Marriott International Reports Robust 2006 Second Quarter; Significant REVPAR, Margin and Earnings Growth

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Jul 13, 2006

Marriott International Reports Robust 2006 Second Quarter; Significant REVPAR, Margin and Earnings Growth

WASHINGTON, July 13, 2006 /PRNewswire-FirstCall via COMTEX News Network/ -- Marriott International, Inc. (NYSE: MAR) today reported second quarter 2006 net income of $186 million, an increase of 35 percent, and diluted earnings per share (EPS) of $0.43, an increase of 48 percent.

Adjusted net income was $182 million, an increase of 17 percent, and adjusted diluted earnings per share was $0.42, an increase of 27 percent. The 2006 adjusted results exclude the impact of the company's synthetic fuel business. The 2005 adjusted results exclude the impact of the company's synthetic fuel business and a $94 million pre-tax charge ($0.13 per share after-tax) due to the non-cash write-off of management agreements in connection with the CTF transaction. The company's EPS guidance for the 2006 second quarter, disclosed on April 20, 2006, totaled $0.38 to $0.40 and similarly excluded the company's synthetic fuel business. All per share amounts are adjusted for the company's two-for-one stock split completed on June 9, 2006.

J.W. Marriott, Jr., Marriott International's chairman and chief executive officer, said, "Across our portfolio, and throughout our global system, business is exceptionally strong. Our hotels continue to thrive around the world, including such markets as New York, Boston, Atlanta, Miami, Chicago, Orlando, Los Angeles, Hong Kong and Santiago. Business transient and group demand in Western Europe was very strong in advance of this summer's World Cup competition.

"REVPAR and margin improvements, particularly at large downtown and convention hotels in North America, dramatically increased incentive fees during the quarter. Incentive fees at U.S. managed hotels increased 61 percent. Higher effective room rates resulted from both price increases and improving customer mix. Property-level house profit margins improved due to higher room rates, continued focus on efficiency improvements and higher catering, spa and other property level revenue.

"As important as our financial measures, customer satisfaction scores also rose during the quarter reflecting substantial renovation activity in recent years as well as the rollout of new bedding and technology-enabled service initiatives. Marriott's service initiatives focus on greater guest personalization, pre-arrival emails to help travelers with trip planning, and a virtual concierge that lets guests book spa appointments or golf tee times online anytime. We recently announced the rollout of new online airline check-in and boarding pass stations in Marriott Hotels & Resorts and Renaissance Hotels & Resorts lobbies. We continue to test new technology that further enhances guest experiences.

"Looking ahead, we expect operations to remain strong, with North American comparable company-operated REVPAR increasing 9 to 11 percent in 2006 and property-level house profit margins improving 225 to 275 basis points. We expect to open 25,000 new rooms this year, and our pipeline of hotel rooms under development has expanded to 80,000."

In the 2006 second quarter (12 week period from March 25, 2006 to June 16, 2006), REVPAR for the company's comparable worldwide systemwide properties increased 10.4 percent (10.7 percent using constant dollars). Systemwide comparable North American REVPAR increased 10.7 percent in the quarter, with average daily rates up 8.9 percent and occupancy up 1.2 percentage points, to 76.5 percent. REVPAR at the company's comparable systemwide North American full-service hotels (including Marriott Hotels & Resorts, The Ritz-Carlton, and Renaissance Hotels & Resorts) increased by 10.5 percent during the quarter. North American systemwide REVPAR for the company's comparable select- service and extended-stay brands (including Courtyard, Fairfield Inn, Residence Inn, TownePlace Suites, and SpringHill Suites) increased 11.0 percent. For the calendar quarter ended June 30, 2006, REVPAR for systemwide comparable North American properties increased 10.0 percent.

In the 2006 second quarter, international company-operated comparable REVPAR increased 9.6 percent (11.1 percent using constant dollars) including a 7.1 percent increase in average daily rates and a 1.7 percentage point improvement in occupancy to 75.5 percent. With strong demand from European and South American travelers, REVPAR in the Caribbean and Latin America increased nearly 18 percent (16 percent using constant dollars).

The company continued to experience strong demand in Asia and the United Kingdom while demand in Continental Europe improved in the second quarter, especially in the weeks leading up to the World Cup competition. REVPAR improved 3.1 percent (10.2 percent using constant dollars) in Germany and 4.0 percent (10.8 percent using constant dollars) in France.

Marriott added 33 new properties (4,853 rooms) to its worldwide lodging portfolio in the second quarter, including the elegant 338 room JW Marriott Hotel San Francisco. The company also opened a 227 room Marriott in Leicester, United Kingdom and five Courtyard hotels in Europe. Eleven properties (2,170 rooms) exited the system, including seven first generation Fairfield Inn properties (942 rooms). The Renaissance Hotel in Kapalua, Hawaii, was closed in the second quarter, pending conversion to a Ritz-Carlton Club resort. At quarter-end, the company's lodging group encompassed 2,789 hotels and timeshare resorts for a total of 507,130 rooms.

Interest in all of the company's brands continues to strengthen. Owners and franchisees are excited about what Marriott has done to refresh and reposition its brands. Marriott's worldwide pipeline of hotels under construction, awaiting conversion or approved for development increased to 80,000 rooms, up from 60,000 rooms in the year ago quarter and 75,000 rooms at the end of the 2006 first quarter. New in the pipeline are two exciting hotels under development, part of a venture designed to reinvigorate downtown Los Angeles. "L.A. Live," is a mixed-use development project that will include two hotels, luxury residences, a 7,000-seat live performance venue, a movie theatre, fine dining and much more. Marriott's role in the project includes an 877 room Marriott Hotel, a 123 room Ritz-Carlton Hotel and 430,000 square feet of Ritz-Carlton Residences.

MARRIOTT REVENUES totaled $2.9 billion in the 2006 second quarter, a 7 percent increase from the same period in 2005. Base and franchise fees rose 13 percent to $227 million as a result of unit growth and strong REVPAR improvement. Incentive fees climbed 48 percent to $77 million, driven by higher property-level house profit margins. Incentive fees in the 2006 second quarter were only $4 million, or 5 percent, shy of the fees earned in the same quarter of 2000, our peak year for earning incentive fees. In the 2006 second quarter, 56 percent of the company's managed properties paid incentive fees, compared to 42 percent in the year ago quarter.

House profit margins for North American comparable company-operated properties increased 300 basis points during the quarter, while house profit margins for worldwide company-operated properties grew 280 basis points. Higher room rates, strong food and beverage profits and continued cost efficiency measures drove strong margins. Property-level EBITDA margins for comparable North American company-operated properties, calculated as if wholly owned, increased 320 basis points.

Second quarter owned, leased, corporate housing and other revenue benefited from strong results from the owned and leased hotels the company acquired in 2005. Seven hotels were sold during the 2006 second quarter. The company retained long-term management agreements for six of the hotels and obtained a franchise agreement for one hotel. During the 2005 second quarter, owned, leased, corporate housing and other revenue included a $10 million fee for the termination of a hotel management agreement.

Contract sales for the company's timeshare, fractional and whole-ownership projects, including sales made by joint venture projects, surged 40 percent. Demand was particularly strong at the timeshare sequel project in Maui and new whole ownership joint venture projects under development in San Francisco and Kapalua. Approximately 95 percent of San Francisco's whole ownership project, under construction, was sold within a month of initiating sales. Demand for our other resorts also continues to be strong, particularly in Las Vegas, Aruba, Hawaii and Orlando.

Timeshare interval, fractional and whole ownership sales and services revenue declined one percent in the 2006 second quarter. Reported revenue in the 2006 quarter was constrained by projects in early stages of development which did not reach revenue reporting thresholds, offset somewhat by higher revenues from marketing-related villa rentals. In contrast, the 2005 quarter reflected very strong financially reportable sales at projects at or nearing sell-out.

Timeshare interval, fractional and whole ownership sales and services revenue, net of direct expenses, declined 36 percent reflecting substantial sales and marketing costs for new projects in the early stages of development. Under the new timeshare accounting rules, most sales and marketing costs are expensed as incurred.

In the second half of 2006, the company plans to begin sales at the Marriott timeshare project in St. Kitts, and the Ritz-Carlton fractional and whole ownership projects in Miami Beach, and Kauai, Hawaii.

LODGING OPERATING INCOME for the second quarter of 2006 was $252 million compared to $77 million in the second quarter of 2005. In the 2006 quarter, strong results reflected outstanding fee growth from managed and franchised hotels and increased profits from owned and leased properties that the company acquired in 2005. General and administrative expenses were down 50 percent, to $141 million, primarily due to 2005 non comparable items. General and administrative expenses in the 2006 second quarter included $9 million associated with the new accounting rules requiring the expensing of all share- based compensation, offset by $2 million of foreign exchange gains, $4 million favorable impact related to the reversal of a guarantee reserve at one hotel, and $6 million lower deferred compensation expense. In the 2005 second quarter, the company recorded a $94 million charge associated with the CTF transaction, primarily related to the non-cash write-off of management agreements, $29 million of incentives paid to owners and franchisees to accelerate the roll-out of the new bedding program, $6 million related to guarantees at two hotels and a $12 million payment made to retain a management agreement.

SYNTHETIC FUEL operations contributed approximately $0.01 per share of after-tax earnings during the 2006 second quarter, compared to $0.09 in the year ago quarter. Lower synthetic fuel earnings reflected the suspension of production in April and an estimated 38 percent phase out of the 2006 tax credits due to higher oil prices. Excluding the impact of our synthetic fuel operations, the effective tax rate was approximately 35.9 percent in the second quarter of 2006. The company expects the tax rate for 2006, excluding synthetic fuel operations, to approximate 34.9 percent.

GAINS AND OTHER INCOME totaled $48 million (or $45 million excluding synthetic fuel) and included a $40 million gain on the sale of timeshare mortgage notes, $9 million of net gains from the sale of real estate, $29 million of net gains from the sale of our interest in four joint ventures and $4 million of preferred returns and other income. These gains were partially offset by a $37 million non-cash charge to adjust the carrying amount of a straight line rent receivable associated with a land lease which is subject to a purchase option that is likely to be exercised. Prior year's second quarter gains included a $29 million gain on the sale of timeshare mortgage notes, $22 million of gains resulting from the sale or refinancing of real estate loans and $4 million of other gains.

INTEREST EXPENSE increased $9 million to $30 million, primarily due to higher commercial paper balances and higher interest rates. The company issued $350 million of new senior debt on June 14, 2006.

INTEREST INCOME totaled $12 million during the quarter, down from $25 million in the year ago quarter, primarily driven by loan repayments in 2005.

At the end of the 2006 second quarter, total debt was $1,561 million and cash balances totaled $364 million, compared to $1,737 million in total debt and $203 million of cash at the end of 2005. Consistent with the company's strategy, Marriott recycled capital and generated cash proceeds of $810 million in the second quarter. The proceeds included $242 million from the sale of timeshare notes, $201 million from the sale of the company's interests in four joint ventures (including the joint venture with Whitbread), $355 million from the sale of seven properties (including five hotels acquired in 2005 as part of the transaction with CTF Holdings Ltd), and $12 million from notes receivable repayments. The company used part of the proceeds to repurchase 10.5 million shares of common stock in the second quarter of 2006 at a cost of $380 million. Year-to-date, through July 10, 2006, the company repurchased 20.7 million shares of common stock at a cost of $733 million. The remaining share repurchase authorization, as of July 10, 2006 totaled 15 million shares.

OUTLOOK

The company expects North American company-operated REVPAR to increase 9 to 11 percent in 2006. Assuming a 225 to 275 basis point improvement in house profit margins and approximately 25,000 new room openings (gross), the company expects total fee revenue of $1,190 million to $1,210 million, an increase of 16 to 18 percent.

The company expects timeshare interval, fractional and whole ownership sales and services revenues, net of expenses, will decline approximately 3 percent in 2006, reflecting lower contract sales in 2005 resulting from limited inventory, and higher sales and marketing costs associated with new projects. With strong customer interest in the company's new projects, Marriott continues to expect contract sales (including joint venture sales) to increase roughly 40 percent in 2006.

General, administrative and other expenses are expected to decline approximately 12 to 14 percent in 2006 to $650 million to $660 million from $753 million in 2005. The comparison reflects the impact in 2005 of the $94 million charge associated with the CTF transaction and $30 million in bedding incentives. This 2006 guidance includes an approximately $37 million pre-tax impact of the FAS No. 123(R), requiring the expensing of all share-based compensation (including stock options).

Given these above items, the company estimates that lodging operating income will total $950 million to $980 million in 2006, an increase of 36 to 40 percent over 2005.

The company expects lodging gains and other income to total approximately $130 million in 2006 (including approximately $75 million in timeshare mortgage note sale gains).

Net interest expense is expected to total $80 million, an increase of $25 million, primarily driven by loan repayments in 2005 resulting in reduced interest income, as well as higher average debt levels and interest rates.

Given the continued high level of oil prices and the uncertainty surrounding the availability of 2006 tax credits, the company suspended production at its four synthetic fuel facilities in April 2006. The company cannot yet predict whether or when the facilities will restart production and, as such, is unable to provide guidance for 2006 earnings from the synthetic fuel business. The net book value of the four facilities at the end of the second quarter 2006 was $15 million.

The company estimates North American company-operated REVPAR will grow 8 to 10 percent in the third quarter of 2006, with house profit margin growth of 225 to 275 basis points.

Under the above assumptions, the company currently estimates the following results for the third quarter and full year 2006:


                                   Third Quarter 2006       Full Year 2006
    Total fee revenue               $250 million to       $1,190 million to
                                    $255 million          $1,210 million
    Owned, leased,
     corporate housing and
     other, net of direct expenses  Approx. $35 million   Approx. $170 million

    Timeshare interval, fractional
     and whole ownership sales and
     services,
     net of direct expenses         Approx. $65 million   Approx. $250 million

    General, administrative &
     other expenses(1)              Approx. $155 million $650 million to
                                                          $660 million

    Lodging operating income(1)     $195 million to       $950 million to
                                    $200 million          $980 million
    Gains
     (excluding synthetic fuel)     Approx.               Approx.
                                    $10 million           $130 million(2)

    Net interest expense(3)         Approx. $20 million   Approx $80 million

    Equity in earnings/(losses)     $0 to $5 million      $10 million to
                                                          $15 million
    Earnings per share from
     synthetic fuel                 No guidance           No guidance

    Earnings per share excluding
     synthetic fuel(1) (4)          $0.28 to $0.30        $1.52 to $1.57

    Effective tax rate excluding
     synthetic fuel                 34.9 percent          34.9 percent

    (1) Full year 2006 includes pre-tax expense of $37 million ($0.06 per
        share) associated with the adoption of FAS No. 123(R) ($9 million
        ($0.01 per share) for the 2006 third quarter).
    (2) Includes timeshare mortgage note sale gains.  Excludes $1 million loss
        reported year-to-date from the synthetic fuel business.
    (3) Includes interest expense, provision for loan losses and interest
        income.
    (4) Full year estimate is before the cumulative effect of a change in
        accounting principle associated with the new timeshare accounting
        rules.  The company recorded an after-tax charge of $105 million
        ($0.24 per share) in the 2006 first quarter.


The company expects investment spending in 2006 to total approximately $950 million to $1 billion, including $50 million for maintenance capital spending, $325 million to $350 million for capital expenditures and acquisitions, $125 million to $135 million for timeshare development, $75 million in new mezzanine financing and mortgage loans for hotels developed by owners and franchisees, and approximately $375 million to $390 million in equity and other investments (including timeshare equity investments).

Marriott International, Inc. (NYSE: MAR) will conduct its quarterly earnings review for the investment community and news media on Thursday, July 13, 2006 at 10 a.m. Eastern Time (ET). The conference call will be webcast simultaneously via Marriott's investor relations website at http://www.marriott.com/investor. To listen, click the "Recent Investor News" tab and then click on the quarterly conference call link. A replay will be available on the Internet until August 13, 2006.

The telephone dial-in number for the conference call is 913-981-5509. A telephone replay of the conference call will also be available by telephone from 1 p.m. ET, Thursday, July 13, 2006 until Thursday, July 20, 2006 at 8 p.m. ET. To access the recording, call 719-457-0820. The reservation number for the recording is 7343492.

Note: This press release contains "forward-looking statements" within the meaning of federal securities laws, including REVPAR, profit margin and earning trends; statements concerning the number of lodging properties we expect to add in future years; our expected 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 the duration and full extent of the current growth environment in both the economy and the lodging industry; supply and demand changes for hotel rooms, timeshare interval, fractional and whole ownership products, and corporate housing; competitive conditions in the lodging industry; relationships with clients and property owners; the availability of capital to finance hotel growth and refurbishment; and matters referred to in our most recent quarterly report on Form 10-Q under the heading "Risks Factors", any of which could cause actual results to differ materially from those expressed in or implied by the statements herein. These statements are made as of the date of this press release, and 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. (NYSE: MAR) is a leading lodging company with nearly 2,800 lodging properties in the United States and 67 other countries and territories. Marriott International operates and franchises hotels under the Marriott, JW Marriott, The Ritz-Carlton, Renaissance, Residence Inn, Courtyard, TownePlace Suites, Fairfield Inn, SpringHill Suites and Bulgari brand names; develops and operates vacation ownership resorts under the Marriott Vacation Club International, Horizons, The Ritz-Carlton Club and Grand Residences by Marriott brands; operates Marriott Executive Apartments; provides furnished corporate housing through its Marriott ExecuStay division; and operates conference centers. Marriott is also in the synthetic fuel business. The company is headquartered in Washington, D.C., and had approximately 143,000 employees at 2005 year-end. In fiscal year 2005, Marriott International reported sales from continuing operations of $11.6 billion. For more information or reservations, please visit our web site at www.marriott.com.

                                    IRPR#1


                         MARRIOTT INTERNATIONAL, INC.
                             Financial Highlights
                   (in millions, except per share amounts)

                               12 Weeks Ended      12 Weeks Ended
                                  June 16, 2006       June 17, 2005
                               -----------------   -----------------

                                                                       Percent
                                     Synthetic           Synthetic     Better/
                               Lodging Fuel  Total Lodging Fuel  Total (Worse)
                               ------------------- ---------------------------
    REVENUES
    Base management fees         $134    $-   $134   $123    $-    $123     9
    Franchise fees                 93     -     93     78     -      78    19
    Incentive management fees      77     -     77     52     -      52    48
    Owned, leased, corporate
     housing and other revenue
     (1)                          272     -    272    180     -     180    51
    Timeshare interval,
     fractional and whole
     ownership sales and
     services(2)                  331     -    331    335     -     335    (1)
    Cost reimbursements(3)      1,905     -  1,905  1,795     -   1,795     6
    Synthetic fuel                  -    39     39      -    98      98   (60)
                                -----  ----  -----  -----  ----   -----
       Total Revenues           2,812    39  2,851  2,563    98   2,661     7

    OPERATING COSTS AND
     EXPENSES
    Owned, leased and corporate
     housing - direct(4)          225     -    225    138     -     138   (63)
    Timeshare - direct            289     -    289    269     -     269    (7)
    Reimbursed costs            1,905     -  1,905  1,795     -   1,795    (6)
    General, administrative
     and other(5)                 141     -    141    284     -     284    50
    Synthetic fuel                  -    57     57      -   134     134    57
                                -----  ----  -----  -----  ----   -----
       Total Expenses           2,560    57  2,617  2,486   134   2,620     -
                                -----  ----  -----  -----  ----   -----

    OPERATING INCOME (LOSS)      $252  $(18)   234    $77  $(36)     41   471
                                =====  ====         =====  ====

    Gains and other income(6)                   48                   63   (24)
    Interest expense                           (30)                 (21)  (43)
    Interest income                             12                   25   (52)
    Reversal of provision for
     loan losses                                 1                    -     *
    Equity in earnings(7)                        6                    6     -
                                             -----                -----
    INCOME BEFORE INCOME TAXES,
     MINORITY INTEREST AND
     CUMULATIVE EFFECT OF CHANGE
     IN ACCOUNTING PRINCIPLE                   271                  114   138

    (Provision) benefit for
     income taxes                              (85)                  20     *
                                             -----                -----

    INCOME BEFORE MINORITY
     INTEREST AND CUMULATIVE
     EFFECT OF CHANGE IN
     ACCOUNTING PRINCIPLE                      186                  134    39

    Minority interest                            -                    4  (100)
                                             -----                -----

    INCOME BEFORE CUMULATIVE
     EFFECT OF CHANGE IN
     ACCOUNTING PRINCIPLE                      186                  138    35

    Cumulative effect of change
     in accounting principle,
     net of tax(8)                               -                    -     *
                                             -----                -----

    NET INCOME                                $186                 $138    35
                                             =====                =====

    EARNINGS PER SHARE - Basic(9)
       Earnings before
        cumulative effect of
        change in accounting
        principle                            $0.45                $0.31    45
       Losses from cumulative
        effect of change in
        accounting principle                   -                    -       *
                                             -----                -----
       Earnings per share                    $0.45                $0.31    45
                                             =====                =====

    EARNINGS PER SHARE -
     Diluted(9)
       Earnings before
        cumulative effect of
        change in accounting
        principle                            $0.43                $0.29    48
       Losses from cumulative
        effect of change in
        accounting principle                   -                    -       *
                                             -----                -----
       Earnings per share                    $0.43                $0.29    48
                                             =====                =====


    Basic Shares(9)                          412.5                440.9
    Diluted Shares(9)                        436.6                468.9



    *  Percent can not be calculated or is not meaningful.

    (1) Owned, leased, corporate housing and other revenue includes revenue
        from the properties we own or lease, revenue from our ExecuStay
        business, land rent income and other revenue.
    (2) Timeshare interval, fractional and whole ownership sales and services
        includes total timeshare revenue except for base fees, cost
        reimbursements, gains, and joint venture earnings (losses).
    (3) Cost reimbursements include reimbursements from lodging and timeshare
        properties for Marriott funded operating expenses.
    (4) Owned, leased and corporate housing - direct expenses include
        operating expenses related to our owned or leased hotels, including
        lease payments, pre-opening expenses and depreciation, plus expenses
        related to our ExecuStay business.
    (5) General, administrative and other expenses include the overhead costs
        allocated to our lodging business segments (including ExecuStay and
        timeshare) and our unallocated corporate overhead costs and general
        expenses.  Expenses in 2005 included a $94 million charge associated
        with the CTF transaction as well as charges totaling $29 million
        associated with our bedding incentive program.
    (6) Gains and other income includes gains on the sale of real estate, note
        sales, joint ventures and timeshare note receivable securitizations,
        income related to our cost method joint ventures, and the net earn-out
        payments associated with our synthetic fuel operations.  It is our
        understanding that discussions among rule-makers about the income
        statement presentation of gains from note securitizations have taken
        place in recent weeks and we are monitoring those developments.  If
        the Securities and Exchange Commission or other accounting rule
        making organizations change the required presentation of gains
        associated with note securitizations, we would adjust our
        presentation accordingly.
    (7) Equity in earnings includes our equity in earnings of unconsolidated
        joint ventures.
    (8) Cumulative effect of change in accounting principle, net of tax is
        associated with the adoption, in the 2006 first quarter, of Statement
        of Position 04-2, "Accounting for Real Estate Time-sharing
        Transactions" which was issued by the American Institute of Certified
        Public Accountants.
    (9) All share and per share amounts reflect the June 9, 2006, two-for-one
        stock split effected in the form of a stock dividend.


                         MARRIOTT INTERNATIONAL, INC.
                             Financial Highlights
                   (in millions, except per share amounts)


                               24 Weeks Ended      24 Weeks Ended
                                June 16, 2006       June 17, 2005
                               ---------------     ---------------
                                                                       Percent
                                     Synthetic           Synthetic     Better/
                               Lodging Fuel  Total Lodging Fuel  Total (Worse)
                               ------------------- ---------------------------
    REVENUES
    Base management fees         $261    $-   $261   $234    $-    $234    12
    Franchise fees                175     -    175    148     -     148    18
    Incentive management fees     136     -    136    102     -     102    33
    Owned, leased, corporate
     housing and other revenue
     (1)                          526     -    526    347     -     347    52
    Timeshare interval,
     fractional and whole
     ownership sales and
     services(2)                  637     -    637    681     -     681    (6)
    Cost reimbursements(3)      3,725     -  3,725  3,477     -   3,477     7
    Synthetic fuel                  -    96     96      -   206     206   (53)
                                -----  ----  -----  -----  ----   -----
       Total Revenues           5,460    96  5,556  4,989   206   5,195     7

    OPERATING COSTS AND
     EXPENSES
    Owned, leased and corporate
     housing - direct(4)          433     -    433    283     -     283   (53)
    Timeshare - direct            529     -    529    541     -     541     2
    Reimbursed costs            3,725     -  3,725  3,477     -   3,477    (7)
    General, administrative and
     other(5)                     291     -    291    408     -     408    29
    Synthetic fuel                  -   141    141      -   287     287    51
                                -----  ----  -----  -----  ----   -----
       Total Expenses           4,978   141  5,119  4,709   287   4,996    (2)
                                -----  ----  -----  -----  ----   -----

    OPERATING INCOME (LOSS)      $482  $(45)   437   $280  $(81)    199   120
                                =====  ====         =====  ====

    Gains and other income(6)                   82                   58    41
    Interest expense                           (57)                 (45)  (27)
    Interest income                             23                   52   (56)
    Reversal of provision for
     loan losses (provision for
     loan losses)                                3                  (11)    *
    Equity in earnings(7)                        3                    1   200
                                             -----                -----

    INCOME BEFORE INCOME TAXES,
     MINORITY INTEREST AND
     CUMULATIVE EFFECT OF
     CHANGE IN ACCOUNTING
     PRINCIPLE                                 491                  254    93

    (Provision) benefit for
     income taxes                             (141)                  15     *
                                             -----                -----

    INCOME BEFORE MINORITY
     INTEREST AND CUMULATIVE
     EFFECT OF CHANGE IN
     ACCOUNTING PRINCIPLE                      350                  269    30

    Minority interest                            6                   14   (57)
                                             -----                -----

    INCOME BEFORE CUMULATIVE
     EFFECT OF CHANGE IN
     ACCOUNTING PRINCIPLE                      356                  283    26

    Cumulative effect of change
     in accounting principle,
     net of tax(8)                            (105)                   -     *
                                             -----                -----

    NET INCOME                                $251                 $283   (11)
                                             =====                =====

    EARNINGS PER SHARE - Basic(9)
       Earnings before
        cumulative effect of
        change in accounting
        principle                            $0.86                $0.63    37
       Losses from cumulative
        effect of change in
        accounting principle                 (0.25)                 -       *
                                             -----                -----
       Earnings per share                    $0.61                $0.63    (3)
                                             =====                =====

    EARNINGS PER SHARE -
     Diluted(9)
       Earnings before
        cumulative effect of
        change in accounting
        principle                            $0.81                $0.60    35
       Losses from cumulative
        effect of change in
        accounting principle                 (0.24)                 -       *
                                             -----                -----
       Earnings per share                    $0.57                $0.60    (5)
                                             =====                =====


    Basic Shares(9)                          412.1                446.0
    Diluted Shares(9)                        438.9                475.5



    *  Percent can not be calculated or is not meaningful.

    (1) Owned, leased, corporate housing and other revenue includes revenue
        from the properties we own or lease, revenue from our ExecuStay
        business, land rent income and other revenue.
    (2) Timeshare interval, fractional and whole ownership sales and services
        includes total timeshare revenue except for base fees, cost
        reimbursements, gains, and joint venture earnings (losses).
    (3) Cost reimbursements include reimbursements from lodging and timeshare
        properties for Marriott funded operating expenses.
    (4) Owned, leased and corporate housing - direct expenses include
        operating expenses related to our owned or leased hotels, including
        lease payments, pre-opening expenses and depreciation, plus expenses
        related to our ExecuStay business.
    (5) General, administrative and other expenses include the overhead costs
        allocated to our lodging business segments (including ExecuStay and
        timeshare) and our unallocated corporate overhead costs and general
        expenses.  Expenses in 2005 included a $94 million charge associated
        with the CTF transaction as well as charges totaling $29 million
        associated with our bedding incentive program.
    (6) Gains and other income includes gains on the sale of real estate, note
        sales, joint ventures and timeshare note receivable securitizations,
        income related to our cost method joint ventures, and the net earn-out
        payments associated with our synthetic fuel operations.  It is our
        understanding that discussions among rule-makers about the income
        statement presentation of gains from note securitizations have taken
        place in recent weeks and we are monitoring those developments.  If
        the Securities and Exchange Commission or other accounting rule making
        organizations change the required presentation of gains associated
        with note securitizations, we would adjust our presentation
        accordingly.
    (7) Equity in earnings includes our equity in earnings of unconsolidated
        joint ventures.
    (8) Cumulative effect of change in accounting principle, net of tax is
        associated with the adoption, in the 2006 first quarter, of Statement
        of Position 04-2, "Accounting for Real Estate Time-sharing
        Transactions" which was issued by the American Institute of Certified
        Public Accountants.
    (9) All share and per share amounts reflect the June 9, 2006, two-for-one
        stock split effected in the form of a stock dividend.


                         Marriott International, Inc.
                              Business Segments
                               ($ in millions)

                                               Twelve Weeks Ended     Percent
                                        ----------------------------  Better/
                                        June 16, 2006  June 17, 2005  (Worse)
                                        -------------  -------------  -------

    REVENUES

    Full-Service                               $1,937       $1,751      11%
    Select-Service                                332          293      13%
    Extended-Stay                                 156          136      15%
    Timeshare                                     387          383       1%
                                               ------       ------
       Total lodging(1)                         2,812        2,563      10%
    Synthetic fuel                                 39           98     -60%
                                               ------       ------
       Total                                   $2,851       $2,661       7%
                                               ======       ======


    INCOME BEFORE CUMULATIVE EFFECT OF
     CHANGE IN ACCOUNTING PRINCIPLE

    Full-Service                                 $169          $30        *
    Select-Service                                 72           48      50%
    Extended-Stay                                  26           13     100%
    Timeshare                                      68           80     -15%
                                               ------       ------
       Total lodging financial results(1)         335          171      96%
    Synthetic fuel (after-tax)                      4           44     -91%
    Unallocated corporate expenses                (32)         (33)      3%
    Interest income, provision for loan
     losses and interest expense
     (excluding Synthetic Fuel)                   (19)           4        *
    Income taxes (excluding Synthetic
     Fuel)                                       (102)         (48)   -113%
                                               ------       ------
       Total                                     $186         $138      35%
                                               ======       ======

    * Calculated percentage is not meaningful.

    (1) We consider lodging revenues and lodging financial results to be
        meaningful indicators of our performance because they measure our
        growth in profitability as a lodging company and enable investors to
        compare the sales and results of our lodging operations to those of
        other lodging companies.


                         Marriott International, Inc.
                              Business Segments
                               ($ in millions)

                                           Twenty-Four Weeks Ended     Percent
                                         ----------------------------  Better/
                                         June 16, 2006  June 17, 2005  (Worse)
                                         -------------  -------------  -------

    REVENUES

    Full-Service                                $3,779        $3,380      12%
    Select-Service                                 638           565      13%
    Extended-Stay                                  300           262      15%
    Timeshare                                      743           782      -5%
                                                ------        ------
       Total lodging(1)                          5,460         4,989       9%
    Synthetic fuel                                  96           206     -53%
                                                ------        ------
       Total                                    $5,556        $5,195       7%
                                                ======        ======


    INCOME BEFORE CUMULATIVE EFFECT OF
     CHANGE IN ACCOUNTING PRINCIPLE

    Full-Service                                  $358          $146     145%
    Select-Service                                 117            81      44%
    Extended-Stay                                   46            29      59%
    Timeshare                                      119           143     -17%
                                                ------        ------
       Total lodging financial results(1)          640           399      60%
    Synthetic fuel (after-tax)                       7            62     -89%
    Unallocated corporate expenses                 (71)          (59)    -20%
    Interest income, provision for loan
     losses and interest expense
     (excluding Synthetic Fuel)                    (33)           (4)       *
    Income taxes (excluding Synthetic
     Fuel)                                        (187)         (115)    -63%
                                                ------        ------
       Total                                      $356          $283      26%
                                                ======        ======


    * Calculated percentage is not meaningful.

    (1) We consider lodging revenues and lodging financial results to be
        meaningful indicators of our performance because they measure our
        growth in profitability as a lodging company and enable investors to
        compare the sales and results of our lodging operations to those of
        other lodging companies.


                         MARRIOTT INTERNATIONAL, INC.

                             Total Lodging Products(1)
                     -------------------------------------------------------
                                Number of Properties  Number of Rooms/Suites
                                --------------------  ----------------------
                                              Change                  Change
                                               vs.                     vs.
                                 June   June   June   June     June    June
                                  16,    17,   17,     16,      17,     17,
    Brand                        2006   2005   2005   2006     2005    2005
    ------------------------    --------------------------------------------

    Full-Service Lodging
        Marriott Hotels &
         Resorts                   517    499    18  186,259  181,184   5,075
        The Ritz-Carlton            60     58     2   19,382   18,931     451
        Renaissance Hotels &
         Resorts                   136    136   -     48,188   48,129      59
        Bulgari Hotel & Resort       1      1   -         58       58     -
        Ramada International         2      4    (2)     332      724    (392)
    Select-Service Lodging
        Courtyard                  711    668    43  102,402   96,239   6,163
        Fairfield Inn              521    515     6   47,305   47,397     (92)
        SpringHill Suites          145    134    11   16,953   15,557   1,396
    Extended-Stay Lodging
        Residence Inn              500    475    25   60,050   56,458   3,592
        TownePlace Suites          123    118     5   12,389   11,935     454
        Marriott Executive
         Apartments                 17     16     1    2,804    2,809      (5)
    Timeshare(2)
        Marriott Vacation Club
         International              44     44   -      9,876    9,160     716
        The Ritz-Carlton Club        7      4     3      491      273     218
        Grand Residences by
         Marriott                    3      2     1      313      248      65
        Horizons by Marriott
         Vacation Club               2      2   -        328      328     -
                                 ------------------  ------------------------
    Total                        2,789  2,676   113  507,130  489,430  17,700
                                 ==================  ========================



                                            Number of Timeshare Interval,
                                            Fractional and Whole Ownership
                                                       Resorts(2)
                                          ------------------------------------
                                                                    In Active
                                                     Total(3)         Sales
                                                    ---------       ---------
    100% Company Developed
        Marriott Vacation Club International            43               23
        The Ritz-Carlton Club                            3                2
        Grand Residences by Marriott                     3                3
        Horizons by Marriott Vacation Club               2                2

    Joint Ventures
        Marriott Vacation Club International             1                1
        The Ritz-Carlton Club                            4                4
        Grand Residences by Marriott                   -                -
                                                    ------------------------

    Total                                               56               35
                                                    ========================

    (1) Total Lodging Products does not include the 2,005 Marriott ExecuStay
        corporate housing rental units.
    (2) Includes products in active sales which may not be ready for
        occupancy.
    (3) Includes resorts that are in active sales as well as those that are
        sold out.


                         MARRIOTT INTERNATIONAL, INC.
                            KEY LODGING STATISTICS

           Comparable Company-Operated North American Properties(1)
         ------------------------------------------------------------

                          Twelve Weeks Ended June 16, 2006 and June 17, 2005
                          --------------------------------------------------
                                                               Average Daily
                                   REVPAR        Occupancy          Rate
                                   ------        ---------     -------------
     Brand                        2006   vs.    2006   vs.         2006   vs.
                                        2005          2005               2005
     -------------------------------------------------------------------------
     Marriott Hotels &
      Resorts                  $129.97   9.3%   76.3%  0.1% pts. $170.31  9.2%
     The Ritz-Carlton(2)       $252.81  10.4%   77.7%  2.6% pts. $325.44  6.7%
     Renaissance Hotels &
      Resorts                  $129.89  15.7%   77.2%  3.1% pts. $168.34 11.1%
     Composite - Full-Service  $142.47  10.3%   76.6%  0.8% pts. $186.05  9.2%
     Residence Inn              $97.12   9.3%   82.0%  0.4% pts. $118.38  8.8%
     Courtyard                  $89.71  12.3%   75.2%  0.7% pts. $119.35 11.2%
     TownePlace Suites          $61.95  13.3%   79.4%  1.6% pts.  $78.00 11.0%
     SpringHill Suites          $81.47  12.9%   78.5%  0.7% pts. $103.79 11.9%
     Composite - Select-
      Service & Extended-Stay   $89.45  11.6%   77.5%  0.7% pts. $115.41 10.5%
     Composite - All           $119.92  10.7%   77.0%  0.8% pts. $155.80  9.6%


                 Comparable Systemwide North American Properties(1)
               ------------------------------------------------------

                          Twelve Weeks Ended June 16, 2006 and June 17, 2005
                          --------------------------------------------------
                                                               Average Daily
                                   REVPAR        Occupancy          Rate
                                   -----------------------------------------
     Brand                        2006   vs.    2006   vs.         2006   vs.
                                        2005          2005               2005
     ------------------------------------------------------------------------
     Marriott Hotels &
      Resorts                  $115.72   9.8%   74.1%  0.7% pts. $156.14  8.8%
     The Ritz-Carlton(2)       $252.81  10.4%   77.7%  2.6% pts. $325.44  6.7%
     Renaissance Hotels &
      Resorts                  $118.06  14.3%   75.8%  2.4% pts. $155.76 10.7%
     Composite - Full-Service  $124.91  10.5%   74.6%  1.1% pts. $167.46  8.9%
     Residence Inn              $93.12   9.2%   81.9%  0.8% pts. $113.72  8.2%
     Courtyard                  $89.45  11.3%   76.5%  1.2% pts. $116.91  9.7%
     Fairfield Inn              $60.85  12.4%   74.5%  2.2% pts.  $81.72  9.1%
     TownePlace Suites          $62.96  12.2%   79.4%  1.4% pts.  $79.25 10.3%
     SpringHill Suites          $77.65  12.5%   78.3%  1.8% pts.  $99.16 10.0%
     Composite - Select-
      Service & Extended-Stay   $82.05  11.0%   77.8%  1.3% pts. $105.52  9.1%
     Composite - All            $99.26  10.7%   76.5%  1.2% pts. $129.78  8.9%


     (1) Composite - All statistics include properties for the Marriott Hotels
         & Resorts, Renaissance Hotels & Resorts, The Ritz-Carlton, Courtyard,
         Residence Inn, TownePlace Suites, Fairfield Inn, and SpringHill
         Suites brands.  Full-Service composite statistics include properties
         for Marriott Hotels & Resorts, Renaissance Hotels & Resorts and The
         Ritz-Carlton. Select-Service and Extended-Stay composite statistics
         include properties for the Courtyard, Residence Inn, TownePlace
         Suites, Fairfield Inn and SpringHill Suites brands.
     (2) Statistics for The Ritz-Carlton are for March through May.


                         MARRIOTT INTERNATIONAL, INC.
                            KEY LODGING STATISTICS

           Comparable Company-Operated North American Properties(1)
         ------------------------------------------------------------

                     Twenty-Four Weeks Ended June 16, 2006 and June 17, 2005
                     -------------------------------------------------------
                                                               Average Daily
                                   REVPAR        Occupancy          Rate
                                   ------        ---------     -------------
     Brand                        2006   vs.    2006   vs.         2006   vs.
                                        2005          2005               2005
     -------------------------------------------------------------------------
     Marriott Hotels &
      Resorts                  $123.14   8.7%   72.8%  0.0% pts. $169.07  8.7%
     The Ritz-Carlton(2)       $242.14  10.8%   75.3%  3.5% pts. $321.50  5.6%
     Renaissance Hotels &
      Resorts                  $120.54  14.5%   74.1%  2.8% pts. $162.72 10.1%
     Composite - Full-Service  $132.89   9.8%   73.2%  0.7% pts. $181.45  8.7%
     Residence Inn              $93.31   9.8%   79.4%  0.2% pts. $117.56  9.4%
     Courtyard                  $85.45  11.9%   71.8%  0.4% pts. $119.10 11.2%
     TownePlace Suites          $58.88  13.2%   75.8%  1.4% pts.  $77.66 11.2%
     SpringHill Suites          $75.11  10.1%   73.2% -0.7% pts. $102.56 11.2%
     Composite - Select-
      Service & Extended-Stay   $85.27  11.3%   74.1%  0.4% pts. $115.00 10.7%
     Composite - All           $112.42  10.3%   73.6%  0.6% pts. $152.69  9.4%


              Comparable Systemwide North American Properties(1)
            ------------------------------------------------------

                     Twenty-Four Weeks Ended June 16, 2006 and June 17, 2005
                     -------------------------------------------------------
                                                               Average Daily
                                   REVPAR        Occupancy          Rate
                                   ------        ---------     -------------
     Brand                        2006   vs.    2006   vs.         2006   vs.
                                        2005          2005               2005
     -------------------------------------------------------------------------
     Marriott Hotels &
      Resorts                  $111.14   9.8%   71.4%  0.9% pts. $155.69  8.4%
     The Ritz-Carlton(2)       $242.14  10.8%   75.3%  3.5% pts. $321.50  5.6%
     Renaissance Hotels &
      Resorts                  $111.09  13.7%   72.8%  2.5% pts. $152.58  9.9%
     Composite - Full-Service  $118.18  10.4%   71.8%  1.3% pts. $164.59  8.5%
     Residence Inn              $89.79   9.6%   79.5%  1.1% pts. $112.88  8.2%
     Courtyard                  $84.63  11.3%   73.0%  1.1% pts. $115.95  9.6%
     Fairfield Inn              $56.59  13.2%   70.1%  2.4% pts.  $80.74  9.4%
     TownePlace Suites          $60.10  12.6%   76.1%  1.5% pts.  $78.99 10.5%
     SpringHill Suites          $73.33  12.7%   74.5%  1.8% pts.  $98.38 10.0%
     Composite - Select-
      Service & Extended-Stay   $77.87  11.2%   74.3%  1.4% pts. $104.74  9.1%
     Composite - All            $93.91  10.8%   73.3%  1.4% pts. $128.05  8.7%


     (1) Composite - All statistics include properties for the Marriott Hotels
         & Resorts, Renaissance Hotels & Resorts, The Ritz-Carlton, Courtyard,
         Residence Inn, TownePlace Suites, Fairfield Inn, and SpringHill
         Suites brands.  Full-Service composite statistics include properties
         for Marriott Hotels & Resorts, Renaissance Hotels & Resorts and The
         Ritz-Carlton. Select-Service and Extended-Stay composite statistics
         include properties for the Courtyard, Residence Inn, TownePlace
         Suites, Fairfield Inn and SpringHill Suites brands.
     (2) Statistics for The Ritz-Carlton are for January through May.



                         MARRIOTT INTERNATIONAL, INC.
                            KEY LODGING STATISTICS
                                 (Constant $)

          Comparable Company-Operated International Properties(1,2)
         ------------------------------------------------------------

                           Three Months Ended May 31, 2006 and May 31, 2005
                           ------------------------------------------------
                                                                 Average
                                 REVPAR         Occupancy       Daily Rate
                                 ------         ---------       ----------
    Region/Brand(3)           2006  vs. 2005  2006  vs. 2005   2006  vs. 2005
    -------------------------------------------------------------------------
    Caribbean & Latin
     America                 $130.27  16.0%  77.7%   3.8% pts. $167.65  10.2%
    Continental Europe       $105.81  10.3%  73.8%   3.7% pts. $143.45   4.8%
    United Kingdom           $167.12  13.7%  78.7%   3.5% pts. $212.32   8.6%
    Middle East & Africa     $108.24  13.5%  74.1%  -1.3% pts. $146.13  15.5%
    Asia Pacific(4)           $97.21  10.8%  76.2%   1.1% pts. $127.60   9.2%

    The Ritz-Carlton
     International           $163.71   7.1%  71.9%  -2.7% pts. $227.60  11.0%

    Total International(5)   $115.01  11.1%  75.5%   1.7% pts. $152.37   8.6%

    Worldwide(6)             $118.56  10.8%  76.6%   1.0% pts. $154.86   9.4%


                Comparable Systemwide International Properties(1,2)
               -----------------------------------------------------

                             Three Months Ended May 31, 2006 and May 31, 2005
                             ------------------------------------------------
                                                                   Average
                                 REVPAR         Occupancy         Daily Rate
                                 ------         ---------         ----------
    Region/Brand(3)          2006   vs. 2005  2006  vs. 2005    2006  vs. 2005
    --------------------------------------------------------------------------
    Caribbean & Latin
     America                 $124.45  12.6%  75.8%   2.0% pts. $164.26   9.7%
    Continental Europe       $104.11  11.1%  71.3%   3.2% pts. $146.06   6.0%
    United Kingdom           $146.49  11.3%  74.1%   2.2% pts. $197.60   7.9%
    Middle East & Africa     $100.52  14.2%  73.3%  -1.4% pts. $137.09  16.3%
    Asia Pacific(4)           $97.91   9.8%  76.4%   1.0% pts. $128.13   8.4%

    The Ritz-Carlton
     International           $163.71   7.1%  71.9%  -2.7% pts. $227.60  11.0%

    Total International(5)   $112.16  10.7%  74.4%   1.1% pts. $150.77   9.0%

    Worldwide(6)             $101.49  10.7%  76.1%   1.2% pts. $133.33   9.0%


    (1)  International financial results are reported on a period-end basis,
         while International statistics are reported on a month-end basis.
    (2)  Statistics are in constant dollars for March through May.  Excludes
         North America (except for Worldwide).
    (3)  Regional information includes the Marriott Hotels & Resorts,
         Renaissance Hotels & Resorts and Courtyard brands. Does not
         include The Ritz-Carlton International brand.
    (4)  Does not include Hawaii.
    (5)  Includes Hawaii.
    (6)  Includes international statistics for the three calendar months ended
         May 31, 2006 and May 31, 2005, and North American statistics for the
         twelve weeks ended June 16, 2006 and June 17, 2005.  Includes the
         Marriott Hotels & Resorts, The Ritz-Carlton, Renaissance Hotels &
         Resorts, Residence Inn, Courtyard, TownePlace Suites, Fairfield Inn
         and SpringHill Suites brands.



                         MARRIOTT INTERNATIONAL, INC.
                            KEY LODGING STATISTICS
                                 (Constant $)

             Comparable Company-Operated International Properties(1,2)
            -----------------------------------------------------------

                             Five Months Ended May 31, 2006 and May 31, 2005
                             -----------------------------------------------
                                                                 Average
                                 REVPAR         Occupancy       Daily Rate
                                 ------         ---------       ----------
    Region/Brand(3)          2006  vs. 2005  2006   vs. 2005  2006   vs. 2005
    -------------------------------------------------------------------------
    Caribbean & Latin
     America                 $134.44  13.8%  78.2%   3.4% pts. $171.92   8.8%
    Continental Europe        $95.06   8.4%  68.6%   3.0% pts. $138.61   3.6%
    United Kingdom           $159.02  14.0%  75.7%   3.2% pts. $210.06   9.2%
    Middle East & Africa     $103.86  11.2%  70.5%  -2.6% pts. $147.34  15.3%
    Asia Pacific(4)           $93.13  12.5%  75.0%   1.4% pts. $124.10  10.4%

    The Ritz-Carlton
     International           $155.04   5.4%  69.6%  -2.9% pts. $222.84   9.9%

    Total International(5)   $109.75  10.7%  73.1%   1.4% pts. $150.23   8.6%

    Worldwide(6)             $111.78  10.4%  73.5%   0.8% pts. $152.10   9.2%


                Comparable Systemwide International Properties(1,2)
               -----------------------------------------------------

                             Five Months Ended May 31, 2006 and May 31, 2005
                             -----------------------------------------------
                                                                  Average
                                REVPAR         Occupancy        Daily Rate
                                ------         ---------        ----------
    Region/Brand(3)          2006  vs. 2005  2006   vs. 2005   2006   vs. 2005
    --------------------------------------------------------------------------
    Caribbean & Latin
     America                 $123.05  11.2%  75.0%   2.7% pts. $164.09   7.2%
    Continental Europe        $93.17   9.3%  66.2%   2.7% pts. $140.68   4.9%
    United Kingdom           $137.66  12.4%  70.7%   2.7% pts. $194.83   8.0%
    Middle East & Africa      $97.33  12.3%  69.9%  -2.6% pts. $139.23  16.5%
    Asia Pacific(4)           $94.17  11.8%  75.2%   1.2% pts. $125.27  10.0%

    The Ritz-Carlton
     International           $155.04   5.4%  69.6%  -2.9% pts. $222.84   9.9%

    Total International(5)   $106.26  10.2%  71.8%   1.1% pts. $148.05   8.5%

    Worldwide(6)              $95.74  10.7%  73.1%   1.3% pts. $130.96   8.7%


    (1) International financial results are reported on a period-end basis,
        while International statistics are reported on a month-end basis.
    (2) Statistics are in constant dollars for January through May.  Excludes
        North America (except for Worldwide).
    (3) Regional information includes the Marriott Hotels & Resorts,
        Renaissance Hotels & Resorts and Courtyard brands. Does not include
        The Ritz-Carlton International brand.
    (4) Does not include Hawaii.
    (5) Includes Hawaii.
    (6) Includes international statistics for the five calendar months ended
        May 31, 2006 and May 31, 2005, and North American statistics for the
        twenty-four weeks ended June 16, 2006 and June 17, 2005.  Includes the
        Marriott Hotels & Resorts, The Ritz-Carlton, Renaissance Hotels &
        Resorts, Residence Inn, Courtyard, TownePlace Suites, Fairfield Inn
        and SpringHill Suites brands.



                         MARRIOTT INTERNATIONAL, INC.
                         Non-GAAP Financial Measures

In our press release and schedules we report certain financial measures that are not prescribed or authorized by United States generally-accepted accounting principles ("GAAP"). We discuss management's reasons for reporting these non-GAAP measures below, and the tables on the following pages reconcile the most directly comparable generally accepted accounting principle measures to the non-GAAP measures (identified by a double asterisk on the following pages) that we refer to in our press release. Although our management evaluates and presents these non-GAAP measures for the reasons described below, please be aware that these non-GAAP measures are not alternatives to operating income, income from continuing operations, net income, earnings per share or any other comparable operating measure prescribed by GAAP. In addition, these non-GAAP financial measures may be calculated and/or presented differently than measures with the same or similar names that are reported by other companies, and as a result, the non-GAAP measures we report may not be comparable to those reported by others.

Synthetic Fuel. We do not consider the Synthetic Fuel segment to be related to our core business, which is lodging. In addition, management expects the Synthetic Fuel segment will no longer have a material impact on our business after the end of 2007, when the Internal Revenue Code provision which provides for synthetic fuel tax credits expires, or earlier if the company elects to make its present synthetic fuel production shutdown permanent. Accordingly, our management evaluates non-GAAP measures which exclude the impact of our Synthetic Fuel segment because those measures allow for period-over-period comparisons of our on-going core lodging operations. In addition, these non-GAAP measures facilitate management's comparison of our results with the results of other lodging companies.

CTF transaction. Some of the non-GAAP measures are further adjusted to exclude the impact of the $94 million pre-tax charge (2005 second quarter) associated with the agreements we entered into with CTF Holdings Ltd. and its affiliates ("the CTF transaction"). That charge was primarily non-cash and primarily due to the write-off of deferred contract acquisition costs associated with the termination of management agreements. GAAP reporting for the CTF transaction charge does not reflect the fact that the company entered into new management agreements as part of the CTF transaction, which substantially replaced the terminated management agreements. Accordingly, our management evaluates the non-GAAP measures which exclude the CTF transaction charge because those measures allow for period-over-period comparisons relative to our on-going core lodging operations before material charges, and in particular because those non-GAAP measures recognize the new management agreements that were entered into as part of the CTF transaction and the resulting continuity of management for the hotels in question. In addition, these non-GAAP measures facilitate management's comparison of our results with the results of other lodging companies.


    Leveraged lease impairment charge and discontinued operations.  Management
evaluates non-GAAP measures that exclude the $17 million leveraged lease
impairment charge recorded in the 2005 third quarter and discontinued
operations in order to better assess the period-over-period performance of our
on-going core operating business.  Management does not consider the leveraged
lease investment to be related to our core lodging business.  In addition,
non-GAAP measures which exclude these non-lodging items facilitate
management's comparison of our results with the results of other lodging
companies.


                         MARRIOTT INTERNATIONAL, INC.
                  Non-GAAP Financial Measure Reconciliation
                           Lodging Operating Income
                               ($ in millions)

                                         Fiscal Year 2006
                     --------------------------------------------------------
                                              Range               Range
                                            ---------           ---------
                                      Estimated Estimated Estimated Estimated
                      First   Second    Third     Third      Full     Full
                     Quarter  Quarter  Quarter   Quarter     Year     Year
                     -------  ------- --------- --------- --------- ---------

    Operating income    $203     $234    ***       ***       ***      ***

      Add back:
       Synthetic Fuel
       operating
       loss ***           27       18    ***       ***       ***      ***
                     -------  ------- -------- ---------- --------- ---------

    Lodging
     operating
     income **          $230     $252   $195      $200      $950     $980
                     =======  ======= ======== ========== ========= =========


                                     Fiscal Year 2005
                     -------------------------------------------
                      First   Second    Third   Fourth
                     Quarter  Quarter  Quarter  Quarter   Total
                     -------  -------  -------  -------   -----

    Operating income
     as reported        $158      $41   $135      $221     $555

      Add back:
       Synthetic Fuel
        operating
        loss              45       36     34        29      144
                     -------  -------  -------  -------   -----

    Lodging
     operating
     income **          $203      $77   $169      $250     $699
                     =======  =======  =======  =======   =====

       ** Denotes non-GAAP financial measures.
      *** Guidance not provided for the third and fourth quarters of 2006.



                         MARRIOTT INTERNATIONAL, INC.
                  Non-GAAP Financial Measure Reconciliation
           Measures that Exclude Synthetic Fuel and CTF Transaction
                   (in millions, except per share amounts)

                                 Twelve Weeks ending June 16, 2006
                     ---------------------------------------------------------
                                                                  Excluding
                                                                  Synthetic
                               Synthetic  Excluding                 Fuel
                        As       Fuel     Synthetic     CTF        and CTF
                     Reported   Impact      Fuel**  Transaction  Transaction**
                     --------  ---------  --------- -----------  -------------
    Operating
     income (loss)     $234      $(18)       $252       $-          $252
    Gains and
     other income        48         3          45        -            45
    Interest income,
     provision for loan
     losses and
     interest expense   (17)        2         (19)       -           (19)
    Equity in earnings    6         -           6        -             6
                     --------  ---------  ---------- ----------  -------------
    Income (loss) before
     Income Taxes,
     Minority Interest
     and Cumulative
     Effect of Change
     in Accounting
     Principle          271       (13)        284        -           284
                     --------  ---------  ---------- ----------  -------------
     Tax (Provision)/
      Benefit           (96)        6        (102)       -          (102)
     Tax Credits         11        11           -        -             -
                     --------  ---------  ---------- ----------  -------------
    Total Tax (Provision)
     /Benefit           (85)       17        (102)       -          (102)
                     --------  ---------  ---------- ----------  -------------
    Income before
     Minority Interest
     and Cumulative
     Effect of Change
     in Accounting
     Principle          186         4         182        -           182

    Minority Interest     -         -           -        -             -
                     --------  ---------  ----------- ---------  -------------
    Income before
     Cumulative Effect
     of Change in
     Accounting
     Principle         $186        $4        $182       $-          $182
                     ========  =========  =========== =========  =============
    Diluted Shares    436.6     436.6       436.6    436.6         436.6

    Earnings per
     Share - Diluted  $0.43     $0.01       $0.42    $0.00         $0.42

    Tax Rate          31.4%                 35.9%                  35.9%



                                 Twelve Weeks ending June 17, 2005
                     ---------------------------------------------------------
                                                                  Excluding
                                                                  Synthetic
                               Synthetic  Excluding                 Fuel
                        As       Fuel     Synthetic     CTF        and CTF
                     Reported   Impact      Fuel**  Transaction  Transaction**
                     --------  ---------  --------- -----------  -------------
    Operating
     income (loss)      $41      $(36)        $77     $(94)          $171
    Gains and
     other income        63         8          55        -             55
    Interest income,
     provision for loan
     losses and
     interest expense     4         -           4        -              4
    Equity in earnings    6         -           6        -              6
                      -------  -------     ------- ------------  -------------
    Income (loss)
     before Income Taxes,
     Minority Interest
     and Cumulative
     Effect of Change
     in Accounting
     Principle          114       (28)        142      (94)           236
                      -------  -------     ------- ------------  -------------
     Tax (Provision)/
      Benefit           (39)        9         (48)      32            (80)
     Tax Credits         59        59           -        -              -
                      -------  -------     ------- ------------  -------------
    Total Tax Benefit/
     (Provision)         20        68         (48)      32            (80)
                      -------  -------     ------- ------------  -------------
    Income before
     Minority Interest
     and Cumulative
     Effect of Change
     in Accounting
     Principle          134        40          94      (62)           156

    Minority Interest     4         4           -        -              -
                      -------  -------     ------- ------------  -------------
    Income before
     Cumulative Effect
     of Change in
     Accounting
     Principle         $138       $44         $94     $(62)          $156
                      =======  =======     ======= ============  =============
    Diluted Shares    468.9     468.9       468.9    468.9          468.9

    Earnings per
     Share - Diluted  $0.29     $0.09       $0.20   ($0.13)         $0.33

    Tax Rate         -17.5%                 33.8%                   33.8%

    ** Denotes non-GAAP financial measures.



                         MARRIOTT INTERNATIONAL, INC.
                  Non-GAAP Financial Measure Reconciliation
           Measures that Exclude Synthetic Fuel and CTF Transaction
                   (in millions, except per share amounts)

                                 Twenty-Four Weeks ending June 16, 2006
                     ---------------------------------------------------------
                                                                  Excluding
                                                                  Synthetic
                               Synthetic  Excluding                 Fuel
                        As       Fuel     Synthetic     CTF        and CTF
                     Reported   Impact      Fuel**  Transaction  Transaction**
                     --------  ---------  --------- -----------  -------------
    Operating
     income (loss)     $437      $(45)      $482         $-          $482
    Gains and other
     income (expense)    82        (1)        83          -            83
    Interest income,
     provision for loan
     losses and interest
     expense            (31)        2        (33)         -           (33)
    Equity in earnings    3         -          3          -             3
                      -------  ---------  --------- -----------  -------------
    Income (loss)
     before Income Taxes,
     Minority Interest
     and Cumulative
     Effect of Change
     in Accounting
     Principle          491       (44)       535          -           535
                      -------  ---------  --------- -----------  -------------
     Tax (Provision)/
      Benefit          (173)       14       (187)         -          (187)
     Tax Credits         32        32          -          -             -
                      -------  ---------  --------- -----------  -------------
    Total Tax (Provision)
     /Benefit          (141)       46       (187)         -          (187)
                      -------  ---------  --------- -----------  -------------
    Income before
     Minority Interest
     and Cumulative
     Effect of Change
     in Accounting
     Principle          350         2        348          -           348

    Minority Interest     6         5          1          -             1
                      -------  ---------  --------- -----------  -------------
    Income before
     Cumulative Effect
     of Change in
     Accounting
     Principle         $356        $7       $349         $-          $349
                      =======  =========  ========= ===========  =============
    Diluted Shares    438.9     438.9      438.9      438.9         438.9

    Earnings per
     Share - Diluted  $0.81     $0.02      $0.79      $0.00         $0.79

    Tax Rate          28.7%                35.0%                    35.0%


                               Twenty-Four Weeks ending June 17, 2005
                     ---------------------------------------------------------
                                                                  Excluding
                                                                  Synthetic
                               Synthetic  Excluding                 Fuel
                        As       Fuel     Synthetic     CTF        and CTF
                     Reported   Impact      Fuel**  Transaction  Transaction**
                     --------  ---------  --------- -----------  -------------
    Operating
     income (loss)     $199      $(81)      $280       $(94)         $374
    Gains and other
     income (expense)    58        (1)        59          -            59
    Interest income,
     provision for loan
     losses and
     interest expense    (4)        -         (4)         -            (4)
    Equity in earnings    1         -          1          -             1
                      -------  ---------  --------- -----------  ------------
    Income (loss)
     before Income Taxes,
     Minority Interest
     and Cumulative
     Effect of Change
     in Accounting
     Principle          254       (82)       336        (94)          430
                      -------  ---------  --------- -----------  ------------
     Tax (Provision)/
      Benefit           (91)       24       (115)        32          (147)
     Tax Credits        106       106          -          -             -
                      -------  ---------  --------- -----------  ------------
    Total Tax Benefit/
     (Provision)         15       130       (115)        32          (147)
                      -------  ---------  --------- -----------  ------------
    Income before
     Minority Interest
     and Cumulative
     Effect of Change
     in Accounting
     Principle          269        48        221        (62)          283

    Minority Interest    14        14          -          -             -
                      -------  ---------  --------- -----------  ------------
    Income before
     Cumulative Effect
     of Change in
     Accounting
     Principle         $283       $62       $221       $(62)         $283
                      =======  =========  ========= ===========  ============
    Diluted Shares    475.5     475.5      475.5      475.5         475.5

    Earnings per
     Share - Diluted  $0.60     $0.13      $0.47     ($0.13)        $0.60

    Tax Rate          -5.9%                34.2%                    34.2%

    ** Denotes non-GAAP financial measures.



                         MARRIOTT INTERNATIONAL, INC.
                  Non-GAAP Financial Measure Reconciliation
                                    EBITDA
                               ($ in millions)

                                                      Fiscal Year 2006
                                               ------------------------------
                                                First      Second
                                               Quarter     Quarter      Total
                                               -------     -------      -----
    Net income                                   $65        $186        $251
    Cumulative effect of change in
     accounting principle, before tax            173           -         173
    Interest expense                              27          30          57
    Tax provision from continuing
     operations                                   56          85         141
    Tax benefit from cumulative effect of
     change in accounting principle              (68)          -         (68)
    Depreciation                                  34          34          68
    Amortization                                   6           8          14
    Less:  Depreciation reimbursed by
     third-party owners                           (4)         (4)         (8)
    Interest expense from unconsolidated
     joint ventures                                5           6          11
    Depreciation and amortization from
     unconsolidated joint ventures                 6           7          13
                                               -------     -------      -----
    EBITDA **                                   $300        $352        $652

    Synthetic fuel adjustment                     24          11          35
                                               -------     -------      -----
    Adjusted EBITDA **                          $324        $363        $687
                                               =======     =======      =====
    Increase over 2005 Adjusted EBITDA           17%         19%         18%

    The following items make up the
     Synthetic Fuel adjustment:
    Pre-tax synthetic fuel operating losses      $31         $13         $44
    Pre-tax minority interest - synthetic fuel    (5)          -          (5)
    Synthetic fuel depreciation                   (2)         (2)         (4)
                                               -------     -------      -----
    EBITDA adjustment for synthetic fuel         $24         $11         $35
                                               =======     =======      =====


                                                   Fiscal Year 2005
                                         -------------------------------------
                                          First  Second   Third  Fourth
                                         Quarter Quarter Quarter Quarter Total
                                         ------- ------- ------- ------- -----
    Net income                             $145   $138    $149    $237   $669
    Interest expense                         24     21      24      37    106
    Tax provision/(benefit) from
     continuing operations                    5    (20)     33      76     94
    Tax provision/(benefit) from
     discontinued operations                  -      -       1       -      1
    Depreciation                             30     29      46      51    156
    Amortization                              7      7       7       7     28
    Less:  Depreciation reimbursed by
     third-party owners                       -      -     (12)     (5)   (17)
    Interest expense from unconsolidated
     joint ventures                          11      6       4       8     29
    Depreciation and amortization from
     unconsolidated joint ventures           12      9       7      11     39
                                         ------- ------- ------- ------ ------
    EBITDA **                              $234   $190    $259    $422 $1,105

    Synthetic fuel adjustment                42     22      (7)     (1)    56
    Pre-tax gain from discontinued
     operations                               -      -      (2)      -     (2)
    Non-recurring charges -
       CTF Acquisition one-time charge        -     94       -       -     94
       Leveraged lease charge                 -      -      17       -     17
                                         ------- ------- ------- ------ ------
    Adjusted EBITDA **                     $276   $306    $267    $421 $1,270
                                         ======= ======= ======= ====== ======
    The following items make up the
     Synthetic Fuel adjustment:
    Pre-tax synthetic fuel operating
     losses                                 $54    $28     $13     $17   $112
    Pre-tax minority interest - synthetic
     fuel                                   (10)    (4)    (18)    (15)   (47)
    Synthetic fuel depreciation              (2)    (2)     (2)     (3)    (9)
                                         ------- ------- ------- ------ ------
    EBITDA adjustment for synthetic fuel    $42    $22     $(7)    $(1)   $56
                                         ======= ======= ======= ====== ======

     ** Denotes Non-GAAP financial measures.

SOURCE Marriott International, Inc.

Tom Marder, Marriott International, Inc., +1-301-380-2553, thomas.marder@marriott.com
http://www.prnewswire.com

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