Marriott International Reports Fourth Quarter 2019 Results

<< Back
Feb 26, 2020

Marriott International Reports Fourth Quarter 2019 Results

BETHESDA, Md., Feb. 26, 2020 /PRNewswire/ --

HIGHLIGHTS

  • Fourth quarter reported diluted EPS totaled $0.85, compared to $0.92 in the year-ago quarter. Fourth quarter adjusted diluted EPS totaled $1.57, compared to fourth quarter 2018 adjusted diluted EPS of $1.44. Reported and adjusted diluted EPS for the 2019 fourth quarter included the benefit of $0.32 of asset sale gains, partially offset by $0.26 of asset impairments. Reported and adjusted diluted EPS for the 2018 fourth quarter included the benefit of $0.02 of asset sale gains;
  • Fourth quarter 2019 comparable systemwide constant dollar RevPAR rose 1.1 percent worldwide, with 1.5 percent growth outside North America and 0.9 percent growth in North America;
  • Worldwide comparable systemwide RevPAR index grew 240 basis points in the fourth quarter;
  • Fourth quarter reported net income totaled $279 million, a 12 percent decrease from prior year results. Fourth quarter adjusted net income totaled $517 million, a 4 percent increase from prior year adjusted results;
  • Adjusted EBITDA totaled $901 million in the 2019 fourth quarter, a 4 percent increase compared to fourth quarter 2018 adjusted EBITDA;
  • Full year 2019 reported diluted EPS totaled $3.80, compared to $5.38 in the prior year. Full year 2019 adjusted diluted EPS totaled $6.00, compared to $6.21 in the prior year. Reported and adjusted diluted EPS for 2019 included the benefit of $0.33 of asset sale gains partially offset by $0.25 of asset impairments. Reported and adjusted diluted EPS for 2018 included the benefit of $0.66 and $0.65 of asset sale gains, respectively;
  • Full year 2019 comparable systemwide constant dollar RevPAR rose 1.3 percent worldwide, with 2.2 percent growth outside North America and 1.0 percent growth in North America;
  • The company added more than 78,000 rooms globally during 2019, including roughly 14,300 rooms converted from competitor brands and approximately 34,000 rooms in international markets;
  • At year-end 2019, Marriott's worldwide development pipeline totaled nearly 3,050 hotels and approximately 515,000 rooms, including roughly 23,000 rooms approved, but not yet subject to signed contracts. Over 220,000 rooms in the pipeline were under construction at the end of 2019;
  • For full year 2019, Marriott repurchased 17.3 million shares of the company's common stock for $2.3 billion, including 3.1 million shares for $432 million in the fourth quarter.

Marriott International, Inc. (NASDAQ: MAR) today reported solid fourth quarter 2019 results.

Arne M. Sorenson, president and chief executive officer of Marriott International, said, "We are pleased with our performance in 2019.  We grew rooms nearly 5 percent, achieved record RevPAR index gains, drove higher guest satisfaction scores, and maintained global hotel profit margins in a low RevPAR growth environment.  Our fee-driven, asset light business model and successful asset recycling continued to generate significant excess cash, allowing us to return a total of $2.9 billion to shareholders during the year.

"Marriott Bonvoy is driving market share at our hotels by leveraging our industry-leading distribution and powerful brand portfolio.  Loyalty members accounted for 52 percent of occupied rooms in 2019, a 250-basis point increase year over year.  Our worldwide systemwide RevPAR index for comparable hotels increased 200 basis points in 2019 and rose 240 basis points in the fourth quarter alone.  We are increasing our market share of rooms as well, with record signings in 2019 taking our development pipeline to approximately 515,000 rooms at year-end. 

"Our thoughts are with everyone impacted by the Coronavirus situation. I am particularly proud of our Asia Pacific team as they assist affected customers and fellow associates.  To date, the crisis has primarily affected our Asia Pacific region.

"Given the fluid nature of the situation, we have not reflected the impact from the outbreak in our base case outlook for this year.  For full year 2020, our base case outlook assumes comparable systemwide RevPAR on a constant dollar basis will be flat to up 2 percent, with RevPAR growth in North America around the middle of that range.  We assume net rooms additions of 5 to 5.25 percent in 2020. 

"Given those assumptions, our base case assumes gross fee revenues in 2020 could total $4 billion, a 5 percent increase compared to 2019.  However, assuming the current low occupancy rates in the Asia Pacific region continue, with no meaningful impact outside the region, we estimate the company could earn roughly $25 million in lower fee revenue per month, compared to our 2020 base case outlook."

Fourth Quarter 2019 Results
Marriott's reported operating income totaled $274 million in the 2019 fourth quarter, compared to 2018 fourth quarter reported operating income of $422 million.  Reported net income totaled $279 million in the 2019 fourth quarter, compared to 2018 fourth quarter reported net income of $317 million.  Reported diluted earnings per share (EPS) totaled $0.85 in the quarter, compared to reported diluted EPS of $0.92 in the year-ago quarter.

Adjusted operating income in the 2019 fourth quarter totaled $603 million, compared to 2018 fourth quarter adjusted operating income of $680 million.  Adjusted operating income in the 2019 fourth quarter includes impairment charges of $114 million in depreciation, amortization, and other expenses. 

Fourth quarter 2019 adjusted net income totaled $517 million, compared to 2018 fourth quarter adjusted net income of $497 million.  Adjusted diluted EPS in the fourth quarter totaled $1.57, compared to adjusted diluted EPS of $1.44 in the year-ago quarter.  Results for the 2019 fourth quarter include the benefit of $134 million pretax ($0.32 per share) of asset sale gains in gains and other income, net, partially offset by $114 million pretax ($0.26 per share) of impairment charges in depreciation, amortization, and other expenses.  Results for the 2018 fourth quarter include a $6 million pretax ($0.02 per share) asset sale gain in gains and other income, net.  Adjusted results exclude merger-related costs and charges, cost reimbursement revenue, and reimbursed expenses.  See page A-3 for the 2019 adjusted diluted EPS calculation.

Base management and franchise fees totaled $799 million in the 2019 fourth quarter, an 8 percent increase over base management and franchise fees of $743 million in the year-ago quarter.  The year-over-year increase in these fees is primarily attributable to rooms growth, RevPAR growth, and higher credit card branding fees.

Fourth quarter 2019 incentive management fees totaled $175 million, a 5 percent increase compared to incentive management fees of $167 million in the year-ago quarter.  The year-over-year increase largely reflects new units and higher net house profits at managed hotels in North America and Europe, partially offset by lower net house profits in Hong Kong.

Depreciation, amortization, and other expenses for the 2019 fourth quarter totaled $179 million, compared to $62 million in the year-ago quarter.  The year-over-year change largely reflects a $99 million impairment charge associated with a leased hotel in North America and a $15 million impairment charge related to the sale of a hotel in North America.

General, administrative, and other expenses for the 2019 fourth quarter totaled $267 million, compared to $242 million in the year-ago quarter.  The year-over-year change largely reflects an increase in development and legal costs, higher bad debt expense, and unfavorable foreign exchange. 

In the 2019 fourth quarter, the company incurred $14 million of expenses and recognized $7 million of insurance recoveries related to the data security incident it disclosed on November 30, 2018.  The expenses and insurance recoveries are reflected in either the reimbursed expenses or merger-related costs and charges lines of the Income Statement, both of which have been excluded from adjusted net income, adjusted EPS and adjusted EBITDA. 

Based on the ongoing proceeding involving the U.K. Information Commissioner's Office (ICO), in the fourth quarter the company also reduced to $65 million the non-tax deductible accrual recorded in the second quarter of 2019 for the fine proposed by ICO in July 2019 in relation to the data security incident.  The reduction of the accrual is reflected in the merger-related costs and charges line of the Income Statement, which has been excluded from adjusted net income, adjusted EPS and adjusted EBITDA. 

Gains and other income, net, totaled $138 million, compared to $3 million in the year-ago quarter.  Gains and other income, net, in the 2019 fourth quarter primarily reflects $134 million of gains associated with the sales of two hotels in North America.

Fourth Quarter 2019 Results Compared to November 5, 2019 Guidance
On November 5, 2019, the company estimated gross fee revenues would total $960 million to $970 million in the fourth quarter.  Actual gross fee revenues totaled $974 million in the quarter, largely reflecting higher than expected incentive management fees in North America.

The company estimated owned, leased, and other revenue, net of direct expenses, for the fourth quarter would total approximately $85 million.  Actual results of $92 million in the quarter were higher than estimated, largely due to higher termination fees.

The company estimated depreciation, amortization, and other expenses for the fourth quarter would total approximately $55 million.  Actual expenses of $179 million in the quarter were higher than estimated, largely due to asset impairments of $114 million and contract write-offs related to terminated hotels.

The company estimated general, administrative, and other expenses for the fourth quarter would total $250 million to $255 million.  Actual expenses of $267 million in the quarter were higher than estimated, largely due to legal costs, bad debt expenses, and foreign exchange.

Selected Performance Information
The company added 173 new properties (25,399 rooms) to its worldwide lodging portfolio during the 2019 fourth quarter, including W Ibiza in Spain, JW Marriott Maldives, and North Island, a Luxury Collection Resort, Seychelles.  Twenty-nine properties (6,400 rooms) exited the system during the quarter.  At year-end, Marriott's global lodging system totaled more than 7,300 properties and timeshare resorts, with roughly 1,380,000 rooms.

At year-end, the company's worldwide development pipeline totaled 3,039 properties with approximately 515,000 rooms, including 1,207 properties with over 220,000 rooms under construction and 133 properties with roughly 23,000 rooms approved for development, but not yet subject to signed contracts.

In the 2019 fourth quarter, worldwide comparable systemwide constant dollar RevPAR increased 1.1 percent (a 0.8 percent increase using actual dollars).  North American comparable systemwide constant dollar RevPAR increased 0.9 percent (a 0.9 percent increase using actual dollars), and international comparable systemwide constant dollar RevPAR increased 1.5 percent (a 0.6 percent increase using actual dollars) for the same period.

Worldwide comparable company-operated house profit margins increased 20 basis points in the fourth quarter, reflecting the impact of solid cost controls and synergies from the Starwood acquisition, partially offset by modest RevPAR growth and higher wages.  House profit margins for international comparable company-operated properties increased 30 basis points and North American comparable company-operated house profit margins increased 10 basis points in the fourth quarter.

For full year 2019, worldwide comparable systemwide constant dollar RevPAR increased 1.3 percent (a 0.4 percent increase using actual dollars).  North American comparable systemwide constant dollar RevPAR increased 1.0 percent (a 0.9 percent increase using actual dollars), and international comparable systemwide constant dollar RevPAR increased 2.2 percent (a 1.0 percent decrease using actual dollars) for the same period.

Worldwide comparable company-operated house profit margins were flat for full year 2019, largely due to solid cost controls and synergies from the Starwood acquisition, offset by modest RevPAR growth and higher wages.  House profit margins for comparable company-operated properties outside North America rose 20 basis points and North American comparable company-operated house profit margins decreased 20 basis points year over year.

Balance Sheet
At year-end, Marriott's total debt was $10.94 billion and cash balances totaled $225 million, compared to $9.347 billion in debt and $316 million of cash at year-end 2018.

Marriott Common Stock
Weighted average fully diluted shares outstanding used to calculate both reported and adjusted diluted EPS totaled 330.4 million in the 2019 fourth quarter, compared to 345.7 million shares in the year-ago quarter.

The company repurchased 3.1 million shares of common stock in the 2019 fourth quarter for $432 million at an average price of $140.00 per share.  For full year 2019, Marriott repurchased 17.3 million shares for $2.3 billion at an average price of $130.79 per share.  Year to date through February 25, the company has repurchased 1.0 million shares for $150 million at an average price of $145.42 per share.

Coronavirus
Due to the uncertainty regarding the duration and extent of the Coronavirus outbreak, Marriott cannot fully estimate the financial impact from the virus, which could be material to first quarter and full year 2020 results.  As such, the company is providing a base case outlook for the first quarter and full year 2020, which does not reflect any impact from the outbreak.

Assuming the current low occupancy rates in the Asia Pacific region continue, with no meaningful impact outside the region, Marriott estimates the company could earn roughly $25 million in lower fee revenue per month, compared to its 2020 base case outlook.  Room additions for the current year could also be delayed as a result of the Coronavirus outbreak.

2020 Base Case Outlook, Not Including Impact from the Coronavirus
The following base case outlook for first quarter and full year 2020 does not reflect any impact from the Coronavirus outbreak, merger-related costs and charges, cost reimbursement revenue, or reimbursed expenses, each of which the company cannot forecast with sufficient accuracy, and which may be significant.  The base case outlook for first quarter and full year 2020 does not reflect any additional asset sales that may occur during the year. 

For the 2020 first quarter, Marriott assumes comparable systemwide RevPAR on a constant dollar basis will increase 1 to 2 percent worldwide and in North America.

The company assumes first quarter 2020 gross fee revenues will total $940 million to $950 million, a 5 to 6 percent increase over first quarter 2019 gross fee revenues of $895 million.  The company anticipates first quarter 2020 incentive management fees will decrease slightly compared to first quarter 2019 incentive management fees of $163 million.  

The company assumes first quarter 2020 general, administrative, and other expenses could total $230 million to $234 million.

Marriott assumes first quarter 2020 adjusted EBITDA could total $853 million to $867 million, a 4 to 6 percent increase over first quarter 2019 adjusted EBITDA of $821 million.  See page A-12 for the adjusted EBITDA calculation.

For the full year 2020, Marriott assumes comparable systemwide RevPAR growth on a constant dollar basis will be flat to up 2 percent worldwide, with RevPAR growth in North America around the middle of that range.

Marriott assumes global room growth of 5.0 to 5.25 percent, net of 1 to 1.5 percent deletions for full year 2020.

The company assumes full year 2020 gross fee revenues will total $3,960 million to $4,040 million, a 4 to 6 percent increase over 2019 gross fee revenues of $3,823 million, including roughly $10 million of unfavorable foreign exchange.  Full year 2020 estimated gross fee revenues include $630 million to $640 million of other franchise fees, a roughly 10 percent increase over other franchise fees for full year 2019.  Other franchise fees include application fees, relicensing fees, timeshare licensing fees, credit card branding fees, and residential and other branding fees.

Marriott anticipates full year 2020 owned, leased, and other revenue, net of direct expenses, could total $295 million to $305 million.  

The company assumes full year 2020 general, administrative, and other expenses could total $950 million to $960 million, a 1 to 2 percent increase from full year 2019 expenses of $938 million

The company anticipates full year 2020 diluted EPS could total $6.30 to $6.53.  Full year 2019 adjusted diluted EPS totaled $6.00.  Full year adjusted 2019 results include the benefit of $143 million pre-tax ($0.33 per share) of asset sale gains in gains and other income, net, partially offset by asset impairments of $114 million pre-tax ($0.25 per share) in depreciation, amortization, and other expenses.  See page A-3 for the 2019 adjusted diluted EPS calculation.

Marriott assumes full year 2020 adjusted EBITDA could total $3,700 million to $3,800 million, a 3 to 6 percent increase over 2019 adjusted EBITDA of $3,575 million.  See page A-13 for the adjusted EBITDA calculation.


First Quarter 20201

Full Year 20201

Gross fee revenues

$940 million to $950 million

$3,960 million to $4,040 million

Contract investment 
     amortization

Approx. $18 million

Approx. $75 million

Owned, leased and other
     revenue, net of direct 
     expenses

Approx. $50 million

$295 million to $305 million

Depreciation, amortization,
      and other expenses

Approx. $53 million

Approx. $225 million

General, administrative, 
     and other expenses

$230 million to $234 million

$950 million to $960 million

Operating income

$685 million to $699 million

$2,995 million to $3,095 million

Gains and other income

Approx. $2 million

Approx. $10 million

Net interest expense

Approx. $85 million

Approx. $360 million

Equity in earnings (losses)

Approx. $5 million

Approx. $15 million

Earnings per share - diluted

$1.47 to $1.50

$6.30 to $6.53

Effective tax rate

20.8 percent

23.3 percent





1The base case outlook provided in this table does not reflect any impact from the Coronavirus outbreak, merger-related costs and charges, cost reimbursement revenue, or reimbursed expenses, each of which the company cannot forecast with sufficient accuracy, and which may be significant.  It also does not reflect any additional asset sales that may occur during the year. 

The company assumes investment spending in 2020 will total approximately $700 million to $800 million, including approximately $200 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.  The company estimates nearly 40 percent of its 2020 investment spending will be reimbursed or recycled over time.  

In the first quarter, the company sold a hotel in North America for $268 million subject to a long-term management agreement.  Assuming the level of investment spending noted above, no additional asset sales, and no impact from the Coronavirus, cash returned to shareholders through share repurchases and dividends could total more than $2.4 billion for full year 2020.

Marriott International, Inc. (NASDAQ: MAR) will conduct its quarterly earnings review for the investment community and news media on Thursday, February 27, 2020 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.  A replay will be available at that same website until February 27, 2021.

The telephone dial-in number for the conference call is 706-679-3455 and the conference ID is 1548644.  A telephone replay of the conference call will be available from 2:00 p.m. ET, Thursday, February 27, 2020 until 8:00 p.m. ET, Thursday, March 5, 2020.  To access the replay, call 404-537-3406.  The conference ID for the recording is 1548644.

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; estimates about impact to fee revenue from the Coronavirus outbreak as compared to our 2020 base case outlook; 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; the impact of the Coronavirus outbreak, whether in Greater China, elsewhere in our Asia Pacific region or globally; 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 experience adverse effects from the data security incident; changes in tax laws in countries in which we earn significant income; and changes to our estimates of the impact of new accounting standards.  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 26, 2020.  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 based in Bethesda, Maryland, USA, and encompasses a portfolio of more than 7,300 properties under 30 leading brands spanning 134 countries and territories. Marriott operates and franchises hotels and licenses vacation ownership resorts all around the world. The company offers Marriott Bonvoy™, its highly-awarded travel program.  For more information, please visit our website at www.marriott.com, and for the latest company news, visit www.marriottnewscenter.com.  In addition, connect with us on Facebook and @MarriottIntl on Twitter and Instagram.

IRPR#1

Tables follow

 

MARRIOTT INTERNATIONAL, INC.

PRESS RELEASE SCHEDULES

TABLE OF CONTENTS

QUARTER 4, 2019

































































Consolidated Statements of Income - As Reported









A-1

















Non-GAAP Financial Measures












A-3

















Total Lodging Products














A-4

















Key Lodging Statistics














A-7

















Adjusted EBITDA














A-11

















Adjusted EBITDA Forecast - First Quarter 2020










A-12

















Adjusted EBITDA Forecast - Full Year 2020










A-13

















Explanation of Non-GAAP Financial and Performance Measures






A-14

 


MARRIOTT INTERNATIONAL, INC.


CONSOLIDATED STATEMENTS OF INCOME - AS REPORTED


FOURTH QUARTER 2019 AND 2018


(in millions except per share amounts, unaudited)




















As Reported


As Reported


Percent




Three Months Ended


Three Months Ended


Better/(Worse)




December 31, 2019


December 31, 2018


Reported 2019 vs. 2018


REVENUES








Base management fees


$                                           298


$                                           288


3


Franchise fees 1


501


455


10


Incentive management fees


175


167


5


Gross Fee Revenues


974


910


7


Contract investment amortization 2


(17)


(14)


(21)


Net Fee Revenues


957


896


7


Owned, leased, and other revenue 3


426


409


4


Cost reimbursement revenue 4


3,988


3,984


-


  Total Revenues


5,371


5,289


2










OPERATING COSTS AND EXPENSES








Owned, leased, and other - direct 5


334


321


(4)


Depreciation, amortization, and other 6


179


62


(189)


General, administrative, and other 7


267


242


(10)


Merger-related costs and charges (credits)


(53)


91


158


Reimbursed expenses 4


4,370


4,151


(5)


  Total Expenses


5,097


4,867


(5)










OPERATING INCOME


274


422


(35)










Gains and other income, net 8


138


3


4,500


Interest expense


(95)


(94)


(1)


Interest income 


6


6


-


Equity in earnings 9


3


8


(63)










INCOME BEFORE INCOME TAXES


326


345


(6)










Provision for income taxes


(47)


(28)


(68)










NET INCOME


$                                           279


$                                           317


(12)










EARNINGS PER SHARE








  Earnings per share - basic


$                                          0.85


$                                          0.93


(9)


  Earnings per share - diluted


$                                          0.85


$                                          0.92


(8)










Basic Shares


327.7


341.9




Diluted Shares


330.4


345.7











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.







2

Contract investment amortization includes amortization of capitalized costs to obtain contracts with our owner and franchisee customers, and any related


impairments, accelerations, or write-offs.







3

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



4

Cost reimbursement revenue includes reimbursements from properties for property-level and centralized programs and services that we operate for the benefit of 


our hotel owners. Reimbursed expenses include costs incurred by Marriott for certain property-level operating expenses and centralized programs and services.

5

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

6

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.





7

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

8

Gains and other income, net includes gains and losses on the sale of real estate, the sale of joint venture interests and other investments, and adjustments from 


other equity investments.







9

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


FOURTH QUARTER YEAR-TO-DATE 2019 AND 2018


(in millions except per share amounts, unaudited)




















As Reported


As Reported10


Percent




Twelve Months Ended


Twelve Months Ended


Better/(Worse)




December 31, 2019


December 31, 2018


Reported 2019 vs. 2018


REVENUES








Base management fees


$                                        1,180


$                                        1,140


4


Franchise fees 1


2,006


1,849


8


Incentive management fees


637


649


(2)


Gross Fee Revenues


3,823


3,638


5


Contract investment amortization 2


(62)


(58)


(7)


Net Fee Revenues


3,761


3,580


5


Owned, leased, and other revenue 3


1,612


1,635


(1)


Cost reimbursement revenue 4


15,599


15,543


-


  Total Revenues


20,972


20,758


1










OPERATING COSTS AND EXPENSES








Owned, leased, and other - direct 5


1,316


1,306


(1)


Depreciation, amortization, and other 6


341


226


(51)


General, administrative, and other 7


938


927


(1)


Merger-related costs and charges


138


155


11


Reimbursed expenses 4


16,439


15,778


(4)


  Total Expenses


19,172


18,392


(4)










OPERATING INCOME


1,800


2,366


(24)










Gains and other income, net 8


154


194


(21)


Interest expense


(394)


(340)


(16)


Interest income 


26


22


18


Equity in earnings 9


13


103


(87)










INCOME BEFORE INCOME TAXES


1,599


2,345


(32)










Provision for income taxes


(326)


(438)


26










NET INCOME


$                                        1,273


$                                        1,907


(33)










EARNINGS PER SHARE








  Earnings per share - basic


$                                          3.83


$                                          5.45


(30)


  Earnings per share - diluted


$                                          3.80


$                                          5.38


(29)










Basic Shares


332.7


350.1




Diluted Shares


335.5


354.2











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.







2

Contract investment amortization includes amortization of capitalized costs to obtain contracts with our owner and franchisee customers, and any related


impairments, accelerations, or write-offs.







3

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



4

Cost reimbursement revenue includes reimbursements from properties for property-level and centralized programs and services that we operate for the benefit of 


our hotel owners. Reimbursed expensesinclude costs incurred by Marriott for certain property-level operating expenses and centralized programs and services.

5

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

6

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.





7

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

8

Gains and other income, net includes gains and losses on the sale of real estate, the sale of joint venture interests and other investments, and adjustments from 


other equity investments.







9

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



10

Reflects revised information for our 2018 first, second, and third quarters as presented in our 2018 Annual Report on Form 10-K.


A-2

 


MARRIOTT INTERNATIONAL, INC.



NON-GAAP FINANCIAL MEASURES



($ in millions except per share amounts)































The following table presents our reconciliations of Adjusted operating income, Adjusted operating income margin, Adjusted net income, Adjusted diluted EPS, 



and Adjusted net income and Adjusted diluted EPS excluding Asset impairments, Gain on asset dispositions, Gain on investee's property sales, 




and the income tax effect of these adjustments, to the most directly comparable GAAP measure. Adjusted total revenues is used in the determination of 



Adjusted operating income margin.











































Three Months Ended 


Twelve Months Ended








Percent






Percent




December 31,


December 31,


Better/


December 31,


December 31,


Better/




2019


2018


(Worse)


2019


2018 1


(Worse)



Total revenues, as reported

$            5,371


$            5,289




$           20,972


$           20,758





Less: Cost reimbursement revenue

(3,988)


(3,984)




(15,599)


(15,543)





Adjusted total revenues**

1,383


1,305




5,373


5,215



















Operating income, as reported

274


422




1,800


2,366





Less: Cost reimbursement revenue

(3,988)


(3,984)




(15,599)


(15,543)





Add: Reimbursed expenses

4,370


4,151




16,439


15,778





Add: Merger-related costs and charges (credits)

(53)


91




138


155





Adjusted operating income **

603


680


-11%


2,778


2,756


1%

















Operating income margin

5%


8%




9%


11%





Adjusted operating income margin **

44%


52%




52%


53%



















Net income, as reported

279


317




1,273


1,907





Less: Cost reimbursement revenue

(3,988)


(3,984)




(15,599)


(15,543)





Add: Reimbursed expenses

4,370


4,151




16,439


15,778





Add: Merger-related costs and charges (credits)

(53)


91




138


155





Less: Gain on sale of Avendra

-


-




-


(6)





Income tax effect of above adjustments

(91)


(83)




(239)


(117)





Add: U.S. Tax Cuts and Jobs Act of 2017

-


5




-


27





Adjusted net income **

517


497


4%


2,012


2,201


-9%

















Add: Asset impairments

114


-




114


-





Less: Gain on asset dispositions

(134)


(6)




(143)


(183)





Less: Gain on investee's property sales

-


-




-


(65)





Income tax effect of above adjustments

1


(2)




3


15





Adjusted net income, excluding Asset
impairments, Gain on asset dispositions,
Gain on investee's property sales, and the
income tax effect of these adjustments **

$              498


$               489


2%


$            1,986


$            1,968


1%

















Diluted EPS, as reported

$             0.85


$              0.92




$              3.80


$              5.38





Adjusted Diluted EPS**

$             1.57


$              1.44


9%


$              6.00


$              6.21


-3%



Adjusted Diluted EPS, excluding Asset
impairments, Gain on asset dispositions,
Gain on investee's property sales, and the
income tax effect of these adjustments **

$             1.51


$              1.42


6%


$              5.92


$              5.56


6%






























**

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.















1

Reflects revised information for our 2018 first, second, and third quarters as presented in our 2018 Annual Report on Form 10-K.


A-3

 

MARRIOTT INTERNATIONAL, INC.


TOTAL LODGING PRODUCTS


As of December 31, 2019











North America

Total International

Total Worldwide



Units

Rooms

Units

Rooms

Units

Rooms

 Managed 

759

239,705

1,231

318,946

1,990

558,651

 Marriott Hotels 

119

64,295

173

50,854

292

115,149

 Marriott Hotels Serviced Apartments 

-

-

1

154

1

154

 Sheraton 

27

22,807

190

64,641

217

87,448

 Courtyard 

233

37,020

101

21,765

334

58,785

 Westin 

43

23,638

71

21,779

114

45,417

 JW Marriott 

18

11,210

59

22,089

77

33,299

 Renaissance 

28

12,018

59

18,168

87

30,186

 The Ritz-Carlton 

38

10,981

60

15,640

98

26,621

 The Ritz-Carlton Serviced Apartments 

-

-

5

697

5

697

 Le Méridien 

3

570

74

20,664

77

21,234

 Four Points 

1

134

78

20,129

79

20,263

 Residence Inn 

108

16,498

5

565

113

17,063

 W Hotels 

24

6,893

30

7,470

54

14,363

 The Luxury Collection 

5

2,234

52

9,426

57

11,660

 Gaylord Hotels 

6

9,918

-

-

6

9,918

 St. Regis 

10

1,968

33

7,458

43

9,426

 St. Regis Serviced Apartments 

-

-

1

70

1

70

 Aloft 

1

330

38

8,936

39

9,266

 AC Hotels by Marriott 

4

679

57

6,918

61

7,597

 Delta Hotels 

25

6,770

1

360

26

7,130

 Fairfield by Marriott 

7

1,539

34

5,435

41

6,974

 SpringHill Suites 

30

4,896

-

-

30

4,896

 Marriott Executive Apartments 

-

-

31

4,523

31

4,523

 Autograph Collection 

7

1,970

15

2,406

22

4,376

 Protea Hotels 

-

-

35

4,270

35

4,270

 EDITION 

4

1,209

6

1,287

10

2,496

 TownePlace Suites 

17

1,948

-

-

17

1,948

 Element 

1

180

7

1,421

8

1,601

 Tribute Portfolio 

-

-

6

784

6

784

 Moxy 

-

-

4

599

4

599

 Bulgari 

-

-

5

438

5

438

 Franchised 

4,477

645,704

628

127,174

5,105

772,878

 Courtyard 

801

106,768

83

15,368

884

122,136

 Fairfield by Marriott 

994

92,524

22

3,651

1,016

96,175

 Residence Inn 

724

86,348

11

1,322

735

87,670

 Marriott Hotels 

218

68,453

56

16,108

274

84,561

 Sheraton 

161

48,232

64

18,053

225

66,285

 SpringHill Suites 

426

49,137

-

-

426

49,137

 TownePlace Suites 

401

40,430

-

-

401

40,430

 Westin 

86

28,386

24

7,596

110

35,982

 Autograph Collection 

101

20,493

62

12,075

163

32,568

 Four Points 

158

23,713

52

8,267

210

31,980

 Renaissance 

57

16,262

28

7,691

85

23,953

 Aloft 

118

17,317

19

3,119

137

20,436

 AC Hotels by Marriott 

59

10,041

39

5,823

98

15,864

 Delta Hotels 

47

10,606

6

1,068

53

11,674

 Moxy 

21

4,149

37

7,461

58

11,610

 The Luxury Collection 

11

2,565

46

8,601

57

11,166

 Le Méridien 

18

3,910

15

4,057

33

7,967

 JW Marriott 

12

5,643

6

1,624

18

7,267

 Element 

41

5,605

2

293

43

5,898

 Tribute Portfolio 

21

4,445

13

1,383

34

5,828

 Protea Hotels 

-

-

38

2,921

38

2,921

 Design Hotels 

1

248

3

542

4

790

 The Ritz-Carlton 

1

429

-

-

1

429

 Bulgari 

-

-

1

85

1

85

 Marriott Executive Apartments 

-

-

1

66

1

66

A-4


 

MARRIOTT INTERNATIONAL, INC.

TOTAL LODGING PRODUCTS

As of December 31, 2019









North America

Total International

Total Worldwide


Units

Rooms

Units

Rooms

Units

Rooms

 Owned/Leased 

28

7,839

40

9,164

68

17,003

Courtyard

19

2,814

4

894

23

3,708

Marriott Hotels

3

1,664

5

1,631

8

3,295

Sheraton

1

1,000

4

1,830

5

2,830

W Hotels

2

779

2

665

4

1,444

Protea Hotels

-

-

7

1,168

7

1,168

Westin

1

1,073

-

-

1

1,073

Renaissance

1

317

2

505

3

822

Autograph Collection 1

-

-

7

705

7

705

The Ritz-Carlton

-

-

2

553

2

553

JW Marriott

-

-

1

496

1

496

The Luxury Collection 2

-

-

4

417

4

417

Residence Inn

1

192

1

140

2

332

St. Regis

-

-

1

160

1

160

 Residences 

60

6,557

35

3,311

95

9,868

The Ritz-Carlton Residences

36

4,421

11

938

47

5,359

W Residences

10

1,089

5

519

15

1,608

St. Regis Residences

7

585

7

598

14

1,183

Westin Residences

3

266

1

264

4

530

Bulgari Residences

-

-

4

448

4

448

The Luxury Collection Residences

2

151

3

112

5

263

Sheraton Residences

-

-

2

262

2

262

Marriott Hotels Residences

-

-

1

108

1

108

Autograph Collection Residences

-

-

1

62

1

62

EDITION Residences

2

45

-

-

2

45

 Timeshare* 

72

18,668

19

3,853

91

22,521

Grand Total

5,396

918,473

1,953

462,448

7,349

1,380,921








*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.

1Includes five properties acquired when we purchased Elegant Hotels Group in December 2019 which we currently intend to re-
brand under the Autograph Collection brand following the completion of planned renovations.

2 Includes two properties acquired when we purchased Elegant Hotels Group in December 2019 which we currently intend to re-
brand under The Luxury Collection brand following the completion of planned renovations.

A-5

 

MARRIOTT INTERNATIONAL, INC.

TOTAL LODGING PRODUCTS

As of December 31, 2019









North America

Total International

Total Worldwide

Total Systemwide

Units

Rooms

Units

Rooms

Units

Rooms

 Luxury 

182

50,202

344

79,791

526

129,993

JW Marriott

30

16,853

66

24,209

96

41,062

The Ritz-Carlton

39

11,410

62

16,193

101

27,603

The Ritz-Carlton Residences

36

4,421

11

938

47

5,359

The Ritz-Carlton Serviced Apartments

-

-

5

697

5

697

The Luxury Collection 1

16

4,799

102

18,444

118

23,243

The Luxury Collection Residences

2

151

3

112

5

263

W Hotels

26

7,672

32

8,135

58

15,807

W Residences

10

1,089

5

519

15

1,608

St. Regis

10

1,968

34

7,618

44

9,586

St. Regis Residences

7

585

7

598

14

1,183

St. Regis Serviced Apartments

-

-

1

70

1

70

EDITION

4

1,209

6

1,287

10

2,496

EDITION Residences

2

45

-

-

2

45

Bulgari

-

-

6

523

6

523

Bulgari Residences

-

-

4

448

4

448

 Full-Service 

977

347,341

916

258,339

1,893

605,680

Marriott Hotels

340

134,412

234

68,593

574

203,005

Marriott Hotels Residences

-

-

1

108

1

108

Marriott Hotels Serviced Apartments

-

-

1

154

1

154

Sheraton

189

72,039

258

84,524

447

156,563

Sheraton Residences

-

-

2

262

2

262

Westin

130

53,097

95

29,375

225

82,472

Westin Residences

3

266

1

264

4

530

Renaissance

86

28,597

89

26,364

175

54,961

Autograph Collection 2

108

22,463

84

15,186

192

37,649

Autograph Collection Residences

-

-

1

62

1

62

Le Méridien

21

4,480

89

24,721

110

29,201

Delta Hotels

72

17,376

7

1,428

79

18,804

Gaylord Hotels

6

9,918

-

-

6

9,918

Tribute Portfolio

21

4,445

19

2,167

40

6,612

Marriott Executive Apartments

-

-

32

4,589

32

4,589

Design Hotels

1

248

3

542

4

790

 Limited-Service 

4,165

502,262

674

120,465

4,839

622,727

Courtyard

1,053

146,602

188

38,027

1,241

184,629

Residence Inn

833

103,038

17

2,027

850

105,065

Fairfield by Marriott

1,001

94,063

56

9,086

1,057

103,149

SpringHill Suites

456

54,033

-

-

456

54,033

Four Points

159

23,847

130

28,396

289

52,243

TownePlace Suites

418

42,378

-

-

418

42,378

Aloft

119

17,647

57

12,055

176

29,702

AC Hotels by Marriott

63

10,720

96

12,741

159

23,461

Moxy

21

4,149

41

8,060

62

12,209

Protea Hotels

-

-

80

8,359

80

8,359

Element

42

5,785

9

1,714

51

7,499

 Timeshare* 

72

18,668

19

3,853

91

22,521

 Grand Total 

5,396

918,473

1,953

462,448

7,349

1,380,921








*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.

1 Includes two properties acquired when we purchased Elegant Hotels Group in December 2019 which we currently intend to re-
brand under The Luxury Collection brand following the completion of planned renovations.

2Includes five properties acquired when we purchased Elegant Hotels Group in December 2019 which we currently intend to re-
brand under the Autograph Collection brand following the completion of planned renovations.

A-6

 

MARRIOTT INTERNATIONAL, INC.

KEY LODGING STATISTICS

In Constant $












Comparable Company-Operated North American Properties














Three Months Ended December 31, 2019 and December 31, 2018



REVPAR


Occupancy


Average Daily Rate

Brand


2019

 vs. 2018


2019

 vs. 2018


2019

 vs. 2018

JW Marriott


$205.28

1.8%


74.4%

0.1%

pts.


$276.03

1.6%

The Ritz-Carlton


$288.59

5.8%


72.9%

2.0%

pts.


$395.84

2.9%

W Hotels


$257.32

1.9%


78.3%

1.1%

pts.


$328.62

0.5%

Composite North American Luxury1


$274.02

3.0%


75.3%

1.9%

pts.


$364.00

0.4%

Marriott Hotels


$150.01

2.3%


72.9%

1.0%

pts.


$205.72

0.9%

Sheraton


$151.32

1.8%


74.5%

2.0%

pts.


$203.20

-0.9%

Westin


$153.53

1.8%


73.3%

1.2%

pts.


$209.50

0.1%

Composite North American Upper Upscale2

$149.20

2.3%


73.4%

1.1%

pts.


$203.26

0.7%

North American Full-Service3 


$171.23

2.5%


73.7%

1.3%

pts.


$232.23

0.7%

Courtyard


$94.99

-1.0%


67.8%

-0.6%

pts.


$140.19

-0.1%

Residence Inn


$117.41

0.1%


75.2%

-0.4%

pts.


$156.19

0.6%

Composite North American Limited-Service4

$101.51

-0.3%


70.4%

-0.5%

pts.


$144.21

0.3%

North American - All5


$148.72

1.9%


72.7%

0.7%

pts.


$204.69

0.9%























Comparable Systemwide North American Properties














Three Months Ended December 31, 2019 and December 31, 2018



REVPAR


Occupancy


Average Daily Rate

Brand


2019

 vs. 2018


2019

 vs. 2018


2019

 vs. 2018

JW Marriott


$190.67

-0.1%


72.8%

-1.2%

pts.


$261.73

1.6%

The Ritz-Carlton


$287.32

5.3%


73.0%

1.8%

pts.


$393.59

2.8%

W Hotels


$257.32

1.9%


78.3%

1.1%

pts.


$328.62

0.5%

Composite North American Luxury1


$255.86

2.2%


74.7%

1.1%

pts.


$342.64

0.6%

Marriott Hotels


$124.63

1.9%


69.2%

0.8%

pts.


$180.06

0.7%

Sheraton


$108.68

1.5%


68.8%

1.7%

pts.


$158.00

-0.9%

Westin


$142.54

2.5%


72.4%

1.9%

pts.


$196.91

-0.3%

Composite North American Upper Upscale2

$128.70

2.4%


70.5%

1.2%

pts.


$182.53

0.7%

North American Full-Service3 


$141.60

2.4%


70.9%

1.2%

pts.


$199.63

0.7%

Courtyard


$93.61

-1.1%


67.9%

-0.4%

pts.


$137.83

-0.5%

Residence Inn


$108.30

-0.9%


74.7%

-0.6%

pts.


$145.07

-0.1%

Fairfield by Marriott


$74.76

-1.0%


66.5%

-0.3%

pts.


$112.41

-0.6%

Composite North American Limited-Service4

$91.64

-0.7%


69.7%

-0.1%

pts.


$131.50

-0.5%

North American - All5


$112.46

0.9%


70.2%

0.4%

pts.


$160.19

0.3%












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 by Marriott, SpringHill Suites, TownePlace Suites, Four Points, Aloft, Element, 

  and AC Hotels by Marriott.  Systemwide also includes Moxy.





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

A-7

 

MARRIOTT INTERNATIONAL, INC.

KEY LODGING STATISTICS

In Constant $












Comparable Company-Operated International Properties














Three Months Ended December 31, 2019 and December 31, 2018



REVPAR


Occupancy


Average Daily Rate

Region


2019

 vs. 2018


2019

 vs. 2018


2019

 vs. 2018

Greater China


$82.89

-5.4%