MAR
$125.91
Marriot Int Class A
$.43
.34%
Earnings Details
3rd Quarter September 2017
Tuesday, November 07, 2017 4:30:00 PM
Tweet Share Watch
Summary

Marriot Int Class A Beats but Guides Lower

Marriot Int Class A (MAR) reported 3rd Quarter September 2017 earnings of $1.10 per share on revenue of $5.7 billion. The consensus earnings estimate was $0.98 per share on revenue of $5.0 billion. The Earnings Whisper number was $1.01 per share. Revenue grew 43.7% on a year-over-year basis.

The company said it expects fourth quarter earnings of $0.98 to $1.00 per share. The current consensus earnings estimate is $1.02 per share for the quarter ending December 31, 2017.

Marriott International Inc is an operator, franchisor & licensor of hotels and timeshare properties under different brand names. It also operates & develops residential properties and provides services to home/condominium owner association.

Results
Reported Earnings
$1.10
Earnings Whisper
$1.01
Consensus Estimate
$0.98
Reported Revenue
$5.66 Bil
Revenue Estimate
$4.98 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Marriott International Reports Third Quarter 2017 Results Highlights

Third quarter reported diluted EPS totaled $1.04, a 300 percent increase over prior year results. Third quarter adjusted diluted EPS totaled $1.10, a 26 percent increase over third quarter 2016 combined results. Adjusted 2017 third quarter results exclude merger-related adjustments. Combined 2016 third quarter 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 2.1 percent in the 2017 third quarter, while North American comparable systemwide constant dollar RevPAR rose 0.4 percent;

The company added nearly 22,800 rooms during the third quarter, including more than 3,600 rooms converted from competitor brands and roughly 8,000 rooms in international markets;

At quarter-end, Marriott’s worldwide development pipeline increased to approximately 450,000 rooms, including 41,000 rooms approved, but not yet subject to signed contracts;

Third quarter reported net income totaled $392 million, a 460 percent increase over prior year results. Third quarter adjusted net income totaled $413 million, a 20 percent increase over prior year combined results;

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) totaled $831 million in the quarter, a 64 percent increase over third quarter 2016 adjusted EBITDA and a 7 percent increase over third quarter 2016 combined adjusted EBITDA;

Marriott repurchased 7.8 million shares of the company’s common stock for $800 million during the third quarter. Year-to-date through November 7, the company repurchased 23.9 million shares for $2.4 billion.

https://mma.prnewswire.com/media/599196/Marriott_International_logo_black.jpg

Marriott International, Inc. (MAR) today reported third quarter 2017 results.

On September 23, 2016, Marriott completed its acquisition of Starwood Hotels & Resorts Worldwide (Starwood). The discussion in the first section below reflects reported results for the third quarter in accordance with US generally accepted accounting principles (GAAP). To further assist investors, the company is also providing (a) adjusted results that exclude merger-related adjustments; and (b) combined financials and selected performance information for 2016 that assume Marriott’s acquisition of Starwood and Starwood’s sale of its timeshare business had been completed on January 1, 2015, but use the estimated fair value of assets and liabilities as of the actual closing date of the acquisition. Combined results also reflect other adjustments as described below. Throughout this press release, the business associated with brands that were in Marriott’s portfolio before the Starwood acquisition are referred to as "Legacy-Marriott", while the Starwood business and brands that the company acquired are referred to as "Legacy-Starwood."

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 and combined results on pages A-3 and A-4 have been reclassified to conform to the current reporting.

Arne M. Sorenson, president and chief executive officer of Marriott International, said, "In the third quarter, many of our hotels were rocked by destructive hurricanes in the Caribbean, Texas, and Florida and the earthquakes in Mexico. Our hotels in these markets continue to serve aid workers and emergency personnel, as well as guests displaced by property damage. We are very proud of our associates who delivered great hospitality during this challenging time.

"The business related to the hurricane response increased North American lodging demand modestly in the third quarter, even as business transient and group demand was in line with expectations. Outside North America, strong leisure demand in Asia and Europe drove RevPAR above our guidance.

"Owners and franchisees remain attracted to our terrific brands and strong hotel economics. New project signings and approvals added 36,000 rooms to our development pipeline in the third quarter, increasing it to a record 450,000 rooms by the quarter-end, equal to 36 percent of our current distribution. More than half of those rooms under development are located outside North America and 40 percent should fly one of Marriott’s luxury or upper upscale flags.

"It’s been just over a year since the completion of the Starwood acquisition. We are pleased with our progress on the integration. Our properties and general and administrative functions have already realized meaningful cost savings. From the date of the acquisition through last week, we have recycled assets totaling more than $1.1 billion of our $1.5 billion goal. Year-to-date through November 7, we have already returned $2.7 billion to shareholders through dividends and share repurchase and believe we could return nearly $3.5 billion in 2017.

"For 2018, we expect comparable systemwide RevPAR on a constant dollar basis will increase 1 to 3 percent worldwide and 3 to 5 percent outside North America, while RevPAR in North America should be flat to up 2 percent. Group revenue pace for our North American full-service hotels is up nearly 2 percent.

"We anticipate our number of rooms will increase roughly 7 percent, gross, in 2018, while rooms deletions should total 1 to 1.5 percent during the year."

Third Quarter 2017 GAAP - Financial Results As Reported

Marriott reported net income totaled $392 million in the 2017 third quarter, a 460 percent increase over 2016 third quarter net income of $70 million. Reported diluted earnings per share (EPS) was $1.04 in the quarter, a 300 percent increase from diluted EPS of $0.26 in the year-ago quarter.

Base management and franchise fees totaled $695 million in the 2017 third quarter, compared to $470 million in the year-ago quarter. The year-over-year increase in these fees is primarily attributable to the Starwood acquisition, higher RevPAR, unit growth and higher branding fees.

Third quarter worldwide incentive management fees increased to $136 million, compared to $81 million in the year-ago quarter. The year-over-year increase was largely attributable to the Starwood acquisition.

Owned, leased, and other revenue, net of direct expenses, totaled $96 million in the 2017 third quarter, compared to $45 million in the year-ago quarter. The year-over-year increase is primarily attributable to the Starwood acquisition, partially offset by lower results in Brazil due to the Olympics in the year-ago quarter.

Depreciation, amortization, and other expenses totaled $68 million in the third quarter, compared to $36 million in the year-ago quarter. The year-over-year increase is primarily attributable to the Starwood acquisition.

General, administrative, and other expenses for the 2017 third quarter totaled $199 million, compared to $161 million in the year-ago quarter. The year-over-year increase is primarily attributable to the Starwood acquisition, inclusive of general administrative cost savings from combined company synergies.

Interest expense, net, totaled $64 million in the third quarter compared to $46 million in the year-ago quarter. The increase largely reflects a higher commercial paper balance, higher Senior Note balances due to debt assumed in the Starwood acquisition, which the company subsequently exchanged for new Marriott Senior Notes, partially offset by the maturity of Series I Senior Notes.

Equity in earnings for the 2017 third quarter totaled $6 million, compared to $3 million in the year-ago quarter. The year-over-year increase is primarily attributable to the Starwood acquisition.

The provision for income taxes totaled $188 million in the third quarter, a 32.4 percent effective tax rate, compared to $61 million in the year-ago quarter, a 46.6 percent effective tax rate. The provision for the third quarter of 2017 includes a $6 million tax benefit resulting from the adoption of Accounting Standards Update 2016-09 ("ASU 2016-09"), which changes the GAAP reporting of excess tax benefits associated with employee stock-based compensation. In the third quarter of 2016, income before taxes included $237 million of merger-related costs, most of which were incurred in jurisdictions with lower tax rates.

For the third quarter, adjusted EBITDA totaled $831 million, a 64 percent increase over third quarter 2016 adjusted EBITDA of $506 million. See page A-12 for the adjusted EBITDA calculation.

Third Quarter 2017 Financial Results As Adjusted Compared to Third Quarter 2016 Combined Financial Results

This information is being presented to allow shareholders to more easily compare the 2017 third quarter adjusted results with the combined results for the third quarter of 2016. The combined results assume Marriott’s acquisition of Starwood and Starwood’s sale of its timeshare business had been completed on January 1, 2015, but use the estimated fair value of assets and liabilities as of the actual closing date of the acquisition.

Combined results for the 2016 third quarter discussed in this section make the following assumptions: (1) removes merger-related adjustments; (2) adjusts income taxes to reflect the company’s combined 2016 effective tax rate of 32.5 percent; (3) adjusts weighted average shares outstanding to include shares issued to Starwood shareholders; and (4) adjusts debt to reflect borrowing on the Credit Facility and issuance of Series Q and R Notes on January 1, 2015. Adjusted results for the 2017 third quarter exclude merger-related adjustments. See page A-3 for the calculation of adjusted results, as well as combined results for the year-ago quarter.

Third quarter 2017 adjusted net income totaled $413 million, a 20 percent increase over 2016 third quarter combined net income of $344 million. Adjusted net income for the third quarter of 2017 excludes $22 million ($21 million after-tax) of merger-related adjustments. Adjusted diluted EPS in the third quarter totaled $1.10, a 26 percent increase from combined diluted EPS of $0.87 in the year-ago quarter.

Base management and franchise fees totaled $695 million in the third quarter of 2017, an 8 percent increase over combined base management and franchise fees of $644 million in the year-ago quarter. The year-over-year increase largely reflects higher RevPAR, unit growth and an increase in branding fees.

Third quarter incentive management fees increased to $136 million, compared to combined fees of $127 million in the 2016 third quarter. The year-over-year increase was largely due to higher net house profit at many properties outside North America.

Adjusted owned, leased, and other revenue, net of direct expenses, totaled $94 million, compared to combined revenue, net of direct expenses of $116 million in the year-ago quarter. The adjusted year-over-year decrease largely reflects the impact of hotels previously sold and lower results in Brazil and New York, partially offset by stronger results at other owned and leased hotels and $9 million of favorable purchase accounting revisions. Combined revenue, net of expenses, for the third quarter of 2016 included $15 million of results from hotels subsequently sold.

Adjusted depreciation, amortization, and other expenses for the 2017 third quarter totaled $70 million, compared to combined expenses of $81 million in the year-ago quarter. The year-over-year decrease was largely due to hotels previously sold or properties moved to assets held for sale.

Adjusted general, administrative, and other expenses for the 2017 third quarter totaled $201 million, compared to combined expenses of $237 million in the year-ago quarter. The decrease in expenses year-over-year was largely due to general and administrative cost savings and $4 million of favorable purchase accounting revisions.

Interest expense, net, totaled $64 million in the third quarter, compared to combined net expense of $69 million in the year-ago quarter. The decrease was largely due to the maturity of Series I Senior Notes.

The adjusted provision for income taxes totaled $189 million in the third quarter, a 31.4 percent effective rate, compared to the combined provision for taxes of $166 million in the 2016 third quarter, a 32.5 percent effective rate. The adjusted provision for the third quarter of 2017 includes a $5 million tax benefit resulting from the adoption of ASU 2016-09.

For the third quarter, adjusted EBITDA totaled $831 million, a 7 percent increase over third quarter 2016 combined adjusted EBITDA of $775 million. Combined adjusted EBITDA for the third quarter of 2016 included $15 million of results from hotels subsequently sold. See page A-12 for the adjusted EBITDA and combined adjusted EBITDA calculations.

Third Quarter 2017 Financial Results As Adjusted Compared to August 7, 2017 Guidance

On August 7, 2017, the company estimated total fee revenue for the third quarter would be $810 million to $825 million. Actual total fee revenue of $831 million in the quarter was higher than estimated, largely reflecting RevPAR at the high end of the guidance range, better than expected branding fees, favorable foreign exchange and $3 million of previously deferred incentive management fees.

Marriott estimated owned, leased, and other revenue, net of direct expenses, for the third quarter would total approximately $75 million. Actual adjusted results of $94 million in the quarter were higher than estimated, largely due to $9 million of favorable purchase accounting revisions, $4 million of termination fees and better than expected results at hotels in Canada.

The company estimated general, administrative, and other expenses for the third quarter would total approximately $215 million to $220 million. Actual adjusted expenses of $201 million in the quarter were lower than expected largely due to a $6 million state tax incentive, $4 million of favorable purchase accounting revisions, and timing.

The company estimated interest expense, net, for the third quarter would total approximately $60 million. Actual net expense of $64 million in the quarter was higher than expected, largely due to $3 million of unfavorable purchase accounting revisions.

The company estimated gains and other income for the third quarter would total approximately $0 million. Actual gains of $6 million in the quarter were higher than expected, largely due to a settlement with tax authorities related to the sale of Starwood properties in 2008.

Selected Performance Information

Combined information for the 2016 third quarter presented in this section assumes Marriott’s acquisition of Starwood and Starwood’s sale of its timeshare business had been completed on January 1, 2015.

The company added 138 new properties (22,772 rooms) to its worldwide lodging portfolio during the 2017 third quarter, including The St. Regis, Astana in Kazakhstan, the Bulgari Hotel Beijing, and the Weligama Bay Marriott Resort & Spa, the company’s first hotel in Sri Lanka. Twenty-seven properties (4,700 rooms) exited the system during the quarter. At quarter-end, Marriott’s lodging system encompassed 6,401 properties and timeshare resorts with more than 1,239,000 rooms.

At quarter-end, the company’s worldwide development pipeline totaled 2,622 properties with approximately 450,000 rooms, including 975 properties with more than 175,000 rooms under construction and 222 properties with 41,000 rooms approved for development, but not yet subject to signed contracts.

In the 2017 third quarter, worldwide comparable systemwide constant dollar RevPAR increased 2.1 percent (a 2.4 percent increase using actual dollars). North American comparable systemwide constant dollar RevPAR increased 0.4 percent (a 0.6 percent increase using actual dollars), and international comparable systemwide constant dollar RevPAR increased 6.7 percent (a 7.8 percent increase using actual dollars) for the same period. These RevPAR growth statistics compare the third quarter of 2017 to combined comparable systemwide RevPAR for the third quarter of 2016.

In the 2017 third quarter, 64 percent of worldwide company-managed hotels earned incentive management fees. In North America, 55 percent of company-managed hotels earned incentive management fees in the quarter, while 72 percent of company-managed hotels outside North America earned incentive management fees. In addition, the company earned 64 percent of its incentive management fees in the 2017 third quarter at properties outside North America.

Worldwide comparable company-operated house profit margins increased 40 basis points in the third quarter, largely due to higher RevPAR, solid cost controls and synergies from the Starwood acquisition. House profit margins for comparable company-operated properties outside North America rose 130 basis points, while North American comparable company-operated house profit margins declined 20 basis points in the third quarter. These house profit margin statistics compare the third quarter of 2017 to combined comparable company-operated house profit margins for the third quarter of 2016.

Balance Sheet

At quarter-end, Marriott’s total debt was $8,669 million and cash balances totaled $508 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 reported diluted EPS totaled 376.6 million in the 2017 third quarter, compared to 270.5 million shares in the year-ago quarter. Weighted average fully diluted shares outstanding used to calculate combined diluted EPS totaled 394.4 million in the 2016 third quarter.

The company repurchased 7.8 million shares of common stock in the third quarter at a cost of $800 million at an average price of $103.01. Year-to-date through November 7, the company has repurchased 23.9 million shares for $2.4 billion at an average price of $98.17.

OUTLOOK

The following outlook for the fourth quarter and full year 2017 does not include merger-related adjustments, which the company cannot accurately forecast, but could total roughly $150 million on a full-year basis.

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. In 2016, combined fees from credit cards and residential sales totaled $60 million in the fourth quarter and $210 million for the full year. Application fees, relicensing fees and timeshare royalties will continue to be included in the Franchise fees line. Comparisons to prior year combined results throughout this Outlook section reflect this change in reporting. On February 15, 2017, the company issued further schedules setting forth combined quarterly and full year combined financial information for both 2015 and 2016 that reflect this change in presentation, and included those schedules in a Form 8-K filed on that date. Those schedules are available on Marriott’s Investor Relations website at http://www.marriott.com/investor.

For the 2017 fourth quarter, Marriott expects comparable systemwide RevPAR on a constant dollar basis will increase 2 to 3 percent in North America. The company’s guidance for fourth quarter RevPAR growth in North America reflects the shift of the Jewish holidays, which occurred in the third quarter of 2017 compared to the fourth quarter of 2016. The company expects fourth quarter comparable systemwide RevPAR on a constant dollar basis will increase 3 to 5 percent outside North America and 2 to 3 percent worldwide.

Marriott expects fourth quarter 2017 owned, leased, and other revenue, net of direct expenses, could total approximately $90 million. This estimate reflects the negative impact of hotels previously sold, including the Sheraton Centre Toronto.

The company anticipates general, administrative, and other expenses for the fourth quarter will total $240 million to $245 million. Compared to the expense estimates the company provided on August 7, these estimates reflect expenses delayed from the third quarter.

Marriott expects fourth quarter 2017 adjusted EBITDA could total $762 million to $777 million. This estimate reflects the negative impact of hotels previously sold. See page A-13 for the adjusted EBITDA calculation.

For the full year 2017, Marriott expects comparable systemwide RevPAR on a constant dollar basis for the combined company will increase 1 to 2 percent in North America, roughly 5 percent outside North America and 2 to 3 percent worldwide.

Marriott anticipates gross room additions of nearly 7 percent and room deletions of 1 to 1.5 percent for full year 2017.

The company assumes full year 2017 total fee revenue will total $3,287 million to $3,297 million. Compared to the total fee revenue estimates the company provided on August 7, these fee revenue estimates reflect the outperformance in the third quarter, higher worldwide RevPAR guidance and higher branding and relicensing fees.

Marriott expects full year 2017 owned, leased, and other revenue, net of direct expenses, could total approximately $367 million. This estimate reflects the negative impact of hotels previously sold. Compared to the owned, leased and other revenue, net of direct expenses, estimates the company provided on August 7, these estimates reflect the outperformance in the third quarter, partially offset by the impact of the sale of the Sheraton Centre Toronto.

Marriott expects full year 2017 adjusted EBITDA could total $3,177 million to $3,192 million. This estimate reflects the negative impact of hotels previously sold. See page A-14 for the adjusted EBITDA calculation.

Fourth Quarter 2017
Full Year 2017
Total fee revenue1
$825 million to $835 million $3,287 million to $3,297 million
Owned, leased, and other revenue, net of direct expenses1 Approx. $90 million
Approx. $367 million
Depreciation, amortization, and other expenses
Approx. $70 million
Approx. $288 million
General, administrative, and other expenses
$240 million to $245 million $877 million to $882 million
Operating income
$600 million to $615 million $2,485 million to $2,500 million
Gains and other income
Approx. $0 million
Approx. $31 million
Net interest expense2
Approx. $65 million
Approx. $257 million
Equity in earnings (losses)
Approx. $5 million
Approx. $34 million
Earnings per share3
$0.98 to $1.00
$4.22 to $4.24
Tax rate4
33.2 percent
30.2 percent

1Beginning in the first quarter of 2017, the company reports credit card and residential branding fees in Franchise fees revenue. Prior to first quarter of 2017, those fees were reported in Owned, leased and other revenue. Combined credit card and residential branding fees totaled $60 million in the Fourth Quarter of 2016 and $210 million for Full Year 2016. 2Net of interest income 3Guidance for Full Year 2017 EPS includes the $0.13 expected favorable impact from the adoption of ASU 2016-09. 4The tax rate guidance for Full Year 2017 includes the $51 million benefit from the adoption of ASU 2016-09, but does not include the impact of merger-related adjustments that have been or may be made. Without the benefit from adoption of ASU 2016-09, the anticipated tax rate for Full Year 2017 would be 33.0 percent.

The company expects investment spending in 2017 will total approximately $550 million to $650 million, including approximately $175 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, nearly $3.5 billion could be returned to shareholders through share repurchases and dividends in 2017.

The company plans to continue to disclose adjusted results and EBITDA that exclude merger-related costs and charges arising from the Starwood acquisition.

Marriott International, Inc. (MAR) will conduct its quarterly earnings review for the investment community and news media on Wednesday, November 8, 2017 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 the "Recent and Upcoming Events" tab and click on the quarterly conference call link. A replay will be available at that same website until November 8, 2018.

The telephone dial-in number for the conference call is 706-679-3455 and the conference ID is 86389048. A telephone replay of the conference call will be available from 1:30 p.m. ET, Wednesday, November 8, 2017 until 11:00 p.m. ET, Wednesday, November 15, 2017. To access the replay, call 404-537-3406. The conference ID for the recording is 86389048.

Note on forward-looking statements: This press release and accompanying schedules contain "forward-looking statements" within the meaning of federal securities laws, including RevPAR, profit margin and earnings trends, estimates 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 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. 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; and the extent to which we are able to continue successfully integrating Starwood and realize the anticipated benefits of combining Starwood and Marriott. 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 November 7, 2017. 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. (MAR) is the world’s largest hotel company based in Bethesda, Maryland, USA, with more than 6,400 properties in 126 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 M?ridien?, Renaissance? Hotels, Sheraton?, Delta Hotels by MarriottSM, Marriott Executive Apartments?, Marriott Vacation Club?, Autograph Collection? Hotels, Tribute Portfolio(TM), Design Hotels(TM), 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 3, 2017
TABLE OF CONTENTS
Consolidated Statements of Income - As Reported
A-1
Consolidated Statements of Income - Adjusted 2017 Compared to Combined 2016
A-3
Total Lodging Products
A-5
Combined Key Lodging Statistics
A-8
Adjusted EBITDA/ Combined Adjusted EBITDA
A-12
Adjusted EBITDA Forecast - Fourth Quarter 2017
A-13
Adjusted EBITDA Forecast - Full Year 2017
A-14
Non-GAAP Financial and Performance Measures
A-15
MARRIOTT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME - AS REPORTED
THIRD QUARTER 2017 AND 2016
(in millions except per share amounts, unaudited)
As Reported
As Reported
Percent
Three Months Ended
Three Months Ended
Better/(Worse)
September 30, 2017
September 30, 2016
Reported 2017 vs. 2016
REVENUES
Base management fees
$
269
$
180
49
Franchise fees 1
426
290
47
Incentive management fees
136
81
68
Total Fees
831
551
51
Owned, leased, and other revenue 2
452
239
89
Cost reimbursements 3
4,380
3,152
39
Total Revenues
5,663
3,942
44
OPERATING COSTS AND EXPENSES
Owned, leased, and other - direct 4
356
194
(84)
Reimbursed costs
4,380
3,152
(39)
Depreciation, amortization, and other 5
68
36
(89)
Merger-related costs and charges
28
228
88
General, administrative, and other 6
199
161
(24)
Total Expenses
5,031
3,771
(33)
OPERATING INCOME
632
171
270
Gains and other income, net 7
6
3
100
Interest expense
(73)
(55)
(33)
Interest income
9
9
-
Equity in earnings 8
6
3
100
INCOME BEFORE INCOME TAXES
580
131
343
Provision for income taxes
(188)
(61)
(208)
NET INCOME
$
392
$
70
460
EARNINGS PER SHARE
Earnings per share - basic
$
1.05
$
0.26
304
Earnings per share - diluted
$
1.04
$
0.26
300
Basic Shares
372.3
266.2
Diluted Shares
376.6
270.5
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" caption. We adjusted prior amounts to conform to current period presentation.
2
Owned, leased, and other revenueincludes revenue from the properties we own or lease, termination fees, and other revenue.
3
Cost reimbursementsinclude reimbursements from properties for company-funded operating expenses.
4
Owned, leased, and other - directexpenses include operating expenses related to our owned or leased hotels, including lease payments and pre-opening expenses.
5
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.
6
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.
8
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
THIRD QUARTER YEAR-TO-DATE 2017 AND 2016
(in millions except per share amounts, unaudited)
As Reported
As Reported
Percent
Nine Months Ended
Nine Months Ended
Better/(Worse)
September 30, 2017
September 30, 2016
Reported 2017 vs. 2016
REVENUES
Base management fees
$
818
$
538
52
Franchise fees 1
1,207
813
48
Incentive management fees
437
276
58
Total Fees
2,462
1,627
51
Owned, leased, and other revenue 2
1,349
650
108
Cost reimbursements 3
13,208
9,339
41
Total Revenues
17,019
11,616
47
OPERATING COSTS AND EXPENSES
Owned, leased, and other - direct 4
1,069
533
(101)
Reimbursed costs
13,208
9,339
(41)
Depreciation, amortization, and other 5
218
97
(125)
Merger-related costs and charges
100
250
60
General, administrative, and other 6
635
470
(35)
Total Expenses
15,230
10,689
(42)
OPERATING INCOME
1,789
927
93
Gains and other income, net 7
31
3
933
Interest expense
(216)
(159)
(36)
Interest income
24
22
9
Equity in earnings 8
29
8
263
INCOME BEFORE INCOME TAXES
1,657
801
107
Provision for income taxes
(486)
(265)
(83)
NET INCOME
$
1,171
$
536
118
EARNINGS PER SHARE
Earnings per share - basic
$
3.09
$
2.08
49
Earnings per share - diluted
$
3.06
$
2.04
50
Basic Shares
378.5
258.3
Diluted Shares
383.2
262.7
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" caption. We adjusted prior amounts to conform to current period presentation.
2
Owned, leased, and other revenue includes revenue from the properties we own or lease, termination fees, and other revenue.
3
Cost reimbursements include reimbursements from properties for company-funded operating expenses.
4
Owned, leased, and other - directexpenses include operating expenses related to our owned or leased hotels, including lease payments and pre-opening expenses.
5
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.
6
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.
8
Equity in earnings include our equity in earnings or losses of unconsolidated equity method investments.
A-2
MARRIOTT INTERNATIONAL, INC.
ADJUSTED/COMBINED STATEMENTS OF INCOME
THIRD QUARTER ADJUSTED 2017 COMPARED TO COMBINED 2016
(in millions except per share amounts, unaudited)
Percent
As Reported
Less:
As Adjusted **
Combined10 **
Better/(Worse)
Three Months Ended
Merger-related
Three Months Ended
Three Months Ended
Adjusted 2017 vs.
September 30, 2017
Adjustments 9
September 30, 2017
September 30, 2016
Combined 2016
REVENUES
Base management fees
$
269
$
-
$
269
$
266
1
Franchise fees 1
426
-
426
378
13
Incentive management fees
136
-
136
127
7
Total Fees
831
-
831
771
8
Owned, leased, and other revenue 2
452
3
449
499
(10)
Cost reimbursements 3
4,380
-
4,380
4,384
-
Total Revenues
5,663
3
5,660
5,654
-
OPERATING COSTS AND EXPENSES
Owned, leased, and other - direct 4
356
1
355
383
7
Reimbursed costs
4,380
-
4,380
4,384
-
Depreciation, amortization, and other 5
68
(2)
70
81
14
Merger-related costs and charges
28
28
-
-
-
General, administrative, and other 6
199
(2)
201
237
15
Total Expenses
5,031
25
5,006
5,085
2
OPERATING INCOME / (LOSS)
632
(22)
654
569
15
Gains and other income, net 7
6
-
6
6
-
Interest expense
(73)
-
(73)
(80)
9
Interest income
9
-
9
11
(18)
Equity in earnings 8
6
-
6
4
50
INCOME / (LOSS) BEFORE INCOME TAXES
580
(22)
602
510
18
(Provision) benefit for income taxes
(188)
1
(189)
(166)
(14)
NET INCOME / (LOSS)
$
392
$
(21)
$
413
$
344
20
EARNINGS PER SHARE
Earnings per share - basic
$
1.05
$
1.11
$
0.88
26
Earnings per share - diluted
$
1.04
$
1.10
$
0.87
26
Basic Shares
372.3
372.3
388.9
Diluted Shares
376.6
376.6
394.4
** Denotes non-GAAP financial measures. See pages A-15 and A-16 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" caption.
We adjusted prior amounts to conform to current period presentation.
2
Owned, leased, and other revenueincludes revenue from the properties we own or lease, termination fees, and other revenue.
3
Cost reimbursements include reimbursements from properties for company-funded operating expenses.
4
Owned, leased, and other - directexpenses include operating expenses related to our owned or leased hotels, including lease payments and pre-opening expenses.
5
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.
6
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.
8
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 For 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-3
MARRIOTT INTERNATIONAL, INC.
ADJUSTED/COMBINED STATEMENTS OF INCOME
THIRD QUARTER YEAR-TO-DATE ADJUSTED 2017 COMPARED TO COMBINED 2016
(in millions except per share amounts, unaudited)
Percent
As Reported
Less:
As Adjusted **
Combined10 **
Better/(Worse)
Nine Months Ended
Merger-related
Nine Months Ended
Nine Months Ended
Adjusted 2017 vs.
September 30, 2017
Adjustments 9
September 30, 2017
September 30, 2016
Combined 2016
REVENUES
Base management fees
$
818
$
-
$
818
$
804
2
Franchise fees 1
1,207
-
1,207
1,082
12
Incentive management fees
437
-
437
413
6
Total Fees
2,462
-
2,462
2,299
7
Owned, leased, and other revenue 2
1,349
3
1,346
1,455
(7)
Cost reimbursements 3
13,208
-
13,208
13,273
-
Total Revenues
17,019
3
17,016
17,027
-
OPERATING COSTS AND EXPENSES
Owned, leased, and other - direct 4
1,069
-
1,069
1,138
6
Reimbursed costs
13,208
-
13,208
13,273
-
Depreciation, amortization, and other 5
218
1
217
242
10
Merger-related costs and charges
100
100
-
-
-
General, administrative, and other 6
635
(2)
637
730
13
Total Expenses
15,230
99
15,131
15,383
2
OPERATING INCOME / (LOSS)
1,789
(96)
1,885
1,644
15
Gains (losses) and other income, net 7
31
-
31
(24)
229
Interest expense
(216)
-
(216)
(237)
9
Interest income
24
-
24
28
(14)
Equity in earnings 8
29
-
29
23
26
INCOME / (LOSS) BEFORE INCOME TAXES
1,657
(96)
1,753
1,434
22
(Provision) benefit for income taxes
(486)
27
(513)
(467)
(10)
NET INCOME / (LOSS)
$
1,171
$
(69)
$
1,240
$
967
28
EARNINGS PER SHARE
Earnings per share - basic
$
3.09
$
3.28
$
2.49
32
Earnings per share - diluted
$
3.06
$
3.24
$
2.45
32
Basic Shares
378.5
378.5
388.8
Diluted Shares
383.2
383.2
394.4
** Denotes non-GAAP financial measures. See pages A-15 and A-16 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" caption. We adjusted prior amounts to conform to current period presentation.
2
Owned, leased, and other revenue includes revenue from the properties we own or lease, termination fees, and other revenue.
3
Cost reimbursements include reimbursements from properties for company-funded operating expenses.
4
Owned, leased, and other - direct expenses include operating expenses related to our owned or leased hotels, including lease payments and pre-opening expenses.
5
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.
6
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.
8
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 For 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 September 30, 2017
North America
Total International Total Worldwide
Units
Rooms
Units
Rooms
Units
Rooms
Managed
835
252,379 1,040
279,097
1,875
531,476
JW Marriott Hotels
15
9,709
47
18,925
62
28,634
The Ritz-Carlton Hotels
40
11,764
54
14,947
94
26,711
The Ritz-Carlton Residences
34
4,538
9
625
43
5,163
The Ritz-Carlton Serviced Apartments
5
697
5
697
Luxury Collection
5
2,294
48
8,230
53
10,524
W Hotels
26
7,950
24
5,661
50
13,611
W Residences
9
1,078
6
532
15
1,610
St. Regis
10
1,990
31
7,049
41
9,039
St. Regis Residences
6
467
6
516
12
983
EDITION Hotels
2
567
2
699
4
1,266
EDITION Residences
1
25
1
25
Bulgari Hotels & Resorts
3
237
3
237
Bulgari Residences
1
5
1
5
Marriott Hotels
131
69,576
159
46,313
290
115,889
Sheraton
30
23,208
184
63,155
214
86,363
Sheraton Residences
2
262
2
262
Westin
46
25,127
68
21,844
114
46,971
Westin Residences
1
65
1
264
2
329
Renaissance Hotels
28
12,134
50
16,188
78
28,322
Le Meridien
4
720
73
20,200
77
20,920
Autograph Collection Hotels
3
989
6
1,456
9
2,445
Delta Hotels and Resorts
25
6,764
25
6,764
Gaylord Hotels
5
8,108
5
8,108
Marriott Executive Apartments
28
4,195
28
4,195
Tribute Portfolio
3
559
3
559
Courtyard
254
40,429
79
16,723
333
57,152
Residence Inn
106
16,207
5
517
111
16,724
Fairfield Inn & Suites
6
1,432
16
2,344
22
3,776
SpringHill Suites
30
4,854
30
4,854
Four Points
1
134
61
14,921
62
15,055
TownePlace Suites
15
1,740
15
1,740
Aloft
1
330
28
6,726
29
7,056
Protea Hotels
36
4,265
36
4,265
Element
1
180
4
933
5
1,113
Moxy Hotels
1
109
1
109
A-5
MARRIOTT INTERNATIONAL, INC.
TOTAL LODGING PRODUCTS
As of September 30, 2017
North America
Total International
Total Worldwide
Units
Rooms
Units
Rooms
Units
Rooms
Franchised
3,798
553,100
451
96,612
4,249
649,712
JW Marriott Hotels
10
4,425
6
1,624
16
6,049
The Ritz-Carlton Hotels
1
429
1
429
The Ritz-Carlton Residences
1
55
1
55
Luxury Collection
9
1,891
37
6,868
46
8,759
Luxury Collection Residences
1
91
1
64
2
155
Bulgari Hotels & Resorts
1
85
1
85
Marriott Hotels
212
66,137
48
13,297
260
79,434
Sheraton
161
47,765
60
17,075
221
64,840
Westin
80
26,262
24
7,432
104
33,694
Westin Residences
2
201
2
201
Renaissance Hotels
58
16,323
27
7,441
85
23,764
Le Meridien
18
4,286
15
4,022
33
8,308
Autograph Collection Hotels
70
15,247
45
10,838
115
26,085
Delta Hotels and Resorts
22
5,267
22
5,267
Tribute Portfolio
15
4,733
8
797
23
5,530
Courtyard
714
95,110
58
10,986
772
106,096
Residence Inn
627
73,883
3
287
630
74,170
Fairfield Inn & Suites
870
79,399
4
755
874
80,154
SpringHill Suites
352
40,464
352
40,464
Four Points
137
20,900
43
6,743
180
27,643
TownePlace Suites
314
31,510
314
31,510
Aloft
96
14,235
12
1,928
108
16,163
Protea Hotels
45
3,343
45
3,343
Element
25
3,581
2
293
27
3,874
Moxy Hotels
3
906
12
2,734
15
3,640
Owned/Leased
31
9,613
37
10,024
68
19,637
JW Marriott Hotels
1
496
1
496
The Ritz-Carlton Hotels
2
553
2
553
Luxury Collection
3
465
3
465
W Hotels
1
509
2
665
3
1,174
St. Regis
1
238
1
160
2
398
Marriott Hotels
3
1,664
5
1,625
8
3,289
Sheraton
3
2,671
6
2,866
9
5,537
Westin
1
1,073
1
246
2
1,319
Renaissance Hotels
1
317
3
749
4
1,066
Tribute Portfolio
1
135
1
135
Courtyard
19
2,814
3
644
22
3,458
Residence Inn
1
192
1
140
2
332
Protea Hotels
9
1,415
9
1,415
Unconsolidated Joint Ventures 25
4,423
96
12,086
121
16,509
Autograph Collection Hotels
6
419
6
419
AC Hotels by Marriott
25
4,423
90
11,667
115
16,090
Timeshare*
70
18,117
18
3,770
88
21,887
Marriott Vacations Worldwide
51
11,249
14
2,355
65
13,604
Vistana
19
6,868
4
1,415
23
8,283
Grand Total
4,759
837,632
1,642
401,589
6,401
1,239,221
*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 September 30, 2017
North America
Total International
Total Worldwide
Total Systemwide
Units
Rooms
Units
Rooms
Units
Rooms
Luxury
172
48,020
290
69,103
462
117,123
JW Marriott Hotels
25
14,134
54
21,045
79
35,179
The Ritz-Carlton Hotels
41
12,193
56
15,500
97
27,693
The Ritz-Carlton Residences
35
4,593
9
625
44
5,218
The Ritz-Carlton Serviced Apartments
5
697
5
697
Luxury Collection
14
4,185
88
15,563
102
19,748
Luxury Collection Residences
1
91
1
64
2
155
W Hotels
27
8,459
26
6,326
53
14,785
W Residences
9
1,078
6
532
15
1,610
St. Regis
11
2,228
32
7,209
43
9,437
St. Regis Residences
6
467
6
516
12
983
EDITION Hotels
2
567
2
699
4
1,266
EDITION Residences
1
25
1
25
Bulgari Hotels & Resorts
4
322
4
322
Bulgari Residences
1
5
1
5
Full Service
920
338,772
822
241,243
1,742
580,015
Marriott Hotels
346
137,377
212
61,235
558
198,612
Sheraton
194
73,644
250
83,096
444
156,740
Sheraton Residences
2
262
2
262
Westin
127
52,462
93
29,522
220
81,984
Westin Residences
3
266
1
264
4
530
Renaissance Hotels
87
28,774
80
24,378
167
53,152
Le Meridien
22
5,006
88
24,222
110
29,228
Autograph Collection Hotels
73
16,236
57
12,713
130
28,949
Delta Hotels and Resorts
47
12,031
47
12,031
Gaylord Hotels
5
8,108
5
8,108
Marriott Executive Apartments
28
4,195
28
4,195
Tribute Portfolio
16
4,868
11
1,356
27
6,224
Limited Service
3,597
432,723
512
87,473
4,109
520,196
Courtyard
987
138,353
140
28,353
1,127
166,706
Residence Inn
734
90,282
9
944
743
91,226
Fairfield Inn & Suites
876
80,831
20
3,099
896
83,930
SpringHill Suites
382
45,318
382
45,318
Four Points
138
21,034
104
21,664
242
42,698
TownePlace Suites
329
33,250
329
33,250
Aloft
97
14,565
40
8,654
137
23,219
AC Hotels by Marriott
25
4,423
90
11,667
115
16,090
Protea Hotels
90
9,023
90
9,023
Element
26
3,761
6
1,226
32
4,987
Moxy Hotels
3
906
13
2,843
16
3,749
Timeshare*
70
18,117
18
3,770
88
21,887
Marriott Vacations Worldwide
51
11,249
14
2,355
65
13,604
Vistana
19
6,868
4
1,415
23
8,283
Grand Total
4,759
837,632
1,642
401,589
6,401
1,239,221
*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 September 30, 2017 and September 30, 2016
REVPAR
Occupancy
Average Daily Rate
Brand
2017
vs. 2016*
2017
vs. 2016*
2017
vs. 2016*
JW Marriott
$149.62
-2.9%
75.4%
-1.0%
pts.
$198.35
-1.5%
The Ritz-Carlton
$242.43
1.8%
73.4%
0.0%
pts.
$330.37
1.8%
W Hotels
$241.20
-3.3%
84.6%
-0.6%
pts.
$284.93
-2.6%
Composite North American Luxury1
$229.18
-0.9%
77.9%
-0.6%
pts.
$294.09
-0.1%
Marriott Hotels
$145.20
-0.8%
78.1%
0.0%
pts.
$185.79
-0.8%
Sheraton
$156.57
-0.5%
80.1%
-0.6%
pts.
$195.55
0.3%
Westin
$179.58
-0.8%
80.6%
-0.5%
pts.
$222.86
-0.2%
Composite North American Upper Upscale2
$150.81
-0.4%
78.7%
-0.2%
pts.
$191.62
-0.1%
North American Full-Service3
$164.62
-0.6%
78.6%
-0.3%
pts.
$209.52
-0.2%
Courtyard
$105.21
-0.5%
75.6%
0.0%
pts.
$139.10
-0.5%
Residence Inn
$130.82
-0.8%
83.8%
0.0%
pts.
$156.16
-0.8%
Composite North American Limited-Service4 $110.81
-0.5%
78.0%
-0.1%
pts.
$142.07
-0.3%
North American - All5
$147.91
-0.5%
78.4%
-0.2%
pts.
$188.69
-0.2%
Comparable Systemwide North American Properties
Three Months Ended September 30, 2017 and September 30, 2016
REVPAR
Occupancy
Average Daily Rate
Brand
2017
vs. 2016*
2017
vs. 2016*
2017
vs. 2016*
JW Marriott
$157.22
-0.7%
76.8%
-0.4%
pts.
$204.83
-0.1%
The Ritz-Carlton
$242.43
1.8%
73.4%
0.0%
pts.
$330.37
1.8%
W Hotels
$241.20
-3.3%
84.6%
-0.6%
pts.
$284.93
-2.6%
Composite North American Luxury1
$220.67
-0.2%
78.2%
-0.3%
pts.
$282.23
0.2%
Marriott Hotels
$128.24
-0.3%
75.1%
-0.5%
pts.
$170.87
0.4%
Sheraton
$123.23
-0.9%
77.4%
-0.8%
pts.
$159.29
0.1%
Westin
$162.47
-0.4%
80.0%
-1.1%
pts.
$203.02
0.9%
Composite North American Upper Upscale2
$134.65
-0.3%
76.7%
-0.6%
pts.
$175.53
0.5%
North American Full-Service3
$143.65
-0.3%
76.9%
-0.6%
pts.
$186.88
0.5%
Courtyard
$108.12
0.8%
76.9%
0.5%
pts.
$140.53
0.1%
Residence Inn
$125.47
0.4%
83.6%
0.0%
pts.
$150.14
0.4%
Fairfield Inn & Suites
$89.87
2.5%
77.2%
1.7%
pts.
$116.37
0.3%
Composite North American Limited-Service4 $105.89
1.2%
79.0%
0.5%
pts.
$134.10
0.6%
North American - All5
$122.69
0.4%
78.0%
0.0%
pts.
$157.23
0.4%
* 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 Hotels, Autograph Collection Hotels, Delta Hotels, Gaylord Hotels, Le M?ridien, and 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. Systemwide also includes Aloft Hotels and Element Hotels.
5 Includes North American Full-Service and North American Limited-Service.
A-8
MARRIOTT INTERNATIONAL, INC.
COMBINED KEY LODGING STATISTICS
In Constant $
Comparable Company-Operated International Properties
Three Months Ended September 30, 2017 and September 30, 2016
REVPAR
Occupancy
Average Daily Rate
Region
2017
vs. 2016*
2017
vs. 2016*
2017
vs. 2016*
Greater China
$92.60
10.6%
75.1%
6.6%
pts.
$123.30
0.9%
Rest of Asia Pacific
$119.30
6.2%
77.0%
3.5%
pts.
$154.99
1.4%
Asia Pacific
$102.03
8.7%
75.8%
5.5%
pts.
$134.67
0.8%
Caribbean & Latin America
$109.80
0.0%
63.8%
1.7%
pts.
$172.08
-2.6%
Europe
$172.62
8.0%
79.9%
3.0%
pts.
$216.16
3.9%
Middle East & Africa
$84.98
-0.7%
62.9%
0.9%
pts.
$135.13
-2.2%
Other International1
$131.58
4.8%
71.2%
2.1%
pts.
$184.69
1.7%
International - All2
$116.77
6.5%
73.5%
3.8%
pts.
$158.85
1.0%
Worldwide3
$132.65
2.4%
76.0%
1.7%
pts.
$174.54
0.0%
Comparable Systemwide International Properties
Three Months Ended September 30, 2017 and September 30, 2016
REVPAR
Occupancy
Average Daily Rate
Region
2017
vs. 2016*
2017
vs. 2016*
2017
vs. 2016*
Greater China
$92.38
10.6%
74.3%
6.6%
pts.
$124.33
0.8%
Rest of Asia Pacific
$120.83
5.3%
76.0%
2.5%
pts.
$159.00
1.8%
Asia Pacific
$104.50
7.9%
75.0%
4.8%
pts.
$139.29
1.0%
Caribbean & Latin America
$90.89
1.9%
62.6%
1.9%
pts.
$145.10
-1.2%
Europe
$153.25
8.7%
79.0%
3.7%
pts.
$194.03
3.7%
Middle East & Africa
$82.23
-0.3%
62.9%
1.1%
pts.
$130.70
-2.1%
Other International1
$121.56
5.9%
71.3%
2.6%
pts.
$170.42
2.0%
International - All2
$114.12
6.7%
72.9%
3.6%
pts.
$156.46
1.5%
Worldwide3
$120.22
2.1%
76.6%
1.1%
pts.
$157.02
0.7%
* 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 Caribbean & Latin America, Europe, and Middle East & Africa.
2 Includes Asia Pacific and Other International.
3 Includes North American - All and International - All.
A-9
MARRIOTT INTERNATIONAL, INC.
COMBINED KEY LODGING STATISTICS
In Constant $
Comparable Company-Operated North American Properties
Nine Months Ended September 30, 2017 and September 30, 2016
REVPAR
Occupancy
Average Daily Rate
Brand
2017
vs. 2016*
2017
vs. 2016*
2017
vs. 2016*
JW Marriott
$176.63
2.5%
77.6%
1.0%
pts.
$227.64
1.2%
The Ritz-Carlton
$260.23
4.0%
74.6%
1.4%
pts.
$348.69
2.0%
W Hotels
$241.42
-1.1%
82.5%
0.0%
pts.
$292.55
-1.0%
Composite North American Luxury1
$243.40
2.0%
78.3%
0.9%
pts.
$310.99
0.8%
Marriott Hotels
$147.52
1.3%
77.4%
0.7%
pts.
$190.72
0.4%
Sheraton
$150.62
2.1%
78.1%
0.0%
pts.
$192.81
2.1%
Westin
$175.28
1.4%
78.2%
-0.2%
pts.
$224.07
1.8%
Composite North American Upper Upscale2
$150.48
1.7%
77.3%
0.3%
pts.
$194.79
1.3%
North American Full-Service3
$166.86
1.8%
77.4%
0.4%
pts.
$215.49
1.2%
Courtyard
$104.04
0.0%
74.0%
-0.3%
pts.
$140.62
0.4%
Residence Inn
$127.37
2.5%
81.0%
1.0%
pts.
$157.18
1.3%
Composite North American Limited-Service4 $109.32
0.9%
76.2%
0.0%
pts.
$143.55
0.9%
North American - All5
$148.99
1.6%
77.0%
0.3%
pts.
$193.40
1.2%
Comparable Systemwide North American Properties
Nine Months Ended September 30, 2017 and September 30, 2016
REVPAR
Occupancy
Average Daily Rate
Brand
2017
vs. 2016*
2017
vs. 2016*
2017
vs. 2016*
JW Marriott
$177.45
2.8%
78.2%
0.9%
pts.
$227.03
1.6%
The Ritz-Carlton
$260.23
4.0%
74.6%
1.4%
pts.
$348.69
2.0%
W Hotels
$241.42
-1.1%
82.5%
0.0%
pts.
$292.55
-1.0%
Composite North American Luxury1
$231.91
2.3%
78.1%
0.9%
pts.
$297.12
1.0%
Marriott Hotels
$128.64
0.9%
74.0%
0.1%
pts.
$173.79
0.7%
Sheraton
$117.14
0.9%
74.4%
-0.1%
pts.
$157.40
1.1%
Westin
$161.25
1.7%
78.0%
-0.3%
pts.
$206.73
2.1%
Composite North American Upper Upscale2
$133.53
1.4%
75.0%
0.1%
pts.
$178.02
1.3%
North American Full-Service3
$143.82
1.5%
75.3%
0.2%
pts.
$190.94
1.3%
Courtyard
$104.03
0.7%
74.4%
0.2%
pts.
$139.85
0.4%
Residence Inn
$118.64
1.4%
80.4%
0.0%
pts.
$147.62
1.4%
Fairfield Inn & Suites
$82.86
2.8%
72.8%
1.4%
pts.
$113.84
0.8%
Composite North American Limited-Service4 $100.33
1.4%
75.8%
0.4%
pts.
$132.44
0.9%
North American - All5
$119.67
1.5%
75.6%
0.3%
pts.
$158.38
1.1%
* 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 Hotels, Autograph Collection Hotels, Delta Hotels, Gaylord Hotels, Le M?ridien, and 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. Systemwide also includes Aloft Hotels and Element Hotels.
5 Includes North American Full-Service and North American Limited-Service.
A-10
MARRIOTT INTERNATIONAL, INC.
COMBINED KEY LODGING STATISTICS
In Constant $
Comparable Company-Operated International Properties
Nine Months Ended September 30, 2017 and September 30, 2016
REVPAR
Occupancy
Average Daily Rate
Region
2017
vs. 2016*
2017
vs. 2016*
2017
vs. 2016*
Greater China
$87.22
8.2%
70.5%
6.7%
pts.
$123.64
-2.1%
Rest of Asia Pacific
$116.18
6.2%
75.0%
3.5%
pts.
$155.00
1.2%
Asia Pacific
$97.45
7.3%
72.1%
5.6%
pts.
$135.16
-1.0%
Caribbean & Latin America
$127.04
3.0%
65.7%
2.3%
pts.
$193.34
-0.6%
Europe
$141.85
7.3%
74.1%
2.2%
pts.
$191.47
4.0%
Middle East & Africa
$100.74
0.2%
64.4%
1.3%
pts.
$156.44
-1.8%
Other International1
$125.08
4.5%
69.3%
2.0%
pts.
$180.52
1.5%
International - All2
$111.22
5.7%
70.7%
3.8%
pts.
$157.32
0.1%
Worldwide3
$130.49
3.3%
73.9%
2.0%
pts.
$176.50
0.5%
Comparable Systemwide International Properties
Nine Months Ended September 30, 2017 and September 30, 2016
REVPAR
Occupancy
Average Daily Rate
Region
2017
vs. 2016*
2017
vs. 2016*
2017
vs. 2016*
Greater China
$87.34
8.4%
70.0%
6.7%
pts.
$124.80
-2.1%
Rest of Asia Pacific
$115.61
5.0%
74.2%
2.6%
pts.
$155.72
1.2%
Asia Pacific
$99.39
6.7%
71.8%
5.0%
pts.
$138.42
-0.7%
Caribbean & Latin America
$102.72
3.4%
63.9%
1.9%
pts.
$160.73
0.3%
Europe
$124.53
7.9%
72.0%
3.1%
pts.
$173.07
3.3%
Middle East & Africa
$96.97
0.5%
64.3%
1.5%
pts.
$150.86
-1.8%
Other International1
$112.71
5.3%
68.2%
2.4%
pts.
$165.18
1.6%
International - All2
$106.90
5.9%
69.8%
3.5%
pts.
$153.17
0.5%
Worldwide3
$115.99
2.6%
73.9%
1.2%
pts.
$156.96
0.9%
* The 2016 statistics used to calculate change from the 2016 period to the 2017 period assume Marriott’s acquisition of Starwood and Starwood’s sale of its timeshare business had been completed on January 1, 2015.
1 Includes Caribbean & Latin America, Europe, and Middle East & Africa.
2 Includes Asia Pacific and Other International.
3 Includes North American - All and International - All.
A-11
MARRIOTT INTERNATIONAL, INC.
NON-GAAP FINANCIAL MEASURES
ADJUSTED EBITDA/ COMBINED ADJUSTED EBITDA
($ in millions)
Fiscal Year 2017
First
Second
Third
Total
Quarter
Quarter
Quarter
Net income, as reported
$
365
$
414
$
392
$
1,171
Interest expense
70
73
73
216
Tax provision
120
178
188
486
Depreciation and amortization
65
85
68
218
Depreciation classified in reimbursed costs
32
33
28
93
Interest expense from unconsolidated joint ventures
1
3
2
6
Depreciation and amortization from unconsolidated joint ventures
11
10
10
31
EBITDA **
664
796
761
2,221
Gain on asset dispositions and impairments, net
-
(24)
-
(24)
Merger-related costs and charges
51
21
28
100
Share-based compensation (including share-based compensation reimbursed by third-party owners) 35
41
42
118
Adjusted EBITDA **
$
750
$
834
$
831
$
2,415
Increase over 2016 Adjusted EBITDA **
64%
69%
64%
66%
1
Increase over 2016 Combined Adjusted EBITDA **
10%
8%
7%
8%
2
Fiscal Year 2016
First
Second
Third
Fourth
Total
Quarter
Quarter
Quarter
Quarter
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-15 and A-16 for information about our reasons for providing these alternative financial measures and the limitations on their use.
1
Represents the percentage increase of Adjusted EBITDA of $2,415 million for the first three quarters of 2017 over Adjusted EBITDA of $1,458 million for the first three quarters of 2016.
2
Represents the percentage increase of Adjusted EBITDA of $2,415 million for the first three quarters of 2017 over Combined Adjusted EBITDA of $2,231 million for the first three quarters of 2016.
A-12
MARRIOTT INTERNATIONAL, INC.
NON-GAAP FINANCIAL MEASURES
ADJUSTED EBITDA FORECAST
FOURTH QUARTER 2017
($ in millions)
Range
Estimated
Adjusted
Fourth Quarter 2017
Fourth Quarter 2016 2**
Net income 1
$
358
$
367
Interest expense
74
74
Tax provision
178
184
Depreciation and amortization
70
70
Depreciation classified in reimbursed costs
32
32
Interest expense from unconsolidated joint ventures
4
4
Depreciation and amortization from unconsolidated joint ventures
9
9
EBITDA **
725
740
Share-based compensation (including share-based compensation reimbursed by third-party owners) 37
37
Adjusted EBITDA **
$
762
$
777
$
756
Increase over 2016 Adjusted EBITDA **
1%
3%
** Denotes non-GAAP financial measures.
See pages A-15 and A-16 for information about our reasons for providing these alternative financial measures and the limitations on their use.
1Estimated 2017 net income excludes merger-related costs and charges, which the company cannot accurately forecast, but expects will be significant on a full-year basis.
2See page A-12 for a reconciliation of Adjusted EBITDA.
A-13
MARRIOTT INTERNATIONAL, INC.
NON-GAAP FINANCIAL MEASURES
ADJUSTED EBITDA FORECAST
FULL YEAR 2017
($ in millions)
Range
Estimated
Combined
Fiscal Year 2017
Fiscal Year 2016 2 **
Net income 1
$
1,602
$
1,611
Interest expense
290
290
Tax provision
691
697
Depreciation and amortization
288
288
Depreciation classified in reimbursed costs
125
125
Interest expense from unconsolidated joint ventures
10
10
Depreciation and amortization from unconsolidated joint ventures
40
40
EBITDA **
3,046
3,061
Gain on asset dispositions and impairments, net
(24)
(24)
Share-based compensation (including share-based compensation reimbursed by third-party owners) 155
155
Adjusted EBITDA **
$
3,177
$
3,192
$
2,987
Increase over 2016 Combined Adjusted EBITDA **
6%
7%
** Denotes non-GAAP financial measures.
See pages A-15 and A-16 for information about our reasons for providing these alternative financial measures and the limitations on their use.
1Estimated 2017 net income excludes merger-related costs and charges, which the company cannot accurately forecast, but expects will be significant on a full-year basis.
2See page A-12 for a reconciliation of Combined Adjusted EBITDA.
A-14

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 Adjustments. Management evaluates certain non-GAAP measures that exclude transaction and transition costs and purchase accounting adjustments associated with the Starwood merger because those non-GAAP measures allow for period-over period comparisons of our ongoing operations before the impact of these items. These non-GAAP measures, which are reconciled to the comparable GAAP measures on pages A-3 and A-4, include adjusted owned, leased, and other revenue, adjusted owned, leased, and other-direct expenses, adjusted depreciation, amortization, and other expenses, adjusted general, administrative, and other expenses, adjusted provision for income taxes, and as a result of the adjustments, adjusted total revenues, adjusted total expenses, adjusted operating income, adjusted income before taxes, adjusted net income, and adjusted EPS. 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-3, A-4, A-12, A-13, and A-14 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 the 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 on the Credit Facility and issuance of 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 actually have been had the Transactions been completed on the date indicated. In addition, the combined financial information does not purport to project the future operating results of the combined company.

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 presented on the previous pages.

2016
(in millions)
First Quarter
Second Quarter
Third Quarter
Year-to-Date
Total
Pro forma net income under Article 11
$
291
$
209
$
179
$
679
Merger-related costs and charges
3
16
220
239
Income taxes 1
(4)
17
(55)
(42)
Loss on cumulative translation adjustment
--
91
--
91
Combined net income
$
290
$
333
$
344
$
967
1
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.

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, 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.

A-15

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 excluded share-based compensation expense in all periods presented in order to address 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.

A-16

View original content with multimedia:http://www.prnewswire.com/news-releases/marriott-international-reports-third-quarter-2017-results-highlights-300551341.html

SOURCE Marriott International, Inc.

https://rt.prnewswire.com/rt.gif?NewsItemId=PH37388&Transmission_Id=201711071630PR_NEWS_USPR_____PH37388&DateId=20171107