Marriott International Reports Strong Third Quarter Results

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Oct 4, 2007

Marriott International Reports Strong Third Quarter Results

BETHESDA, Md. and WASHINGTON, Oct 04, 2007 /PRNewswire-FirstCall via COMTEX News Network/ -- Marriott International, Inc. (NYSE: MAR) today reported third quarter 2007 adjusted net income of $122 million and adjusted diluted earnings per share (EPS) of $0.31. In the third quarter of 2006, adjusted net income totaled $144 million and adjusted EPS was $0.34. Adjusted results for both years exclude the impact of the company's synthetic fuel business. Strong REVPAR and unit expansion in the quarter led to a 15 percent increase in combined fees but was offset by a decline in timeshare profits and a higher effective tax rate. While the timeshare business reported results in the third quarter that exceeded the guidance the company provided on July 12, 2007, the year-over-year comparison was impacted by the 2006 reversal of a $15 million pretax contingency reserve related to marketing incentives.

The company's EPS guidance for the 2007 third quarter, disclosed on July 12, 2007, totaled $0.27 to $0.31 and excluded the company's synthetic fuel business.

Reported net income was $131 million in the third quarter of 2007 compared to $141 million in the year ago quarter. Reported EPS was $0.33 in both the third quarters of 2007 and 2006.

J.W. Marriott, Jr., Marriott International's chairman and chief executive officer, said, "Working together to serve our guests, we achieved another great quarter for our company. Worldwide comparable REVPAR increased 7.7 percent. Transient REVPAR for our Marriott branded hotels was up 10 percent. Leveraging technology and system size, we continued to drive higher property- level profits. In the third quarter, worldwide company-operated house profit per available room increased 12.2 percent and house profit margins expanded 180 basis points.

"Our brands are the best in the industry and are getting even better. Marriott Hotels & Resorts came out on top for the second year in a row on TripAdvisor's(R) annual survey of business travelers. More than 1,500 individuals responded to the survey, which also named Courtyard by Marriott one of the top five hotel chains for business travel. In late July, JD Power and Associates released its 2007 North America Hotel Guest Satisfaction study, measuring overall guest hotel satisfaction across six hotel segments. The Ritz-Carlton brand came in number one in the luxury segment and the JW Marriott brand came in second.

"Based on favorable group bookings, 2008 is shaping up as another strong year for Marriott International. Our growing pipeline of new hotels implies strong unit growth, and ongoing brand initiatives should enable us to increase our already substantial lead over the competition."

In the 2007 third quarter (12 week period from June 16, 2007 to September 7, 2007), REVPAR for the company's comparable worldwide systemwide properties increased 7.7 percent (6.6 percent using constant dollars). North American REVPAR for the company's comparable company-operated properties increased 7.2 percent.

Third quarter international company-operated comparable REVPAR increased 12.9 percent (7.5 percent using constant dollars), including a 10.8 percent increase in average daily rate (5.5 percent using constant dollars) and a 1.4 percentage point improvement in occupancy to 76.8 percent. The strong showing of the company's international hotels was especially gratifying given tough comparisons to Germany's World Cup business in 2006.

In the third quarter, Marriott added 50 new properties (7,163 rooms) to its worldwide lodging portfolio, including Renaissance hotels in Shanghai, China and Paris, France. The company also added the spectacular Abama Hotel & Spa in Tenerife, Spain and the Ritz-Carlton hotel in Moscow to the Ritz- Carlton system. Six properties (1,046 rooms) exited the system during the quarter. At quarter-end, the company's lodging group encompassed 2,942 hotels and timeshare resorts for a total of 527,307 rooms.

MARRIOTT REVENUES totaled $3.0 billion, a 12 percent increase from the same period in 2006. Base management and franchise fees rose 15 percent to $246 million as a result of REVPAR improvement, unit expansion and higher relicensing fees. Incentive fees rose 14 percent to $56 million, driven by strong REVPAR and higher property-level house profit margins. The 2006 quarter included $10 million of incentive fees that were calculated based on prior period results, but earned and due in the third quarter of 2006.

During the quarter, strong rate growth, higher food and beverage profits, moderating utility costs, and improved productivity drove property-level house profit margins up 180 basis points worldwide and 190 basis points in North America. In the 2007 third quarter, 59 percent of the company's managed properties paid incentive fees, compared to 54 percent in the year ago quarter. Year-to-date 66 percent of the company's managed properties paid incentive management fees compared to 60 percent in 2006.

Owned, leased, corporate housing and other revenue increased 10 percent in the third quarter, to $262 million, primarily driven by outstanding demand at the new leased Ritz-Carlton property in Tokyo. The solid growth was partially offset by the conversion of hotels to management and franchise contracts and the impact of renovation activity at several hotels. The 2006 third quarter revenues included termination fee income totaling $13 million.

Timeshare sales and services revenue increased 4 percent in the third quarter, driven by higher services and financing revenue. Net of direct expenses, results declined $31 million reflecting lower development profits and the comparison to the 2006 third quarter $15 million reversal of a contingency reserve related to marketing incentives. The company's Las Vegas timeshare resort reported higher development profits as a result of reaching higher reportability thresholds this year. However, this strength was more than offset by lower results from resorts nearing sell-out in Aruba, Orlando and Hilton Head.

Third quarter contract sales, including joint ventures, declined 1 percent to $350 million. Higher contract sales from the new Marriott Vacation Club timeshare resort in Marco Island were similarly offset by lower contract sales at resorts nearing sell-out. In addition, third quarter contract sales reflected a tough comparison to last year's successful launch of The Ritz- Carlton whole ownership project in San Francisco and the Marriott Vacation Club timeshare resort in St. Kitts. New resorts in Kauai, Orlando, Singer Island, Lake Tahoe and Vail should begin contract sales in 2008.

General, administrative and other expenses for the third quarter totaled $164 million, a 10 percent increase compared to the prior year, reflecting higher expenses associated with new hotel development, brand initiatives and the impact of foreign exchange.

SYNTHETIC FUEL operations contributed $0.02 per share of after-tax earnings during the 2007 third quarter, compared to a loss of $0.01 in the year ago quarter, reflecting higher production levels in 2007. The 2007 results included an estimated 20 percent phase out of tax credits retroactive to the beginning of the year, compared with a 51 percent estimated phase out in 2006. Excluding the impact of the synthetic fuel operations, the effective tax rate was approximately 43.5 percent in the third quarter of 2007. The effective tax rate in the third quarter of 2007 reflected the impact of a lower German tax rate on deferred tax assets, combined with a change in the mix of taxable income between countries. The fourth quarter tax rate (excluding the impact of synthetic fuel operations) is expected to be approximately 36 percent. The 2008 tax rate is expected to be between 35 percent and 36 percent.

GAINS AND OTHER INCOME totaled $30 million (excluding $3 million of expenses related to synthetic fuel) and included $22 million of gains on the sale of real estate, $2 million of gains from the sale of the company's interest in four joint ventures and $6 million of preferred returns from joint venture investments and other income. The prior year's third quarter gains included $4 million of gains on the sale of real estate, $3 million of gains from the sale of the company's interest in a joint venture and $3 million of preferred returns from joint venture investments.

INTEREST EXPENSE increased $13 million to $42 million, primarily due to higher interest rates and higher average borrowings, including senior debt issued during the 2007 third quarter. The company's repurchase of 40 million shares of common stock at $1.8 billion, over the past four quarters, contributed to the increase in debt.

INTEREST INCOME totaled $6 million during the quarter, down from $11 million in the year ago quarter. Interest income in 2006 included $3 million of income from the reversal of a reserve for a previously impaired loan. Interest income in 2007 was reduced by a $2 million mark-to-market expense associated with oil price hedges for the synthetic fuel operations. In 2006, the mark-to-market expense was $3 million.

EQUITY IN EARNINGS/(LOSSES) reflect Marriott's share of income or losses in equity joint venture investments. Improved results at the timeshare joint venture projects and the reopening of a hotel in Mexico following the hurricane in 2005 contributed to the $9 million increase in equity in earnings.

At the end of the 2007 third quarter, total debt was $2,948 million and cash balances totaled $208 million, compared to $1,833 million in total debt and $193 million of cash at the end of 2006.

The company repurchased 10.7 million shares of common stock in the third quarter of 2007 at a cost of $462 million. Year-to-date, through October 2, 2007, the company repurchased 30.8 million shares of common stock at a cost of $1.4 billion. The remaining share repurchase authorization as of October 2, 2007 totaled 43.4 million shares. The company expects to repurchase approximately $1.6 billion of its common stock during 2007.

FOURTH QUARTER 2007 OUTLOOK

The company expects worldwide systemwide comparable REVPAR and North American company-operated comparable REVPAR to increase 6 to 8 percent in the fourth quarter. Assuming a 150 to 200 basis point improvement in North American house profit margins, the company expects total fee revenue for the fourth quarter of approximately $445 million to $455 million, an increase of 14 to 17 percent.

The company expects timeshare sales and services revenue, net of expenses, to decline 14 to 17 percent in the fourth quarter. In the prior year's quarter, several projects reached higher reportability thresholds. In the 2007 quarter, the company anticipates that timeshare contract sales will decline 15 percent. The 2006 quarter benefited from a surge in contract sales in Hawaii when a new project received final government approvals. Gains on the sale of timeshare mortgage notes, which are included in timeshare sales and services revenue, are expected to total approximately $40 million in the fourth quarter of 2007.

The company expects gains and other income to total approximately $15 million in the fourth quarter of 2007, excluding the impact of the synthetic fuel business.

Based upon the above assumptions, the company expects EPS for the 2007 fourth quarter to total $0.61 to $0.63.

Given the risk created by volatility in oil prices, the company's earnings guidance does not include earnings from the synthetic fuel business.

The company expects investment spending in 2007 to total approximately $1,125 million, including $60 million for maintenance capital spending, $650 million for capital expenditures and acquisitions, $170 million for timeshare development, $25 million in new mezzanine financing and mortgage loans for hotels developed by owners and franchisees, and $220 million in equity and other investments (including timeshare equity investments). Included in capital expenditures is approximately $200 million already invested in land in Las Vegas. The company plans to develop a 3,500-room convention hotel with one-half million square feet of meeting space and a 75,000 square foot casino. Marriott expects partners to complete development of the hotel and operate the casino.

The company expects nearly 30,000 new room openings (gross) in 2007.

2008 OUTLOOK

Based on preliminary planning, the company expects that worldwide systemwide comparable REVPAR and North American company-operated comparable REVPAR will both increase 5 to 7 percent in 2008. Assuming a 50 to 100 basis point improvement in North American house profit margins for the year and approximately 30,000 new room openings (gross), the company expects total fee revenue of $1,540 million to $1,570 million.

The company anticipates investment spending in 2008 to total approximately $750 million to $850 million.

The company's 2008 outlook assumes share repurchases of $1.25 billion to $1.5 billion.

The company expects to permanently shut down its synthetic fuel facilities and cease production of synthetic fuel by December 31, 2007. The company expects costs associated with shutting down the synthetic fuel facilities will be immaterial.

With few hotels anticipated to be owned at the end of 2007, the company expects owned, leased, corporate housing and other revenue, net of direct expenses in 2008 to be flat compared to 2007 levels. With few assets available to be sold, gains and other income are expected to decline $62 million to approximately $30 million.

Given the above assumptions, the company expects earnings per share of $2.10 to $2.25 in 2008. Excluding earnings from synthetic fuel operations, as well as the ESOP tax settlement and gains and other income in both years, the company expects EPS to grow 18 to 26 percent in 2008.

Under the above assumptions, the company currently estimates the following results for the fourth quarter, full year 2007 (excluding the impact of the second quarter 2007 ESOP tax settlement and the synthetic fuel business) and full year 2008.


                         Fourth Quarter       Full Year        Full Year
                              2007              2007              2008
                         --------------    --------------    --------------

    Total fee revenue   $445 million to  $1,408 million to  $1,540 million to
                        $455 million     $1,418 million     $1,570 million

    Owned, leased,      Approx           Approx             $175 million to
     corporate housing  $65 million      $178 million       $185 million
     and other revenue,
     net of direct
     expenses

    Timeshare sales     $110 million to  $334 million to    $340 million to
     and services       $115 million     $339 million       $360 million
     revenue, net of
     direct expenses(1)

    General,            $235 million to  $718 million to    $740 million to
     administrative     $240 million     $723 million(4)    $755 million
     and other expenses

    Operating income    $380 million to  $1,197 million to  $1,300 million to
     (1,5)              $400 million     $1,217 million(4)  $1,375 million

    Gains and
     other income
     (excluding
     synthetic          Approx           Approx             Approx
     fuel)(2)           $15 million      $92 million        $30 million

    Net interest        Approx           Approx             $145 million to
     expense(3,5)       $45 million      $133 million(4)    $155 million

    Equity in           Approx           Approx             $15 million to
     earnings/(losses)  $10 million      $19 million        $20 million

    Earnings per share  No guidance      No guidance        None
     from synthetic
     fuel

    Earnings per share  $0.61 to $0.63   $1.88 to $1.90     $2.10 to $2.25
     excluding
     synthetic fuel
     and ESOP

    Effective tax rate  36 percent       36.5 percent       35 percent to 36
     excluding                                              percent
     synthetic fuel
     and ESOP

    (1) Includes timeshare mortgage note sale gains
    (2) Excludes timeshare mortgage note sale gains
    (3) Net of interest income, and assuming roughly $1.6 billion of share
        repurchases in 2007 and $1.25 billion to $1.5 billion of share
        repurchases in 2008
    (4) Excludes the impact of the second quarter 2007 ESOP tax settlement
    (5) Excludes synthetic fuel operations


2010 OUTLOOK

In October 2006, Marriott held an analyst meeting in Paris where the company outlined its long-term growth prospects through 2009. In conjunction with its annual planning process and to assist investors with their evaluation of the long-term performance of Marriott's business model, the company has updated this outlook through the year 2010.

Similar to its Paris forecast for the period 2007 to 2009, Marriott expects to increase the number of its systemwide hotel rooms by 85,000 to 100,000 from 2008 to 2010, with approximately one third of the new rooms located outside North America. At the end of the third quarter 2007, over 115,000 rooms were under construction, awaiting conversion, or approved for development. Further, assuming worldwide systemwide REVPAR increases of 3, 5 or 7 percent compounded from 2007 to 2010, the company expects total fee revenue in 2010 to total approximately $1,820 million, $1,970 million, or $2,120 million respectively, a growth rate of approximately 9, 12, or 14 percent compounded annually.

Marriott's timeshare business also continues to offer very attractive long-term growth opportunities. Timeshare projects under development today represent nearly $8 billion of potential revenue for the future. With a growing proportion of Ritz-Carlton fractional and residential products expected to begin sales, timeshare segment results could grow by 10 to 15 percent from 2007 to 2010 compounded.

Under the 3, 5 or 7 percent REVPAR growth assumption, Marriott's earnings per share could total $3.00, $3.40 or $3.80 respectively, a growth rate of 16 percent, 21 percent or 26 percent, respectively, compounded from 2007 to 2010 (excluding the impact of Marriott synthetic fuel business and the ESOP tax settlement in 2007).

A continued effort to optimize Marriott's capital structure, together with strong cash flow from operations and capital recycling, should fuel the company's significant growth as well as continued stock repurchases. The company's ongoing leverage target for adjusted debt to adjusted EBITDA remains approximately 3.0x to 3.25x and is likely to be at the lower end of the range for 2007. Through the third quarter of 2007, Marriott repurchased $4.6 billion in common stock over the past three years, roughly 28 percent of the company's outstanding shares. The company plans to invest roughly $1.6 billion in share repurchases in 2007. While use of the company's cash flow may vary as investment opportunities arise, given its cash flow characteristics, the company estimates that it could invest $4.5 billion to $5 billion in share repurchases in 2008 through 2010. This is possible due to the significant cash flow generated by Marriott's business and can still be accomplished while maintaining the company's commitment to a strong BBB credit rating.

"We are gratified that our 2007 year-to-date results and updated analysis reinforces the conclusions we communicated in Paris," said Arne Sorenson, Chief Financial Officer. "Marriott remains the leading hotel management and franchise company with 20 different brands including two new brands announced since the Paris meeting. Our brand leadership drives owner preference and substantial unit growth. And our business model, combined with our strong brands and service culture, provide solid long-term earnings and cash flow growth. Finally, over time, our share repurchases offer accelerating earnings accretion. There are few businesses that offer these attractive growth characteristics."

Marriott International, Inc. (NYSE: MAR) will conduct its quarterly earnings review for the investment community and news media on Thursday, October 4, 2007 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, click the "Recent Investor News" tab and click on the quarterly conference call link. A replay will be available at that same website until November 4, 2007. The webcast will also be available as a podcast from the same site.

The telephone dial-in number for the conference call is 719-457-2693. A telephone replay of the conference call will also be available by telephone from 1 p.m. ET, Thursday, October 4, 2007 until 8 p.m. ET, Thursday, October 11, 2007. To access the replay, call 719-457-0820. The reservation number for the recording is 2614627.

Note: This press release contains "forward-looking statements" within the meaning of federal securities laws, including REVPAR, profit margin and earnings trends; statements concerning the number of lodging properties we expect to add in the future; our expected share repurchases and 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 extent of growth in the economy and the lodging industry; supply and demand changes for hotel rooms, vacation ownership, condominiums, 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 other risk factors identified in our most recent quarterly report on Form 10-Q; 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 over 2,900 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, 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 151,000 employees at 2006 year-end. It is ranked as the lodging industry's most admired company and one of the best places to work for by FORTUNE(R). The company is also a 2006 U.S. Environmental Protection Agency (EPA) ENERGY STAR(R) Partner. In fiscal year 2006, Marriott International reported sales from continuing operations of $12.2 billion. For more information or reservations, please visit our Web site at www.marriott.com.

                                Tables follow


                           MARRIOTT INTERNATIONAL, INC.
                         CONSOLIDATED STATEMENT OF INCOME
                     (in millions, except per share amounts)

                                            Twelve Weeks Ended
                                         -------------------------    Percent
                                         September 7, September 8,    Better/
                                             2007        2006         (Worse)
                                         ------------ ------------    -------
    REVENUES
    Base management fees                      $135        $119           13
    Franchise fees                             111          94           18
    Incentive management fees                   56          49           14
    Owned, leased, corporate housing and
     other revenue (1)                         262         239           10
    Timeshare sales and services (2)           389         374            4
    Cost reimbursements (3)                  1,990       1,822            9
    Synthetic fuel                              97           6        1,517
                                         ------------ ------------
       Total Revenues                        3,040       2,703           12

    OPERATING COSTS AND EXPENSES
    Owned, leased and corporate housing
     - direct (4)                              235         201          (17)
    Timeshare - direct                         344         298          (15)
    Reimbursed costs                         1,990       1,822           (9)
    General, administrative and other (5)      164         149          (10)
    Synthetic fuel                             124           4       (3,000)
                                         ------------ ------------
       Total Expenses                        2,857       2,474          (15)
                                         ------------ ------------

    OPERATING INCOME                           183         229          (20)


    Gains and other income (expense) (6)        27          13          108
    Interest expense                           (42)        (29)         (45)
    Interest income                              6          11          (45)
    Equity in earnings (losses) (7)              8          (1)         900
                                         ------------ ------------

    INCOME BEFORE INCOME TAXES AND
     MINORITY INTEREST                         182         223          (18)
    Provision for income taxes                 (52)        (82)          37
    Minority interest                            1           -            *
                                         ------------ ------------

    NET INCOME                                $131        $141           (7)
                                         ============ ============

    EARNINGS PER SHARE - Basic               $0.35       $0.35            -
                                         ============ ============

    EARNINGS PER SHARE - Diluted             $0.33       $0.33            -
                                         ============ ============

    Basic Shares                             373.8       400.7
    Diluted Shares                           394.1       424.7


    *  Percent can not be calculated.

    1 - Owned, leased, corporate housing and other revenue includes revenue
        from the properties we own or lease, revenue from our corporate
        housing business, land rent income and other revenue.
    2 - Timeshare sales and services includes total timeshare revenue except
        for base fees, cost reimbursements, real estate gains and joint
        venture earnings.  Timeshare sales and services includes gains on the
        sale of timeshare note receivable securitizations.
    3 - Cost reimbursements include reimbursements from lodging properties for
        company 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 corporate housing business.
    5 - General, administrative and other expenses include the overhead costs
        allocated to our lodging business segments, and our corporate overhead
        costs and general expenses.
    6 - Gains and other income (expense) includes net gains on the sale of
        real estate, gains on note sales or repayments (except timeshare note
        securitizations gains), gains on the sale of joint ventures, income
        from cost method joint ventures and net earn-out payments associated
        with our synthetic fuel operations.
    7 - Equity in earnings (losses) includes our equity in earnings (losses)
        of unconsolidated joint ventures.



                          MARRIOTT INTERNATIONAL, INC.
                        CONSOLIDATED STATEMENT OF INCOME
                    (in millions, except per share amounts)

                                          Thirty-Six Weeks Ended
                                         -------------------------  Percent
                                         September 7, September 8,  Better/
                                             2007        2006       (Worse)
                                         ------------ ------------  -------
    REVENUES
    Base management fees                      $417        $380         10
    Franchise fees                             303         269         13
    Incentive management fees                  243         185         31
    Owned, leased, corporate housing and
     other revenue (1)                         824         765          8
    Timeshare sales and services (2)         1,211       1,051         15
    Cost reimbursements (3)                  5,903       5,547          6
    Synthetic fuel                             253         102        148
                                         ------------ ------------
       Total Revenues                        9,154       8,299         10

    OPERATING COSTS AND EXPENSES
    Owned, leased and corporate housing
     - direct (4)                              711         634        (12)
    Timeshare - direct                         987         827        (19)
    Reimbursed costs                         5,903       5,547         (6)
    General, administrative and other (5)      518         440        (18)
    Synthetic fuel                             351         145       (142)
                                         ------------ ------------
       Total Expenses                        8,470       7,593        (12)
                                         ------------ ------------

    OPERATING INCOME                           684         706         (3)

    Gains and other income (expense) (6)        46          55        (16)
    Interest expense                          (127)        (86)       (48)
    Interest income                             15          34        (56)
    (Provision for) reversal of loan
     losses                                      -           3       (100)
    Equity in earnings (losses) (7)              9           2        350
                                         ------------ ------------

    INCOME FROM CONTINUING OPERATIONS
     BEFORE INCOME TAXES AND MINORITY
     INTEREST                                  627         714        (12)
    Provision for income taxes                (108)       (223)        52
    Minority interest                            1           6        (83)
                                         ------------ ------------

    INCOME FROM CONTINUING OPERATIONS          520         497          5
    Cumulative effect of change in
     accounting principle, net of
     tax (8)                                     -        (109)       100
                                         ------------ ------------
    NET INCOME                                $520        $388         34
                                         ============ ============

    EARNINGS PER SHARE - Basic
      Earnings from continuing
       operations                            $1.36       $1.22         11
      Losses from cumulative effect of
       change in accounting principle            -       (0.27)       100
                                         ------------ ------------
       Earnings per share                    $1.36       $0.95         43
                                         ============ ============

    EARNINGS PER SHARE - Diluted
      Earnings from continuing
       operations                            $1.29       $1.14         13
      Losses from cumulative effect of
       change in accounting principle            -       (0.25)       100
                                         ------------ ------------
       Earnings per share                    $1.29       $0.89         45
                                         ============ ============


    Basic Shares                             381.6       408.3
    Diluted Shares                           403.4       434.4


    1 - Owned, leased, corporate housing and other revenue includes revenue
        from the properties we own or lease, revenue from our corporate
        housing business, land rent income and other revenue.
    2 - Timeshare sales and services includes total timeshare revenue except
        for base fees, cost reimbursements, real estate gains and joint
        venture earnings.  Timeshare sales and services includes gains on the
        sale of timeshare note receivable securitizations.
    3 - Cost reimbursements include reimbursements from lodging properties
        for company 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 corporate housing business.
    5 - General, administrative and other expenses include the overhead
        costs allocated to our lodging business segments and our corporate
        overhead costs and general expenses.
    6 - Gains and other income (expense) includes gains and losses on the
        sale of real estate, gains on note sales or repayments (except
        timeshare note securitizations gains), gains and losses on the sale of
        joint ventures, income from cost method joint ventures and net
        earn-out payments associated with our synthetic fuel operations.
    7 - Equity in earnings (losses) includes our equity in earnings
        (losses) of unconsolidated equity method 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.


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


                                            Twelve Weeks Ended
                                         -------------------------   Percent
                                         September 7, September 8,   Better/
                                             2007         2006       (Worse)
                                         ------------ ------------   -------
    REVENUES

    North American Full-Service              $1,241       $1,124         10
    North American Limited-Service              540          500          8
    International                               343          332          3
    Luxury                                      339          313          8
    Timeshare                                   463          413         12
                                         ------------ ------------
      Total lodging (1)                       2,926        2,682          9
    Synthetic Fuel                               97            6      1,517
    Other unallocated corporate                  17           15         13
                                         ------------ ------------
      Total                                  $3,040       $2,703         12
                                         ============ ============

    NET INCOME

    North American Full-Service                 $78          $72          8
    North American Limited-Service              119           93         28
    International                                57           55          4
    Luxury                                       15           10         50
    Timeshare                                    39           61        (36)
                                         ------------ ------------
      Total lodging financial results (1)       308          291          6
    Synthetic Fuel (after-tax)                    9           (3)       400
    Other unallocated corporate                 (59)         (55)        (7)
    Interest income, provision for loan
     losses and interest expense (excluding
     Synthetic Fuel)                            (34)         (15)      (127)
    Income taxes (excluding Synthetic Fuel)     (93)         (77)       (21)
                                         ------------ ------------
      Total                                    $131         $141         (7)
                                         ============ ============


    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)


                                          Thirty-Six Weeks Ended
                                         --------------------------  Percent
                                         September 7,  September 8,  Better/
                                             2007          2006      (Worse)
                                         ------------  ------------  -------
    REVENUES

    North American Full-Service              $3,767        $3,610         4
    North American Limited-Service            1,541         1,442         7
    International                             1,056           933        13
    Luxury                                    1,048           973         8
    Timeshare                                 1,438         1,196        20
                                         ------------  ------------
      Total lodging (1)                       8,850         8,154         9
    Synthetic Fuel                              253           102       148
    Other unallocated corporate                  51            43        19
                                         ------------  ------------
      Total                                  $9,154        $8,299        10
                                         ============  ============

    INCOME FROM CONTINUING OPERATIONS

    North American Full-Service                $324          $314         3
    North American Limited-Service              337           271        24
    International                               166           160         4
    Luxury                                       44            44         -
    Timeshare                                   190           180         6
                                         ------------  ------------
      Total lodging financial results (1)     1,061           969         9
    Synthetic Fuel (after-tax)                   59             4      1375
    Other unallocated corporate                (192)         (164)      (17)
    Interest income, provision for loan
     losses and interest expense (excluding
     Synthetic Fuel)                           (101)          (48)     (110)
    Income taxes (excluding Synthetic
     Fuel)                                     (307)         (264)      (16)
                                         ------------  ------------
      Total                                    $520          $497         5
                                         ============  ============

    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

                                               vs.                      vs.
                         Sept. 7, Sept. 8, Sept. 8, Sept. 7, Sept. 8, Sept. 8,
    Brand                   2007    2006      2006     2007     2006    2006
    -------------------- -------- -------- -------- -------- -------- --------
    Domestic Full-Service
     Marriott Hotels &
      Resorts                340     340        -    135,611  135,590      21
     Renaissance Hotels &
      Resorts                 68      66        2     25,023   25,084     (61)
    Domestic Limited-Service
     Courtyard               679     641       38     94,830   90,166   4,664
     Fairfield Inn           521     515        6     46,231   46,460    (229)
     SpringHill Suites       166     148       18     19,372   17,246   2,126
     Residence Inn           516     493       23     61,421   58,920   2,501
     TownePlace Suites       134     122       12     13,467   12,295   1,172
    International
     Marriott Hotels &
      Resorts                181     176        5     52,324   50,564   1,760
     Renaissance Hotels &
      Resorts                 74      71        3     23,958   23,144     814
     Courtyard                72      81       (9)    13,605   13,916    (311)
     Fairfield Inn             7       5        2        859      559     300
     SpringHill Suites         1       1        -        124      124       -
     Residence Inn            18      18        -      2,612    2,409     203
     Marriott Executive
      Apartments              18      18        -      3,036    3,027       9
     Ramada                    2       2        -        332      332       -
    Luxury
     The Ritz-Carlton -
      Domestic                35      35        -     11,530   11,616     (86)
     The Ritz-Carlton -
      International           30      25        5      9,052    7,766   1,286
     Bulgari Hotels & Resorts  2       1        1        117       58      59
     The Ritz-Carlton
      Residential             16       -       16      1,495        -   1,495
     The Ritz-Carlton
      Services Apartments      1       -        1        248        -     248
    Timeshare(2)
     Marriott Vacation Club   46      45        1     10,775   10,189     586
     The Ritz-Carlton Club -
      Fractional               7       7        -        388      400     (12)
     The Ritz-Carlton Club -
      Residential              3       -        3        140        -     140
     Grand Residences by
      Marriott - Fractional    2       3       (1)       248      313     (65)
     Grand Residences by
      Marriott - Residential   1       -        1         65        -      65
     Horizons by Marriott
      Vacation Club            2       2        -        444      328     116
                         -------------------------- --------------------------
    Sub Total Timeshare       61      57        4     12,060   11,230     830
                         -------------------------- --------------------------

                         -------------------------- --------------------------
    Total                  2,942   2,815      127    527,307  510,506  16,801
                         ========================== ==========================


     Number of Timeshare Interval, Fractional and Whole Ownership Resorts(2)
    ------------------------------------------------------------------------
                                          In Active
                                Total(3)    Sales
                                --------  ---------
    100% Company-Developed
    ----------------------
      Marriott Vacation Club      45          24
      The Ritz-Carlton Club        6           4
      Grand Residences by
       Marriott                    3           3
      Horizons by Marriott
       Vacation Club               2           2

    Joint Ventures
    --------------
      Marriott Vacation Club       1           1
      The Ritz-Carlton Club        4           4
                                -------------------
    Total                         61          38
                                ===================


    1  Total Lodging Products excludes the 1,936 and 2,045 corporate
       housing rental units as of September 7, 2007 and September 8, 2006,
       respectively.
    2  Includes products in active sales which may not be ready for
       occupancy.
    3  Includes resorts that are in active sales and those that are sold out.
       Residential properties are captured once they possess a certificate
       of occupancy.


                         Marriott International, Inc.
                            Key Lodging Statistics


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

                       Three Months Ended August 31, 2007 and August 31, 2006
                       ------------------------------------------------------
                                  REVPAR       Occupancy   Average Daily Rate
                       ------------------------------------------------------
    Region                   2007    vs.2006  2007 vs.2006      2007  vs.2006
                       ------------------------------------------------------
    Caribbean & Latin
     America                $116.66    13.2%  76.8%   2.9% pts. $151.88  9.0%
    Continental Europe      $127.08     2.0%  76.9%   1.4% pts. $165.16  0.1%
    United Kingdom          $160.99     5.4%  81.4%   0.3% pts. $197.83  5.0%
    Middle East & Africa     $83.81    14.5%  70.5%   3.1% pts. $118.92  9.4%
    Asia Pacific(2)         $103.09     7.0%  76.0%  -0.5% pts. $135.68  7.6%

    Regional Composite(3)   $123.08     5.9%  77.3%   0.9% pts. $159.28  4.7%

    International Luxury(4) $197.49    17.0%  72.9%   6.0% pts. $271.09  7.3%

    Total International(5)  $130.70     7.5%  76.8%   1.4% pts. $170.12  5.5%

    Worldwide(6)            $119.07     7.3%  76.5%   1.7% pts. $155.61  5.0%


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

                        Three Months Ended August 31, 2007 and August 31, 2006
                        ------------------------------------------------------
                                REVPAR         Occupancy    Average Daily Rate
                        ------------------------------------------------------
    Region                   2007    vs.2006  2007   vs.2006    2007   vs.2006
                        ------------------------------------------------------
    Caribbean & Latin
     America                $106.59    10.8%  75.2%   3.1% pts. $141.80  6.2%
    Continental Europe      $126.28     2.1%  74.8%   1.1% pts. $168.93  0.6%
    United Kingdom          $158.51     5.3%  81.3%   0.6% pts. $195.07  4.5%
    Middle East & Africa     $82.76    15.1%  70.5%   3.8% pts. $117.36  8.9%
    Asia Pacific(2)         $104.84     5.3%  75.6%  -0.8% pts. $138.65  6.4%

    Regional Composite(3)   $120.46     5.2%  76.1%   0.8% pts. $158.25  4.0%

    International Luxury(4) $197.49    17.0%  72.9%   6.0% pts. $271.09  7.3%

    Total International(5)  $126.95     6.6%  75.8%   1.3% pts. $167.38  4.8%

    Worldwide(6)            $104.90     6.6%  76.6%   0.9% pts. $136.96  5.5%

    1  International financial results are reported on a period basis, while
       International statistics are reported on a monthly basis. Statistics
       are in constant dollars for June through August.  Excludes North
       America (except for Worldwide).
    2  Does not include Hawaii.
    3  Regional information includes the Marriott Hotels & Resorts,
       Renaissance Hotels & Resorts, Courtyard brands, Fairfield Inn,
       SpringHill Suites and Residence Inn.  Includes Hawaii.
    4  International Luxury includes The Ritz-Carlton properties outside of
       North America and Bulgari Hotels & Resorts.
    5  Includes Regional Composite and International Luxury.
    6  Includes international statistics for the three calendar months ended
       August 31, 2007 and August 31, 2006, and North American statistics for
       the twelve weeks ended September 7, 2007 and September 8, 2006.
       Includes the Marriott Hotels & Resorts, The Ritz-Carlton, Bulgari
       Hotels & Resorts, Renaissance Hotels & Resorts, Residence Inn,
       Courtyard, TownePlace Suites, Fairfield Inn and SpringHill Suites
       brands.


                         Marriott International, Inc.
                            Key Lodging Statistics

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

                        Eight Months Ended August 31, 2007 and August 31, 2006
                        ------------------------------------------------------
                                 REVPAR         Occupancy   Average Daily Rate
                        ------------------------------------------------------
    Region                  2007   vs.2006   2007    vs.2006    2007   vs.2006
    --------------------------------------------------------------------------
    Caribbean & Latin
     America                $129.99   12.0%   77.4%   1.7% pts. $167.92  9.5%
    Continental Europe      $121.11    6.4%   73.1%   1.5% pts. $165.66  4.2%
    United Kingdom          $148.85    5.4%   77.1%   1.1% pts. $192.94  3.9%
    Middle East & Africa     $98.40   17.3%   72.9%   4.1% pts. $135.00 10.6%
    Asia Pacific(2)         $105.90    8.8%   74.7%  -1.0% pts. $141.79 10.3%

    Regional Composite(3)   $122.34    8.2%   75.2%   0.9% pts. $162.67  6.9%

    International
     Luxury(4)              $213.06   13.8%   73.1%   4.7% pts. $291.60  6.4%

    Total International(5)  $131.62    9.1%   75.0%   1.3% pts. $175.52  7.3%

    Worldwide(6)            $120.03    6.9%   74.2%   0.5% pts. $161.82  6.3%


              Comparable Systemwide International Properties(1)
    --------------------------------------------------------------------------
                        Eight Months Ended August 31, 2007 and August 31, 2006
                        ------------------------------------------------------
                                 REVPAR         Occupancy   Average Daily Rate
                        ------------------------------------------------------
    Region                   2007   vs.2006   2007   vs.2006    2007   vs.2006
    --------------------------------------------------------------------------
    Caribbean & Latin
     America                $119.61   11.4%   75.4%   2.6% pts. $158.66  7.6%
    Continental Europe      $118.22    6.2%   70.4%   0.8% pts. $168.02  5.0%
    United Kingdom          $146.40    5.4%   76.7%   1.3% pts. $190.80  3.5%
    Middle East & Africa     $95.64   17.3%   71.8%   4.2% pts. $133.17 10.3%
    Asia Pacific(2)         $106.54    8.1%   74.7%  -0.5% pts. $142.57  8.8%

    Regional Composite(3)   $118.90    7.8%   73.9%   0.9% pts. $161.00  6.5%

    International Luxury(4) $213.06   13.8%   73.1%   4.7% pts. $291.60  6.4%

    Total International(5)  $126.84    8.7%   73.8%   1.3% pts. $171.90  6.8%

    Worldwide(6)            $103.00    6.4%   73.8%   0.0% pts. $139.56  6.4%

    1  International financial results are reported on a period basis, while
       International statistics are reported on a monthly basis.  Statistics
       are in constant dollars for January through August. Excludes North
       America (except for Worldwide).
    2  Does not include Hawaii.
    3  Regional information includes the Marriott Hotels & Resorts,
       Renaissance Hotels & Resorts, Courtyard brands, Fairfield Inn,
       SpringHill Suites and Residence Inn.  Includes Hawaii.
    4  International Luxury includes The Ritz-Carlton properties outside of
       North America and Bulgari Hotels & Resorts.
    5  Includes Regional Composite and International Luxury.
    6  Includes international statistics for the eight calendar months ended
       August 31, 2007 and August 31, 2006, and North American statistics for
       the thirty-six weeks ended September 7, 2007 and September 8, 2006.
       Includes the Marriott Hotels & Resorts, The Ritz-Carlton, Bulgari
       Hotels & Resorts, Renaissance Hotels & Resorts, Residence Inn,
       Courtyard, TownePlace Suites, Fairfield Inn and SpringHill Suites
       brands.


                         Marriott International, Inc.
                            Key Lodging Statistics


              Comparable Company-Operated North American Properties
    --------------------------------------------------------------------------
                    Twelve Weeks Ended September 7, 2007 and September 8, 2006
                   -----------------------------------------------------------
                                   REVPAR       Occupancy   Average Daily Rate
                   -----------------------------------------------------------
    Brand                    2007   vs.2006   2007  vs.2006     2007  vs.2006
    --------------------------------------------------------------------------
    Marriott Hotels
     & Resorts              $124.92    8.0%   76.2%   2.5% pts. $163.96  4.5%
    Renaissance Hotels &
     Resorts                $119.71    8.4%   75.9%   2.7% pts. $157.82  4.6%
    Composite North American
     Full-Service(1)        $124.11    8.1%   76.1%   2.5% pts. $163.00  4.5%
    The Ritz-Carlton(2)     $210.18    8.3%   74.2%   1.6% pts. $283.32  6.0%
    Composite North
     American Full-Service
     & Luxury(3)            $132.90    8.1%   75.9%   2.4% pts. $175.00  4.7%
    Residence Inn           $100.23    5.0%   82.3%   0.9% pts. $121.78  3.9%
    Courtyard                $90.82    5.7%   74.2%   1.1% pts. $122.39  4.1%
    TownePlace Suites        $68.28    6.3%   79.2%  -2.1% pts.  $86.21  9.1%
    SpringHill Suites        $82.73    6.1%   77.8%   2.2% pts. $106.33  3.1%
    Composite North
     American
     Limited-Service(4)      $91.47    5.7%   76.9%   1.0% pts. $118.91  4.3%
    Composite - All(5)      $114.18    7.2%   76.4%   1.8% pts. $149.47  4.7%


               Comparable Systemwide North American Properties
    --------------------------------------------------------------------------
                    Twelve Weeks Ended September 7, 2007 and September 8, 2006
                    ----------------------------------------------------------
                                 REVPAR        Occupancy    Average Daily Rate
                    ----------------------------------------------------------
    Brand                    2007    vs.2006  2007    vs.2006    2007  vs.2006
    --------------------------------------------------------------------------
    Marriott Hotels
     & Resorts              $113.33    7.4%   73.9%   1.5% pts. $153.25  5.2%
    Renaissance Hotels &
     Resorts                $110.41    7.0%   74.7%   1.1% pts. $147.87  5.4%
    Composite North American
     Full-Service(1)        $112.89    7.3%   74.1%   1.4% pts. $152.43  5.2%
    The Ritz-Carlton(2)     $210.18    8.3%   74.2%   1.6% pts. $283.32  6.0%
    Composite North American
     Full-Service
     & Luxury(3)            $118.74    7.4%   74.1%   1.4% pts. $160.32  5.3%
    Residence Inn           $101.78    5.7%   83.2%   0.2% pts. $122.40  5.4%
    Courtyard                $93.04    5.7%   76.3%   0.7% pts. $121.89  4.8%
    Fairfield Inn            $69.25    7.2%   76.9%   0.4% pts.  $90.06  6.7%
    TownePlace Suites        $68.63    5.6%   78.8%  -2.2% pts.  $87.06  8.5%
    SpringHill Suites        $82.39    6.2%   77.5%   0.5% pts. $106.36  5.5%
    Composite North American
     Limited-Service(4)      $88.41    6.0%   78.5%   0.3% pts. $112.67  5.5%
    Composite - All(5)      $100.20    6.7%   76.8%   0.8% pts. $130.54  5.6%

    1 Includes the Marriott Hotels & Resorts, and Renaissance Hotels &
       Resorts brands.
    2 Statistics for The Ritz-Carlton are for June through August.
    3 Includes the Marriott Hotels & Resorts, Renaissance Hotels & Resorts
      and The Ritz-Carlton brands.
    4 Includes the Residence Inn, Courtyard, Fairfield Inn, TownePlace
      Suites, and SpringHill Suites brands.
    5 Includes the Marriott Hotels & Resorts, Renaissance Hotels & Resorts,
      The Ritz-Carlton, Residence Inn, Courtyard, Fairfield Inn, TownePlace
      Suites, and SpringHill Suites brands.


                         Marriott International, Inc.
                            Key Lodging Statistics


              Comparable Company-Operated North American Properties
    --------------------------------------------------------------------------
                Thirty-Six Weeks Ended September 7, 2007 and September 8, 2006
                --------------------------------------------------------------
                                   REVPAR       Occupancy   Average Daily Rate
                --------------------------------------------------------------
    Brand                    2007    vs.2006  2007    vs.2006     2007 vs.2006
    --------------------------------------------------------------------------
    Marriott Hotels
     & Resorts              $126.97    7.1%   73.8%   1.3% pts.  $172.14 5.2%
    Renaissance Hotels &
     Resorts                $124.52    5.1%   74.4%   0.1% pts.  $167.28 5.0%
    Composite North American
     Full-Service(1)        $126.59    6.8%   73.9%   1.1% pts.  $171.37 5.2%
    The Ritz-Carlton(2)     $243.20    7.8%   74.1%   0.2% pts.  $328.16 7.4%
    Composite North American
     Full-Service
     & Luxury(3)            $137.20    6.9%   73.9%   1.0% pts.  $185.68 5.5%
    Residence Inn            $97.05    3.3%   78.7%  -1.2% pts.  $123.27 4.9%
    Courtyard                $90.36    4.7%   71.5%  -0.7% pts.  $126.37 5.7%
    TownePlace Suites        $64.71    6.7%   75.4%  -2.2% pts.   $85.80 9.8%
    SpringHill Suites        $79.54    4.2%   73.7%  -0.2% pts.  $107.95 4.5%
    Composite North American
     Limited-Service(4)      $89.96    4.4%   73.9%  -0.8% pts.  $121.81 5.6%
    Composite - All(5)      $115.71    6.0%   73.9%   0.2% pts.  $156.63 5.8%


               Comparable Systemwide North American Properties
    --------------------------------------------------------------------------
                Thirty-Six Weeks Ended September 7, 2007 and September 8, 2006
                --------------------------------------------------------------
                                 REVPAR        Occupancy    Average Daily Rate
                --------------------------------------------------------------
    Brand                    2007    vs.2006  2007  vs.2006      2007  vs.2006
    --------------------------------------------------------------------------
    Marriott Hotels
     & Resorts              $114.03    6.4%   72.0%   0.8% pts. $158.36  5.2%
    Renaissance Hotels &
     Resorts                $112.83    4.8%   72.9%  -0.5% pts. $154.87  5.5%
    Composite North American
     Full-Service(1)        $113.85    6.1%   72.1%   0.6% pts. $157.82  5.2%
    The Ritz-Carlton(2)     $243.20    7.8%   74.1%   0.2% pts. $328.16  7.4%
    Composite North American
     Full-Service
     & Luxury(3)            $120.77    6.3%   72.2%   0.6% pts. $167.18  5.4%
    Residence Inn            $96.88    4.8%   79.4%  -1.1% pts. $122.05  6.3%
    Courtyard                $90.47    5.3%   73.2%  -0.5% pts. $123.57  6.0%
    Fairfield Inn            $63.43    6.6%   72.0%  -0.5% pts.  $88.04  7.3%
    TownePlace Suites        $65.11    5.0%   74.8%  -2.9% pts.  $87.01  9.1%
    SpringHill Suites        $79.63    5.8%   74.7%  -0.5% pts. $106.60  6.5%
    Composite North American
     Limited-Service(4)      $84.50    5.4%   74.8%  -0.8% pts. $112.97  6.5%
    Composite - All(5)       $98.51    5.8%   73.8%  -0.2% pts. $133.46  6.2%


    1 Includes the Marriott Hotels & Resorts, and Renaissance Hotels &
      Resorts brands.
    2 Statistics for The Ritz-Carlton are for January through August.
    3 Includes the Marriott Hotels & Resorts, Renaissance Hotels & Resorts
      and The Ritz-Carlton brands.
    4 Includes the Residence Inn, Courtyard, Fairfield Inn, TownePlace
      Suites, and SpringHill Suites brands.
    5 Includes the Marriott Hotels & Resorts, Renaissance Hotels & Resorts,
      The Ritz-Carlton, Residence Inn, Courtyard, Fairfield Inn, TownePlace
      Suites, and SpringHill Suites brands.


                          MARRIOTT INTERNATIONAL, INC.
                                TIMESHARE SEGMENT
                                 ($ in millions)

    Segment Results
    -----------------
                                            Twelve Weeks Ended
                                         -------------------------  Percent
                                         September 7, September 8,  Better /
                                             2007        2006       (Worse)
                                         ------------ -----------   --------
    Base fees revenue                          $10          $8          25
    Timeshare sales and services revenue,
     net of direct expenses                     45          76         (41)
    Joint venture equity income (loss)           5           -            *
    Minority interest                            1           -            *
    General, administrative and other
     expense                                   (22)        (23)          4
                                         ------------ -----------
     Segment results                           $39         $61         (36)
                                         ============ ===========

    Sales and Services Revenue
    --------------------------
                                            Twelve Weeks Ended
                                         -------------------------  Percent
                                         September 7, September 8,  Better /
                                             2007        2006       (Worse)
                                         ------------ ------------  --------
    Development                               $279        $281          (1)
    Services                                    77          70          10
    Financing                                   28          23          22
    Other revenue                                5           -            *
                                         ------------ ------------
     Sales and services revenue               $389        $374           4
                                         ============ ============


    Contract Sales
    --------------
                                            Twelve Weeks Ended
                                         -------------------------  Percent
                                         September 7, September 8,  Better /
                                             2007        2006       (Worse)
                                         ------------ ------------  --------
    Company:
      Timeshare                               $313        $314           -
      Fractional                                12          13          (8)
      Whole-Ownership                            6           2         200
                                         ------------ ------------
      Total company                            331         329           1
    Joint ventures:
      Timeshare                                  7           5          40
      Fractional                                 7           3         133
      Whole-Ownership                            5          18         (72)
                                         ------------ ------------
      Total joint ventures                      19          26         (27)
                                         ------------ ------------
      Total contract sales, including
       joint ventures                         $350        $355          (1)
                                         ============ ============

      *   Percent can not be calculated.


                           MARRIOTT INTERNATIONAL, INC.
                                TIMESHARE SEGMENT
                                 ($ in millions)

    Segment Results
    ---------------
                                          Thirty-Six Weeks Ended
                                         -------------------------   Percent
                                         September 7, September 8,   Better /
                                             2007         2006       (Worse)
                                         ------------ ------------   --------
    Base fees revenue                           $30          $24         25
    Timeshare sales and services revenue,
     net of direct expenses                     224          224          -
    Joint venture equity income (loss)            4            1        300
    Minority interest                             1            -           *
    General, administrative and other
     expense                                    (69)         (69)         -
                                         ------------ ------------
      Segment results                          $190         $180          6
                                         ============ ============


    Sales and Services Revenue
    --------------------------
                                           Thirty-Six Weeks Ended
                                         -------------------------   Percent
                                         September 7, September 8,   Better /
                                             2007         2006       (Worse)
                                         ------------ ------------   --------
    Development                                $846         $734         15
    Services                                    225          207          9
    Financing                                   120          104         15
    Other revenue                                20            6        233
                                         ------------ ------------
      Sales and services revenue             $1,211       $1,051         15
                                         ============ ============


    Contract Sales
    --------------
                                          Thirty-Six Weeks Ended
                                         -------------------------   Percent
                                         September 7, September 8,   Better /
                                             2007         2006       (Worse)
                                         ------------ ------------  --------
    Company:
      Timeshare                                $877         $893         (2)
      Fractional                                 27           32        (16)
      Whole-Ownership                             6            5         20
                                         ------------ ------------
      Total company                             910          930         (2)
    Joint ventures:
      Timeshare                                  23           18         28
      Fractional                                 46           22        109
      Whole-Ownership                            56          166        (66)
                                         ------------ ------------
      Total joint ventures                      125          206        (39)
                                         ------------ ------------
      Total contract sales, including
       joint ventures                        $1,035       $1,136         (9)
                                         ============ ============

      *   Percent can not be calculated.


                         MARRIOTT INTERNATIONAL, INC.
                         Non-GAAP Financial Measures

In our press release and schedules, and related conference call, 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 GAAP measures to the non-GAAP measures (identified by a double asterisk on the following pages) that we refer to in our press release. Although 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 revenue, 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 calendar year 2007, when the Internal Revenue Code provision which provides for synthetic fuel tax credits expires. 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.

ESOP Settlement Charge. Management evaluates non-GAAP measures that exclude the charge associated with the settlement of issues raised during the IRS' and Department of Labor's examination of the employee stock ownership plan ("ESOP") feature of our Employees' Profit Sharing, Retirement and Savings Plan and Trust because these measures allow for period-over-period comparisons relative to our on-going operations before material charges. Additionally, these non-GAAP measures facilitate management's comparison of our results relative to on-going operations before material charges with that of other lodging companies. The settlement resulted in an after-tax charge of $54 million in the second quarter 2007 reflecting $35 million of excise taxes (impacting General, Administrative, and Other Expenses), $13 million of interest expense on those excise taxes and $6 million of income tax expense primarily reflecting additional interest.

Gains and Other Income. Management evaluates forecasted non-GAAP earnings per share figures that exclude the impact of gains and other income because these items are not related to our on-going core operations, but instead are primarily associated with hotel property dispositions. Excluding gains and other income from our forecasted earnings per share figures for certain periods allows for period-over-period comparisons relative to our on-going operations, especially in light of the fact that gains associated with hotel property dispositions are expected to be much lower in 2008 than 2007 as we expect to have fewer hotel properties available for sale. Additionally, earnings per share figures excluding gains and other income facilitate management's comparison of our results relative to on-going operations with that of other lodging companies.


    Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)
and Adjusted EBITDA.  Our management considers earnings before interest,
taxes, depreciation and amortization to be an indicator of operating
performance because it can be used to measure our ability to service debt,
fund capital expenditures, and expand our business. For the reasons noted
above in the "Synthetic Fuel" and "ESOP" captions, our management also
evaluates Adjusted EBITDA which excludes the Synthetic Fuel segment and the
second quarter 2007 $35 million charge for excise taxes associated with the
ESOP settlement.


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


                              Third Quarter 2007   Third Quarter 2006  Percent
                              -------------------  ------------------- Better/
                                                                       (Worse)
                                As    Synth-  Ex-     As    Synth-  Ex-   Ex-
                              Report-  etic   clud- Report- etic   clud- clud-
                                ed     Fuel   ing     ed    Fuel    ing   ing
                                      Impact  Synth-      Impact Synth- Synth-
                                              etic                 etic   etic
                                              Fuel**              Fuel**  Fuel
                              ------- ------ ------ ------ ------ ------ -----

    Operating income (loss)    $183   $(27)  $210   $229      $2   $227    (7)
    Gains and other income
     (expense)                   27     (3)    30     13       3     10   200
    Interest income,
     provision for loan
     losses and interest
     expense                    (36)    (2)   (34)   (18)     (3)   (15) (127)
    Equity in earnings
     (losses)                     8      -      8     (1)      -     (1)  900
                              ------ ------ ------ ------  ------ ------
    Income (loss) from
     continuing operations
     before income taxes
     and minority interest      182    (32)   214    223       2    221    (3)
                              ------ ------ ------ ------  ------ ------

    Tax (provision) benefit     (81)    12    (93)   (78)     (1)   (77)  (21)
    Tax credits                  29     29      -     (4)     (4)     -     *
                              ------ ------ ------ ------  ------ ------
    Total tax (provision)
     benefit                    (52)    41    (93)   (82)     (5)   (77)  (21)
                              ------ ------ ------ ------  ------ ------

    Minority interest             1      -      1      -       -      -     *
                              ------ ------ ------ ------  ------ ------
    Income from continuing
     operations                $131     $9   $122   $141     $(3)  $144   (15)
                              ====== ====== ====== ======  ====== ======

    Diluted shares            394.1  394.1  394.1  424.7   424.7  424.7

    Earnings per share from
     continuing operations -
     diluted                  $0.33  $0.02  $0.31  $0.33  $(0.01) $0.34    (9)

    Tax rate                  28.6%         43.5%  36.8%          34.8%

    *  Percent can not be calculated.
    ** Denotes non-GAAP financial measures.


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


                                Third Quarter       Third Quarter      Percent
                                  YTD 2007             YTD 2006        Better/
                             -------------------  -------------------  (Worse)
                                As    Synth-  Ex-     As    Synth-  Ex-   Ex-
                              Report-  etic   clud- Report- etic   clud- clud-
                                ed     Fuel   ing     ed    Fuel    ing   ing
                                      Impact  Synth-      Impact Synth- Synth-
                                              etic                 etic   etic
                                              Fuel**              Fuel**  Fuel
                              ------- ------ ------ ------ ------ ------ -----


    Operating income (loss)     $684   $(98)  $782   $706   $(43)  $749     4
    Gains and other income
     (expense)                    46    (31)    77     55      2     53    45
    Interest income, provision
     for loan losses and
     interest expense           (112)   (11)  (101)   (49)    (1)   (48) (110)
    Equity in earnings
     (losses)                      9      -      9      2      -      2   350
                               ------ ------ ------ ------ ------ ------
    Income (loss) from
     continuing operations
     before income taxes
     and minority interest       627   (140)   767    714    (42)   756     1
                               ------ ------ ------ ------ ------ ------

    Tax (provision) benefit     (256)    51   (307)  (251)    13   (264)  (16)
    Tax credits                  148    148      -     28     28      -     *
                               ------ ------ ------ ------ ------ ------
    Total tax (provision)
     benefit                    (108)   199   (307)  (223)    41   (264)  (16)
                               ------ ------ ------ ------ ------ ------

    Minority interest              1      -      1      6      5      1     -
                               ------ ------ ------ ------ ------ ------

    Income from continuing
     operations                 $520    $59   $461   $497     $4   $493    (6)
                               ====== ====== ====== ====== ====== ======

    Diluted shares             403.4  403.4  403.4  434.4  434.4  434.4

    Earnings per share from
     continuing operations -
     diluted                   $1.29  $0.15  $1.14  $1.14  $0.01  $1.13     1

    Tax rate                   17.2%         40.0%  31.2%         34.9%

    *  Percent can not be calculated.
    ** Denotes non-GAAP financial measures.


                           Marriott International, Inc.
                    Non-GAAP Financial Measure Reconciliation
     Measures that Exclude Gains and Other Income and the Second Quarter 2007
                               ESOP Tax Settlement
                     (in millions, except per share amounts)


                                                            Range
                                               ------------------------------
                                                  Estimated      Estimated
                                               Full Year 2007  Full Year 2007
                                               --------------  --------------
    General, administrative and other expenses       $753             $758
    Less:  ESOP tax settlement impact                 (35)             (35)
                                               --------------  --------------
    General, administrative and other expenses
     excluding the ESOP tax settlement**             $718             $723
                                               ==============  ==============


                                                           Range
                                               ------------------------------
                                                 Estimated        Estimated
                                               Full Year 2007  Full Year 2007
                                               --------------  --------------
    Operating income excluding Synthetic Fuel*     $1,162           $1,182
    Add back: ESOP tax settlement impact               35               35
                                               --------------  --------------
    Operating income excluding the ESOP tax
     settlement and Synthetic Fuel**               $1,197           $1,217
                                               ==============  ==============


                                                          Estimated
                                                       Full Year 2007
                                                       --------------
    Net interest expense excluding Synthetic Fuel*          $146
    Less: ESOP tax settlement impact                         (13)
                                                       --------------
    Net interest expense excluding the ESOP
     tax settlement**                                       $133
                                                       ==============


                                              Range              Range
                                      ------------------- -------------------
                                      Estimated Estimated Estimated Estimated
                                      Full Year Full Year Full Year Full Year
                                          2007     2007      2008      2008
                                      --------- --------- --------- ---------

    Earnings per share excluding
     Synthetic Fuel*                     $1.74    $1.76     $2.10     $2.25
    Add back: ESOP tax settlement impact  0.14     0.14         -         -
    Less: Gains and other income impact  (0.15)   (0.15)    (0.05)    (0.05)
                                      --------- --------- --------- ---------
    Earnings per share excluding
     Synthetic Fuel, gains and the
     ESOP tax settlement**               $1.73    $1.75     $2.05     $2.20
                                      ========= ========= ========= =========


                                                       Estimated
                                                    Full Year 2007
                                                    --------------
    Effective tax rate excluding Synthetic Fuel*         38.7%
    Less: ESOP tax settlement impact                     (2.2)
                                                    --------------
    Effective tax rate excluding Synthetic Fuel and
     the ESOP tax settlement**                           36.5%
                                                    ==============

        * Synthetic Fuel guidance not provided for full year 2007.
       ** Denotes non-GAAP financial measures.



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

                                              Fiscal Year 2007
                                        ----------------------------------
                                         First   Second    Third
                                        Quarter  Quarter  Quarter   Total
                                        -------  -------  -------  -------
    Net income                          $  182   $  207   $  131   $   520
    Interest expense                        33       52       42       127
    Tax provision                           14       42       52       108
    Depreciation and amortization           46       45       43       134
    Less: Depreciation reimbursed by
     third-party owners                     (4)      (4)      (4)      (12)
    Interest expense from unconsolidated
     joint ventures                          5        5        8        18
    Depreciation and amortization from                                   -
     unconsolidated joint ventures           6        7        6        19
                                        -------  -------  -------  -------
    EBITDA**                            $  282   $  354   $  278   $   914

    Synthetic Fuel adjustment               52       52       30       134
    ESOP Settlement -- Excise Tax            -       35        -        35
                                        -------  -------  -------  -------
    Adjusted EBITDA**                   $  334   $  441   $  308   $ 1,083
                                        =======  =======  =======  =======

    Increase over 2006 Adjusted EBITDA      3%      21%       3%       10%

    The following items make up the
     Synthetic Fuel adjustment:
    Pre-tax Synthetic Fuel operating
     losses (income)                    $   54   $   54   $   32   $   140
    Pre-tax minority interest --
     Synthetic Fuel                          -        -        -         -
    Synthetic Fuel depreciation             (2)      (2)      (2)       (6)
                                        -------  -------  -------  -------
    EBITDA adjustment
     for Synthetic Fuel                 $   52   $   52   $   30   $   134
                                        =======  =======  =======  =======

                                              Fiscal Year 2006
                                  -------------------------------------------
                                    First   Second    Third   Fourth
                                   Quarter  Quarter  Quarter  Quarter   Total
                                  --------  -------  -------  -------  -------
    Net income                     $  61    $  186   $  141   $  220   $  608
    Cumulative effect of change
     in accounting principle         173         -        -        -      173
    Interest expense                  27        30       29       38      124
    Tax provision                     56        85       82       63      286
    Tax benefit from cumulative
     effect of change in
     accounting principle            (64)        -        -        -      (64)
    Depreciation and amortization     40        42       44       62      188
    Less: Depreciation reimbursed
     by third-party owners            (4)       (4)      (4)      (6)     (18)
    Interest expense from
     unconsolidated joint ventures     5         6        5        7       23
    Depreciation and amortization
     from unconsolidated
     joint ventures                    6         7        7        9       29
                                   -------  -------  -------  -------  -------
    EBITDA**                       $  300   $  352   $  304   $  393   $1,349

    Synthetic Fuel adjustment          24       11       (4)      44       75
                                   -------  -------  -------  -------  -------
    Adjusted EBITDA**              $  324   $  363   $  300   $  437   $1,424
                                   =======  =======  =======  =======  =======

    The following items make up the
     Synthetic Fuel adjustment:
    Pre-tax Synthetic Fuel
     operating losses (income)     $   31   $   13   $   (2)  $   53   $   95
    Pre-tax minority interest --
     Synthetic Fuel                    (5)       -        -       (1)      (6)
    Synthetic Fuel depreciation        (2)      (2)      (2)      (8)     (14)
                                   -------  -------  -------  -------  -------
    EBITDA adjustment
     for Synthetic Fuel            $   24   $   11   $   (4)  $   44   $   75
                                   =======  =======  =======  =======  =======

    **  Denotes non-GAAP financial measures.

                                    IRPR#1

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