they exclude certain items that can vary widely across different industries or among companies within the same industry. For example, interest expense can be dependent on a company’s capital structure, debt levels, and credit ratings. Accordingly, the impact of interest expense on earnings can vary significantly among companies. The tax positions of companies can also vary because of their differing abilities to take advantage of tax benefits and because of the tax policies of the jurisdictions in which they operate. As a result, effective tax rates and provisions for income taxes can vary considerably among companies. Our Adjusted EBITDA and Combined Adjusted EBITDA also exclude depreciation and amortization expense which we report under “Depreciation, amortization, and other” as well as depreciation included under “Reimbursed costs” in our Income Statements, because companies utilize productive assets of different ages and use different methods of both acquiring and depreciating productive assets. These differences can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies. We also exclude share-based compensation expense in all periods presented to address the considerable variability among companies in recording compensation expense because companies use share-based payment awards differently, both in the type and quantity of awards granted.

RevPAR. In addition to the foregoing non-GAAP financial measures, we present Revenue per Available Room (“RevPAR”) as a performance measure. We believe RevPAR is a meaningful indicator of our performance because it measures the period-over-period change in room revenues for comparable properties. RevPAR may not be comparable to similarly titled measures, such as revenues. We calculate RevPAR by dividing room sales (recorded in local currency) for comparable properties by room nights available for the period. We present growth in comparative pro forma combined company RevPAR on a constant dollar basis, which we calculate by applying exchange rates for the current period to each period presented. We believe constant dollar analysis provides valuable information regarding our properties’ performance as it removes currency fluctuations from the presentation of such results.

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SOURCE Marriott International, Inc.