Marriott International Reports Second Quarter 2019 Results

<< Back
Aug 5, 2019

Marriott International Reports Second Quarter 2019 Results

BETHESDA, Md., Aug. 5, 2019 /PRNewswire/ --

HIGHLIGHTS

  • Second quarter reported diluted EPS totaled $0.69, compared to $1.87 in the year-ago quarter.  Second quarter adjusted diluted EPS totaled $1.56, compared to second quarter 2018 adjusted diluted EPS of $1.73.  Reported and adjusted diluted EPS for the 2018 second quarter included $0.26 of asset sale gains;
  • Second quarter 2019 comparable systemwide constant dollar RevPAR rose 1.2percent worldwide, 2.8 percent outside North America and 0.7 percent in North America;
  • The company added more than 16,000 rooms during the second quarter, including nearly 3,500 rooms converted from competitor brands and approximately 7,500 rooms in international markets;
  • At quarter-end, Marriott's worldwide development pipeline totaled roughly 2,900 hotels and more than 487,000 rooms, including approximately 40,000 rooms approved, but not yet subject to signed contracts.  Roughly 213,000 pipeline rooms were under construction at the end of the second quarter;
  • Second quarter reported net income totaled $232 million, a 65 percent decrease from prior year results.  Second quarter adjusted net income totaled $525 million, a 15 percent decrease from prior year adjusted results;
  • Adjusted EBITDA totaled $952 million in the quarter, a 1 percent increase over second quarter 2018 adjusted EBITDA;
  • Marriott repurchased 3.8 million shares of the company's common stock for $500 million during the second quarter.  Year-to-date through August 2, the company has repurchased 12.1 million shares for $1.6 billion.

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

Arne M. Sorenson, president and chief executive officer of Marriott International, said, "Worldwide RevPAR increased 1.2 percent in the second quarter with higher leisure transient demand in Europe, the Caribbean and South America, and the Asia Pacific regions.  Showing great momentum, our worldwide RevPAR index increased 110 basis points in the quarter, the strongest single quarter performance since our acquisition of Starwood in late 2016.

"Our owners and franchisees continue to sign new hotel deals at a rapid pace.  Our development pipeline increased 3 percent in the second quarter, reaching a record 487,000 rooms, including roughly 213,000 rooms under construction.  Today, our pipeline includes five new all-inclusive resorts to be built over the next several years, which will be part of our newly-launched all-inclusive platform.  Recognizing the growing demand for all-inclusive lodging, our platform will create distinctive vacation experiences while leveraging existing brands in our luxury and full-service portfolio.  We expect the platform will grow through both new-build properties and conversions of existing resorts, offering travelers yet another option for earning and redeeming Marriott Bonvoy points.

"Our results in the second quarter highlight the resiliency of our business model and the growing strength of our brands.  Year-to-date through August 2, we have already returned $1.9 billion to shareholders.  For full year 2019, we expect cash returned to shareholders through share repurchases and dividends could approach $3 billion."

Second Quarter 2019 Results

Marriott's reported net income totaled $232 million in the 2019 second quarter, compared to 2018 second quarter reported net income of $667 million.  Reported diluted earnings per share (EPS) totaled $0.69 in the quarter, compared to reported diluted EPS of $1.87 in the year-ago quarter.

Second quarter 2019 adjusted net income totaled $525 million, compared to 2018 second quarter adjusted net income of $619 million.  Adjusted diluted EPS in the second quarter totaled $1.56, compared to adjusted diluted EPS of $1.73 in the year-ago quarter.  Adjusted results for the 2018 second quarter include $119 million pre-tax ($0.26 per share) of asset sale gains in gains and other income, net and equity in earnings.  See page A-3 for the calculation of adjusted results.  Adjusted results exclude merger-related costs and charges, cost reimbursement revenue, and reimbursed expenses.  Adjusted results for the 2018 second quarter also exclude an increase to the gain on the sale of Avendra.

Base management and franchise fees totaled $834 million in the 2019 second quarter, an 8 percent increase over base management and franchise fees of $775 million in the year-ago quarter.  The year-over-year increase in these fees is primarily attributable to unit growth, RevPAR growth, and higher branding fees.

Second quarter 2019 incentive management fees totaled $165 million, a 6 percent decrease compared to incentive management fees of $176 million in the year-ago quarter.  The year-over-year decrease largely reflects lower net house profits at North American managed hotels, and unfavorable exchange rates, partially offset by higher net house profits at International managed hotels.

General, administrative, and other expenses for the 2019 second quarter totaled $229 million, compared to $217 million in the year-ago quarter.  The year-over-year change largely reflects an increase in administrative costs. 

In the 2019 second quarter, the company incurred $22 million of expenses and recognized $22 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, which have been excluded from adjusted net income, adjusted EPS and adjusted EBITDA. 

The company also recorded a $126 million non-tax deductible accrual in the second quarter for the fine proposed by the U.K. Information Commissioner's Office in relation to the data security incident.  Marriott has the right to respond before the amount of the fine is finally determined and a fine can be issued.  The company intends to respond and vigorously defend its position.  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 $1 million, compared to $114 million in the year-ago quarter.  Gains and other income, net, in the 2018 second quarter largely reflected $109 million of gains from asset sales.  

Interest expense, net, totaled $96 million in the second quarter compared to $79 million in the year-ago quarter.  The increase is largely due to higher debt balances.

Equity in earnings for the second quarter totaled $0 million, compared to $21 million in the year-ago quarter.  The 2019 second quarter included a $4 million asset impairment.  The 2018 second quarter included a $10 million gain on the sale of a hotel in a North American joint venture.

Second Quarter 2019 Results Compared to May 10, 2019 Guidance

On May 10, 2019, the company estimated gross fee revenues would total $990 million to $1,010 million in the second quarter.  Actual gross fee revenues totaled $999 million in the quarter.

The company estimated owned, leased, and other revenue, net of direct expenses, for the second quarter would total approximately $80 million.  Actual results of $87 million in the quarter were higher than estimated, largely due to the timing of non-operating expenses.

The company estimated equity in earnings for the second quarter would total approximately $5 million.  Actual equity in earnings of $0 million in the quarter were lower than expected, largely reflecting a $4 million asset impairment.

The company estimated adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the second quarter would total $940 million to $965 million.  Actual adjusted EBITDA totaled $952 million.  See page A-11 for the adjusted EBITDA calculations.

Selected Performance Information

The company added 112 new properties (16,181 rooms) to its worldwide lodging portfolio during the 2019 second quarter, including The Westin Desaru Coast Resort in Malaysia, W Muscat in Oman, and AC Hotel Riga, the company's first hotel in Latvia.  Fifteen properties (2,321 rooms) exited the system during the quarter.  At quarter-end, Marriott's lodging system encompassed 7,100 properties and timeshare resorts with nearly 1,346,000 rooms.

At quarter-end, the company's worldwide development pipeline totaled 2,919 properties with more than 487,000 rooms, including 1,150 properties with roughly 213,000 rooms under construction and 253 properties with approximately 40,000 rooms approved for development, but not yet subject to signed contracts.

In the 2019 second quarter, worldwide comparable systemwide constant dollar RevPAR increased 1.2 percent (a 0.3 percent decrease using actual dollars).  North American comparable systemwide constant dollar RevPAR increased 0.7 percent (a 0.4 percent increase using actual dollars), and international comparable systemwide constant dollar RevPAR increased 2.8 percent (a 2.4 percent decrease using actual dollars) for the same period.

Worldwide comparable company-operated house profit margins decreased 10 basis points in the second quarter, reflecting solid cost controls and synergies from the Starwood acquisition offset by the impact of 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 decreased 50 basis points in the second quarter.

Balance Sheet

At quarter-end, Marriott's total debt was $10,414 million and cash balances totaled $284 million, compared to $9,347 million in debt and $316 million of cash at year-end 2018.

During the second quarter, the company extended the expiration of its credit facility to June 2024 and increased the facility from $4 billion to $4.5 billion.

Marriott Common Stock

Weighted average fully diluted shares outstanding used to calculate both reported and adjusted diluted EPS totaled 336.4 million in the 2019 second quarter, compared to 357.3 million shares in the year-ago quarter.

The company repurchased 3.8 million shares of common stock in the 2019 second quarter for $500 million at an average price of $132.39 per share.  Year-to-date through August 2, the company has repurchased 12.1 million shares for $1.6 billion at an average price of $128.88 per share.

2019 Outlook

The following outlook for third quarter, fourth quarter, and full year 2019 does not include merger-related costs and charges, cost reimbursement revenue or reimbursed expenses, which the company cannot accurately forecast and which may be significant.

For the 2019 third quarter, Marriott expects comparable systemwide RevPAR on a constant dollar basis will increase 1 to 2 percent in North America, 2 to 3 percent outside North America, and 1 to 2 percent worldwide.

The company anticipates third quarter 2019 gross fee revenues will total $945 million to $960 million, a 1 to 3 percent increase over third quarter 2018 gross fee revenues of $932 million, reflecting lower residential branding fees year-over-year.  The company anticipates third quarter 2019 incentive management fees will decrease at a mid to high single-digit rate compared to third quarter 2018 incentive management fees of $151 million due to modest expected RevPAR growth in North America and tough comparisons to the 2018 World Cup in Russia.

Marriott anticipates third quarter 2019 owned, leased, and other revenue, net of direct expenses, could total $70 million.  This estimate reflects $10 million to $15 million of lower termination fees year-over-year.  This outlook for the 2019 third quarter does not reflect any additional asset sales that may occur during the quarter.

The company expects third quarter 2019 general, administrative, and other expenses could total $220 million to $225 million. General, administrative, and other expenses in the 2018 third quarter included a $7 million expense for the company's supplemental investments in its workforce, which is not expected to repeat in 2019.

The company anticipates gains and other income, net could total $10 million in the 2019 third quarter, largely reflecting a $9 million gain on an asset sale that was completed early in the third quarter.

Marriott expects third quarter 2019 diluted EPS could total $1.47 to $1.51, an 11 to 14 percent decline compared to third quarter 2018 adjusted diluted EPS of $1.70.  Third quarter 2018 adjusted results included $71 million pre-tax ($0.26 per share) of asset sale gains in gains and other income, net and equity in earnings.  Third quarter 2019 guidance does not assume any additional asset sale gains beyond the $9 million pre-tax ($0.02 per share) discussed above.

Marriott anticipates third quarter 2019 adjusted EBITDA could total $896 million to $916 million, flat to up 2 percent compared to third quarter 2018 adjusted EBITDA of $900 million.  This estimate does not reflect any additional asset sales that may occur in the third quarter of 2019.  See page A-12 for the adjusted EBITDA calculation.

For the 2019 fourth quarter, Marriott expects comparable systemwide RevPAR on a constant dollar basis will increase 1 to 2 percent in North America, 2 to 3 percent outside North America, and 1 to 2 percent worldwide.

The company assumes fourth quarter 2019 gross fee revenues will total $981 million to $996 million, an 8 to 9 percent increase over fourth quarter 2018 gross fee revenues of $910 million.  The company anticipates fourth quarter 2019 incentive management fees will increase at a mid to high single-digit rate compared to fourth quarter 2018 incentive management fees of $167 million due to international unit growth and easy comparisons to labor strikes in the 2018 fourth quarter.

The company expects fourth quarter 2019 general, administrative, and other expenses could total $249 million to $254 million. General, administrative, and other expenses in the 2018 fourth quarter included a $7 million expense for the company's supplemental investments in its workforce, which is not expected to repeat in 2019.

Marriott expects fourth quarter 2019 adjusted EBITDA could total $917 million to $937 million, a 6 to 8 percent increase over fourth quarter 2018 adjusted EBITDA of $864 million.  This estimate does not reflect any asset sales that may occur in the fourth quarter of 2019.  See page A-13 for the adjusted EBITDA calculation.

For the full year 2019, Marriott expects comparable systemwide RevPAR on a constant dollar basis will increase 1 to 2 percent in North America, 2 to 3 percent outside North America, and 1 to 2 percent worldwide.

As a result of construction delays in North America and the Middle East and Africa region, Marriott now anticipates net room additions of 5.0 to 5.5 percent for full year 2019, with expected room deletions of 1 to 1.5 percent.

The company expects full year 2019 gross fee revenues will total $3,820 million to $3,850 million, a 5 to 6 percent increase over 2018 gross fee revenues of $3,638 million, including approximately $20 million of unfavorable foreign exchange.  Full year 2019 estimated gross fee revenues include $400 million to $410 million of credit card branding fees, compared to $380 million for full year 2018.  Compared to the estimate the company provided on May 10, this estimate of gross fee revenues largely reflects lower RevPAR growth, additional unfavorable foreign exchange and lower credit card branding fees.  The company anticipates full year 2019 incentive management fees will be flat compared to 2018 full year incentive management fees of $649 million.

Marriott anticipates full year 2019 owned, leased, and other revenue, net of direct expenses, could total $295 million.  This estimate reflects stronger results at owned and leased hotels, offset by approximately $35 million of lower termination fees year-over-year.  This outlook for full year 2019 does not reflect any additional asset sales that may occur during the year. 

The company expects full year 2019 general, administrative, and other expenses could total $920 million to $930 million, flat to down 1 percent from full year 2018 expenses of $927 million.  Full year 2018 general, administrative, and other expenses included a $51 million expense for the company's supplemental investments in its workforce, which is not expected to repeat in 2019.

The company anticipates full year 2019 diluted EPS could total $5.97 to $6.06, a 2 to 4 percent decline compared to 2018 adjusted diluted EPS of $6.21.  Full year adjusted 2018 results include $183 million pre-tax ($0.44 per share) of asset sale gains in gains and other income, net and $65 million pre-tax ($0.21 per share) of asset sale gains in equity in earnings.  Full year 2019 guidance includes the $9 million pre-tax ($0.02 per share) asset sale gain in gains and other income, net, included in the third quarter 2019 outlook.

Marriott expects full year 2019 adjusted EBITDA could total $3,586 million to $3,626 million, a 3 to 4 percent increase over 2018 adjusted EBITDA of $3,473 million.  See page A-14 for the adjusted EBITDA calculation.

 


Third Quarter 20191

Fourth Quarter 20191

Full Year 20191

Gross fee revenues

$945 million to $960 million

$981 million to $996 million

$3,820 million to $3,850 million

Contract investment
  amortization

Approx. $15 million

Approx. $16 million

Approx. $60 million

Owned, leased and other         
  revenue, net of direct
  expenses

Approx. $70 million

Approx. $88 million

Approx. $295 million

Depreciation, amortization,
  and other expenses

Approx. $50 million

Approx. $55 million

Approx. $215 million

General, administrative,
  and other expenses

$220 million to $225 million

$249 million to $254 million

$920 million to $930 million

Operating income

$725 million to $745 million

$744 million to $764 million

$2,910 million to $2,950 million

Gains and other income

Approx. $10 million

Approx. $4 million

Approx. $20 million

Net interest expense

Approx. $90 million

Approx. $93 million

Approx. $370 million

Equity in earnings (losses)

Approx. $5 million

Approx. $7 million

Approx. $20 million

Earnings per share - diluted

$1.47 to $1.51

$1.53 to $1.58

$5.97 to $6.06

Effective tax rate

25.0 percent

23.3 percent

22.4 percent





1The outlook provided in this table does not include merger-related costs and charges, cost reimbursement revenue or reimbursed expenses, which the company cannot accurately forecast and which may be significant.

 

The company expects investment spending in 2019 will total approximately $650 million to $750 million, including approximately $225 million for maintenance capital.  Investment spending also includes other capital expenditures (including property acquisitions), new mezzanine financing and mortgage notes, contract acquisition costs, and equity and other investments.  The company estimates $200 million to $250 million of its 2019 investment spending will be reimbursed or recycled over time.  Assuming this level of investment spending and no additional asset sales, cash returned to shareholders through share repurchases and dividends could approach $3 billion for full year 2019.

Marriott International, Inc. (NASDAQ: MAR) will conduct its quarterly earnings review for the investment community and news media on Tuesday, August 6, 2019 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 August 6, 2020.

The telephone dial-in number for the conference call is 706-679-3455 and the conference ID is 9989245.  A telephone replay of the conference call will be available from 4:00 p.m. ET, Tuesday, August 6, 2019 until 8:00 p.m. ET, Monday, August 12, 2019.  To access the replay, call 404-537-3406.  The conference ID for the recording is 9989245.

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 regarding new product offerings; our expectations regarding the estimates of the impact of new accounting standards; our expectations about investment spending and tax rate; and similar statements concerning anticipated future events and expectations that are not historical facts.  We caution you that these statements are not guarantees of future performance and are subject to numerous risks and uncertainties, including those we identify below and other risk factors that we identify in our most recent quarterly report on Form 10-Q or annual report on Form 10-K.  Risks that could affect forward-looking statements in this press release include changes in market conditions; changes in global and regional economies; supply and demand changes for hotel rooms; competitive conditions in the lodging industry; relationships with clients and property owners; the availability of capital to finance hotel growth and refurbishment; the extent to which we experience adverse effects from the data security incident; changes in tax laws in countries in which we earn significant income, including guidance that may be issued by U.S. standard-setting bodies on how provisions of the Tax Act will be applied or otherwise administered; 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 August 5, 2019.  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 7,000 properties under 30 leading brands spanning 132 countries and territories. Marriott operates and franchises hotels and licenses vacation ownership resorts all around the world.  The company now offers one travel program, Marriott Bonvoy™, replacing Marriott Rewards®, The Ritz-Carlton Rewards®, and Starwood Preferred Guest®(SPG).  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 2, 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 - Third Quarter 2019










A-12

















Adjusted EBITDA Forecast - Fourth Quarter 2019









A-13

















Adjusted EBITDA Forecast - Full Year 2019










A-14

















Explanation of Non-GAAP Financial and Performance Measures






A-15

 

 

 


MARRIOTT INTERNATIONAL, INC.


CONSOLIDATED STATEMENTS OF INCOME - AS REPORTED


SECOND QUARTER 2019 AND 2018


(in millions except per share amounts, unaudited)






















As Reported


As Reported 10


Percent





Three Months Ended


Three Months Ended


Better/(Worse)





June 30, 2019


June 30, 2018


Reported 2019 vs. 2018



REVENUES









Base management fees


$                                           309


$                                           300


3



Franchise fees 1


525


475


11



Incentive management fees


165


176


(6)



Gross Fee Revenues


999


951


5



Contract investment amortization 2


(15)


(13)


(15)



Net Fee Revenues


984


938


5



Owned, leased, and other revenue 3


418


423


(1)



Cost reimbursement revenue 4


3,903


4,048


(4)



  Total Revenues


5,305


5,409


(2)












OPERATING COSTS AND EXPENSES









Owned, leased, and other - direct 5


331


334


1



Depreciation, amortization, and other 6


56


58


3



General, administrative, and other 7


229


217


(6)



Merger-related costs and charges


173


18


(861)



Reimbursed expenses 4


4,107


3,964


(4)



  Total Expenses


4,896


4,591


(7)












OPERATING INCOME


409


818


(50)












Gains and other income, net 8


1


114


(99)



Interest expense


(102)


(85)


(20)



Interest income 


6


6


-



Equity in earnings 9


-


21


(100)












INCOME BEFORE INCOME TAXES


314


874


(64)












Provision for income taxes


(82)


(207)


60












NET INCOME


$                                           232


$                                           667


(65)












EARNINGS PER SHARE









  Earnings per share - basic


$                                          0.70


$                                          1.89


(63)



  Earnings per share - diluted


$                                          0.69


$                                          1.87


(63)












Basic Shares


333.8


353.4





Diluted Shares


336.4


357.3













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.


10

Reflects revised information as presented in our 2018 Annual Report on Form 10-K.



 

 


MARRIOTT INTERNATIONAL, INC.


CONSOLIDATED STATEMENTS OF INCOME - AS REPORTED


SECOND QUARTER YEAR-TO-DATE 2019 AND 2018


(in millions except per share amounts, unaudited)






















As Reported


As Reported10


Percent





Six Months Ended


Six Months Ended


Better/(Worse)





June 30, 2019


June 30, 2018


Reported 2019 vs. 2018



REVENUES









Base management fees


$                                           591


$                                           573


3



Franchise fees 1


975


892


9



Incentive management fees


328


331


(1)



Gross Fee Revenues


1,894


1,796


5



Contract investment amortization 2


(29)


(31)


6



Net Fee Revenues


1,865


1,765


6



Owned, leased, and other revenue 3


793


829


(4)



Cost reimbursement revenue 4


7,659


7,824


(2)



  Total Revenues


10,317


10,418


(1)












OPERATING COSTS AND EXPENSES









Owned, leased, and other - direct 5


656


670


2



Depreciation, amortization, and other 6


110


112


2



General, administrative, and other 7


451


464


3



Merger-related costs and charges


182


52


(250)



Reimbursed expenses 4


7,999


7,772


(3)



  Total Expenses


9,398


9,070


(4)












OPERATING INCOME


919


1,348


(32)












Gains and other income, net 8


6


173


(97)



Interest expense


(199)


(160)


(24)



Interest income 


12


11


9



Equity in earnings 9


8


34


(76)












INCOME BEFORE INCOME TAXES


746


1,406


(47)












Provision for income taxes


(139)


(319)


56












NET INCOME


$                                           607


$                                        1,087


(44)












EARNINGS PER SHARE









  Earnings per share - basic


$                                          1.80


$                                          3.06


(41)



  Earnings per share - diluted


$                                          1.79


$                                          3.02


(41)












Basic Shares


336.7


355.9





Diluted Shares


339.6


360.3







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.


10

Reflects revised information as presented in our 2018 Annual Report on Form 10-K.


 

 


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, and Adjusted diluted EPS, to the most directly comparable GAAP measure. Adjusted total revenues is used in the determination of Adjusted operating income margin.






















Three Months Ended 


Six Months Ended








Percent






Percent




June 30,


June 30,


Better/


June 30,


June 30,


Better/




2019


2018 1


(Worse)


2019


2018 1


(Worse)



Total revenues, as reported

$         5,305


$         5,409




$       10,317


$       10,418





Less: Cost reimbursement revenue

(3,903)


(4,048)




(7,659)


(7,824)





Adjusted total revenues**

1,402


1,361




2,658


2,594



















Operating income, as reported

409


818




919


1,348





Less: Cost reimbursement revenue

(3,903)


(4,048)




(7,659)


(7,824)





Add: Reimbursed expenses

4,107


3,964




7,999


7,772





Add: Merger-related costs and charges

173


18




182


52





Adjusted operating income **

786


752


5%


1,441


1,348


7%

















Operating income margin

8%


15%




9%


13%





Adjusted operating income margin **

56%


55%




54%


52%



















Net income, as reported

232


667




607


1,087





Less: Cost reimbursement revenue

(3,903)


(4,048)




(7,659)


(7,824)





Add: Reimbursed expenses

4,107


3,964




7,999


7,772





Add: Merger-related costs and charges

173


18




182


52





Less: Gain on sale of Avendra

-


(1)




-


(6)





Income tax effect of above adjustments

(84)


19




(122)


3





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

-


-




-


22





Adjusted net income **

$            525


$            619


-15%


$         1,007


$         1,106


-9%

















Diluted EPS, as reported

$           0.69


$           1.87




$           1.79


$           3.02





Adjusted Diluted EPS**

$           1.56


$           1.73


-10%


$           2.97


$           3.07


-3%
















**

Denotes non-GAAP financial measures. Please see pages A-15 and A-16 for information about our reasons for providing these alternative financial measures and the limitations on their use.


















1

Reflects revised information as presented in our 2018 Annual Report on Form 10-K.


 

 

 

MARRIOTT INTERNATIONAL, INC.

TOTAL LODGING PRODUCTS

As of June 30, 2019









North America

Total International

Total Worldwide


Units

Rooms

Units

Rooms

Units

Rooms

 Managed 

757

240,359

1,195

310,124

1,952

550,483

 Marriott Hotels 

122

65,625

172

50,726

294

116,351

 Marriott Hotels Serviced Apartments 

-

-

1

154

1

154

 Sheraton 

27

23,333

184

63,109

211

86,442

 Courtyard 

235

37,664

98

21,247

333

58,911

 Westin 

43

23,650

71

21,912

114

45,562

 JW Marriott 

17

10,864

51

19,724

68

30,588

 Renaissance 

27

11,574

56

17,539

83

29,113

 The Ritz-Carlton 

38

10,981

56

14,943

94

25,924

 The Ritz-Carlton Serviced Apartments 

-

-

5

697

5

697

 Le Méridien 

3

570

72

20,163

75

20,733

 Four Points 

1

134

74

19,117

75

19,251

 Residence Inn 

108

16,495

5

565

113

17,060

 W Hotels 

24

7,078

29

7,347

53

14,425

 The Luxury Collection 

5

2,234

50

8,830

55

11,064

 Gaylord Hotels 

6

9,918

-

-

6

9,918

 Aloft 

1

330

38

8,936

39

9,266

 St. Regis 

9

1,728

32

7,289

41

9,017

 St. Regis Serviced Apartments 

-

-

1

70

1

70

 AC Hotels by Marriott 

3

517

59

7,099

62

7,616

 Delta Hotels 

25

6,775

-

-

25

6,775

 Fairfield by Marriott 

7

1,539

32

4,879

39

6,418

 SpringHill Suites 

30

4,896

-

-

30

4,896

 Marriott Executive Apartments 

-

-

31

4,580

31

4,580

 Protea Hotels 

-

-

36

4,328

36

4,328

 Autograph Collection 

5

1,307

15

2,406

20

3,713

 EDITION 

3

1,019

6

1,293

9

2,312

 TownePlace Suites 

17

1,948

-

-

17

1,948

 Element 

1

180

7

1,421

8

1,601

 Tribute Portfolio 

-

-

5

713

5

713

 Moxy 

-

-

4

599

4

599

 Bulgari 

-

-

5

438

5

438

 Franchised 

4,318

624,924

585

121,107

4,903

746,031

 Courtyard 

783

104,203

74

13,858

857

118,061

 Fairfield by Marriott 

966

89,896

19

3,188

985

93,084

 Residence Inn 

697

83,091

8

1,041

705

84,132

 Marriott Hotels 

213

66,474

54

15,485

267

81,959

 Sheraton 

161

47,749

62

17,683

223

65,432

 SpringHill Suites 

403

46,612

-

-

403

46,612

 TownePlace Suites 

382

38,350

-

-

382

38,350

 Westin 

87

28,811

24

7,372

111

36,183

 Autograph Collection 

95

19,613

58

12,721

153

32,334

 Four Points 

157

23,764

52

8,220

209

31,984

 Renaissance 

59

16,981

27

7,393

86

24,374

 Aloft 

111

16,452

16

2,652

127

19,104

 AC Hotels by Marriott 

52

8,782

40

5,897

92

14,679

 The Luxury Collection 

12

2,850

45

8,590

57

11,440

 Delta Hotels 

42

9,385

2

562

44

9,947

 Moxy 

13

2,739

29

6,007

42

8,746

 Le Méridien 

17

3,665

16

4,248

33

7,913

 JW Marriott 

12

5,643

6

1,624

18

7,267

 Tribute Portfolio 

20

4,626

11

1,211

31

5,837

 Element 

35

4,809

2

293

37

5,102

 Protea Hotels 

-

-

38

2,911

38

2,911

 The Ritz-Carlton 

1

429

-

-

1

429

 Bulgari 

-

-

1

85

1

85

 Marriott Executive Apartments 

-

-

1

66

1

66

 

 

MARRIOTT INTERNATIONAL, INC.

TOTAL LODGING PRODUCTS

As of June 30, 2019









North America

Total International

Total Worldwide


Units

Rooms

Units

Rooms

Units

Rooms

 Owned/Leased 

29

8,281

34

8,820

63

17,101

 Courtyard 

19

2,814

4

894

23

3,708

 Sheraton 

2

1,474

4

1,830

6

3,304

 Marriott Hotels 

3

1,664

5

1,631

8

3,295

 W Hotels 

1

509

2

665

3

1,174

 Protea Hotels 

-

-

7

1,168

7

1,168

 Westin 

1

1,073

-

-

1

1,073

 Renaissance 

1

317

3

749

4

1,066

 The Ritz-Carlton 

-

-

2

553

2

553

 JW Marriott 

-

-

1

496

1

496

 St. Regis 

1

238

1

160

2

398

 Residence Inn 

1

192

1

140

2

332

 The Luxury Collection 

-

-

2

287

2

287

 Autograph Collection 

-

-

2

247

2

247

 Residences 

57

6,475

36

3,519

93

9,994

 The Ritz-Carlton Residences 

35

4,370

11

938

46

5,308

 W Residences 

9

1,078

5

519

14

1,597

 St. Regis Residences 

7

585

7

598

14

1,183

 Westin Residences 

3

266

2

469

5

735

 Bulgari Residences 

-

-

4

448

4

448

 The Luxury Collection Residences 

2

151

3

115

5

266

 Sheraton Residences 

-

-

2

262

2

262

 Marriott Hotels Residences 

-

-

1

108

1

108

 Autograph Collection Residences 

-

-

1

62

1

62

 EDITION Residences 

1

25

-

-

1

25

 Timeshare* 

70

18,424

19

3,873

89

22,297

Grand Total

5,231

898,463

1,869

447,443

7,100

1,345,906








* 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.

 

 

MARRIOTT INTERNATIONAL, INC.

TOTAL LODGING PRODUCTS

As of June 30, 2019









North America

Total International

Total Worldwide

Total Systemwide

Units

Rooms

Units

Rooms

Units

Rooms

 Luxury 

177

49,782

325

75,709

502

125,491

 JW Marriott 

29

16,507

58

21,844

87

38,351

 The Ritz-Carlton 

39

11,410

58

15,496

97

26,906

 The Ritz-Carlton Residences 

35

4,370

11

938

46

5,308

 The Ritz-Carlton Serviced Apartments 

-

-

5

697

5

697

 The Luxury Collection 

17

5,084

97

17,707

114

22,791

 The Luxury Collection Residences 

2

151

3

115

5

266

 W Hotels 

25

7,587

31

8,012

56

15,599

 W Residences 

9

1,078

5

519

14

1,597

 St. Regis 

10

1,966

33

7,449

43

9,415

 St. Regis Residences 

7

585

7

598

14

1,183

 St. Regis Serviced Apartments 

-

-

1

70

1

70

 EDITION 

3

1,019

6

1,293

9

2,312

 EDITION Residences 

1

25

-

-

1

25

 Bulgari 

-

-

6

523

6

523

 Bulgari Residences 

-

-

4

448

4

448

 Full-Service 

962

344,850

882

253,401

1,844

598,251

 Marriott Hotels 

338

133,763

231

67,842

569

201,605

 Marriott Hotels Residences 

-

-

1

108

1

108

 Marriott Hotels Serviced Apartments 

-

-

1

154

1

154

 Sheraton 

190

72,556

250

82,622

440

155,178

 Sheraton Residences 

-

-

2

262

2

262

 Westin 

131

53,534

95

29,284

226

82,818

 Westin Residences 

3

266

2

469

5

735

 Renaissance 

87

28,872

86

25,681

173

54,553

 Autograph Collection 

100

20,920

75

15,374

175

36,294

 Autograph Collection Residences 

-

-

1

62

1

62

 Le Méridien 

20

4,235

88

24,411

108

28,646

 Delta Hotels 

67

16,160

2

562

69

16,722

 Gaylord Hotels 

6

9,918

-

-

6

9,918

 Tribute Portfolio 

20

4,626

16

1,924

36

6,550

 Marriott Executive Apartments 

-

-

32

4,646

32

4,646

 Limited-Service 

4,022

485,407

643

114,460

4,665

599,867

 Courtyard 

1,037

144,681

176

35,999

1,213

180,680

 Residence Inn 

806

99,778

14

1,746

820

101,524

 Fairfield by Marriott 

973

91,435

51

8,067

1,024

99,502

 SpringHill Suites 

433

51,508

-

-

433

51,508

 Four Points 

158

23,898

126

27,337

284

51,235

 TownePlace Suites 

399

40,298

-

-

399

40,298

 Aloft 

112

16,782

54

11,588

166

28,370

 AC Hotels by Marriott 

55

9,299

99

12,996

154

22,295

 Moxy 

13

2,739

33

6,606

46

9,345

 Protea Hotels 

-

-

81

8,407

81

8,407

 Element 

36

4,989

9

1,714

45

6,703

 Timeshare* 

70

18,424

19

3,873

89

22,297

 Grand Total 

5,231

898,463

1,869

447,443

7,100

1,345,906








* 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.

 

 

MARRIOTT INTERNATIONAL, INC.

KEY LODGING STATISTICS

In Constant $












Comparable Company-Operated North American Properties














Three Months Ended June 30, 2019 and June 30, 2018



REVPAR


Occupancy


Average Daily Rate

Brand


2019

 vs. 2018


2019

 vs. 2018


2019

 vs. 2018

JW Marriott


$231.56

1.0%


81.9%

-1.6%

pts.


$282.78

3.0%

The Ritz-Carlton


$294.18

2.5%


76.5%

0.4%

pts.


$384.39

2.0%

W Hotels


$256.29

-1.6%


82.4%

-0.4%

pts.


$311.12

-1.1%

Composite North American Luxury1


$275.85

1.1%


79.7%

-0.3%

pts.


$346.25

1.4%

Marriott Hotels


$168.80

0.7%


80.5%

-0.2%

pts.


$209.77

1.1%

Sheraton


$162.58

-3.0%


81.8%

-1.2%

pts.


$198.67

-1.6%

Westin


$175.41

-0.5%


80.8%

-0.3%

pts.


$217.15

-0.1%

Composite North American Upper Upscale2

$166.44

0.0%


80.6%

-0.3%

pts.


$206.52

0.4%

North American Full-Service3 


$185.28

0.3%


80.4%

-0.3%

pts.


$230.35

0.6%

Courtyard


$113.20

-1.4%


76.7%

-1.5%

pts.


$147.57

0.5%

Residence Inn


$136.95

1.5%


82.9%

0.6%

pts.


$165.28

0.7%

Composite North American Limited-Service4

$119.48

-0.7%


78.9%

-0.9%

pts.


$151.53

0.5%

North American - All5


$164.36

0.1%


79.9%

-0.5%

pts.


$205.63

0.7%























Comparable Systemwide North American Properties














Three Months Ended June 30, 2019 and June 30, 2018



REVPAR


Occupancy


Average Daily Rate

Brand


2019

 vs. 2018


2019

 vs. 2018


2019

 vs. 2018

JW Marriott


$216.78

1.2%


81.2%

-1.6%

pts.


$266.93

3.2%

The Ritz-Carlton


$295.50

2.5%


77.2%

0.4%

pts.


$383.02

2.0%

W Hotels


$256.29

-1.6%


82.4%

-0.4%

pts.


$311.12

-1.1%

Composite North American Luxury1


$262.53

1.0%


79.7%

-0.5%

pts.


$329.31

1.6%

Marriott Hotels


$142.95

1.3%


77.1%

-0.2%

pts.


$185.49

1.6%

Sheraton


$126.69

-0.8%


77.3%

-0.9%

pts.


$163.83

0.5%

Westin


$161.18

0.7%


79.4%

-0.2%

pts.


$203.04

1.0%

Composite North American Upper Upscale2

$145.11

1.2%


77.7%

-0.3%

pts.


$186.70

1.6%

North American Full-Service3 


$156.53

1.2%


77.9%

-0.3%

pts.


$200.90

1.5%

Courtyard


$111.57

-0.3%


76.8%

-1.0%

pts.


$145.35

1.1%

Residence Inn


$126.03

0.3%


82.3%

-0.4%

pts.


$153.08

0.8%

Fairfield by Marriott


$90.08

-0.5%


75.9%

-0.9%

pts.


$118.66

0.7%

Composite North American Limited-Service4

$108.32

0.1%


78.2%

-0.7%

pts.


$138.59

1.0%

North American - All5


$128.80

0.7%


78.1%

-0.5%

pts.


$165.01

1.3%


 

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.

 

 

MARRIOTT INTERNATIONAL, INC.

KEY LODGING STATISTICS

In Constant $












Comparable Company-Operated International Properties














Three Months Ended June 30, 2019 and June 30, 2018



REVPAR


Occupancy


Average Daily Rate

Region


2019

 vs. 2018


2019

 vs. 2018


2019

 vs. 2018

Greater China


$86.00

2.5%


69.7%

2.0%

pts.


$123.48

-0.4%

Rest of Asia Pacific


$116.01

5.5%


73.3%

3.1%

pts.


$158.35

1.0%

Asia Pacific


$98.71

3.9%


71.2%

2.4%

pts.


$138.68

0.4%












Caribbean & Latin America


$125.25

0.6%


65.0%

0.8%

pts.


$192.59

-0.6%

Europe


$164.67

4.3%


78.7%

1.2%

pts.


$209.25

2.7%

Middle East & Africa


$97.58

-0.7%


64.0%

2.8%

pts.


$152.51

-5.1%












International - All1


$115.69

3.1%


71.2%

2.1%

pts.


$162.54

0.0%












Worldwide2


$140.01

1.3%


75.5%

0.8%

pts.


$185.32

0.2%























Comparable Systemwide International Properties














Three Months Ended June 30, 2019 and June 30, 2018



REVPAR


Occupancy


Average Daily Rate

Region


2019

 vs. 2018


2019

 vs. 2018


2019

 vs. 2018

Greater China


$85.34

2.6%


69.3%

2.1%

pts.


$123.22

-0.5%

Rest of Asia Pacific


$116.27

4.4%


73.0%

2.3%

pts.


$159.29

1.1%

Asia Pacific


$100.36

3.6%


71.1%

2.2%

pts.


$141.21

0.4%