Marriott International Reports Third Quarter 2017 Results Highlights
- Third quarter reported diluted EPS totaled
$1.04 , a 300 percent increase over prior year results. Third quarter adjusted diluted EPS totaled$1.10 , a 26 percent increase over third quarter 2016 combined results. Adjusted 2017 third quarter results exclude merger-related adjustments. Combined 2016 third quarter results assume Marriott's acquisition of Starwood and Starwood's sale of its timeshare business had been completed onJanuary 1, 2015 ; - Worldwide comparable systemwide constant dollar RevPAR rose 2.1 percent in the 2017 third quarter, while North American comparable systemwide constant dollar RevPAR rose 0.4 percent;
- The company added nearly 22,800 rooms during the third quarter, including more than 3,600 rooms converted from competitor brands and roughly 8,000 rooms in international markets;
- At quarter-end, Marriott's worldwide development pipeline increased to approximately 450,000 rooms, including 41,000 rooms approved, but not yet subject to signed contracts;
- Third quarter reported net income totaled
$392 million , a 460 percent increase over prior year results. Third quarter adjusted net income totaled$413 million , a 20 percent increase over prior year combined results; - Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) totaled
$831 million in the quarter, a 64 percent increase over third quarter 2016 adjusted EBITDA and a 7 percent increase over third quarter 2016 combined adjusted EBITDA; - Marriott repurchased 7.8 million shares of the company's common stock for
$800 million during the third quarter. Year-to-date throughNovember 7 , the company repurchased 23.9 million shares for$2.4 billion .
On
Branding fees from credit cards and residential sales are reported in the Franchise fees line on the income statement. Prior to the first quarter of 2017, those fees were reported in Owned, leased and other revenue. Reported results for the 2016 periods on pages A-1 and A-2 and combined results on pages A-3 and A-4 have been reclassified to conform to the current reporting.
"The business related to the hurricane response increased North American lodging demand modestly in the third quarter, even as business transient and group demand was in line with expectations.
"Owners and franchisees remain attracted to our terrific brands and strong hotel economics. New project signings and approvals added 36,000 rooms to our development pipeline in the third quarter, increasing it to a record 450,000 rooms by the quarter-end, equal to 36 percent of our current distribution. More than half of those rooms under development are located outside
"It's been just over a year since the completion of the Starwood acquisition. We are pleased with our progress on the integration. Our properties and general and administrative functions have already realized meaningful cost savings. From the date of the acquisition through last week, we have recycled assets totaling more than
"For 2018, we expect comparable systemwide RevPAR on a constant dollar basis will increase 1 to 3 percent worldwide and 3 to 5 percent outside
"We anticipate our number of rooms will increase roughly 7 percent, gross, in 2018, while rooms deletions should total 1 to 1.5 percent during the year."
Third Quarter 2017 GAAP - Financial Results As Reported
Marriott reported net income totaled
Base management and franchise fees totaled
Third quarter worldwide incentive management fees increased to
Owned, leased, and other revenue, net of direct expenses, totaled
Depreciation, amortization, and other expenses totaled
General, administrative, and other expenses for the 2017 third quarter totaled
Interest expense, net, totaled
Equity in earnings for the 2017 third quarter totaled
The provision for income taxes totaled
For the third quarter, adjusted EBITDA totaled
Third Quarter 2017 Financial Results As Adjusted Compared to Third Quarter 2016 Combined Financial Results
This information is being presented to allow shareholders to more easily compare the 2017 third quarter adjusted results with the combined results for the third quarter of 2016. The combined results assume Marriott's acquisition of Starwood and Starwood's sale of its timeshare business had been completed on
Combined results for the 2016 third quarter discussed in this section make the following assumptions: (1) removes merger-related adjustments; (2) adjusts income taxes to reflect the company's combined 2016 effective tax rate of 32.5 percent; (3) adjusts weighted average shares outstanding to include shares issued to Starwood shareholders; and (4) adjusts debt to reflect borrowing on the Credit Facility and issuance of Series Q and R Notes on
Third quarter 2017 adjusted net income totaled
Base management and franchise fees totaled
Third quarter incentive management fees increased to
Adjusted owned, leased, and other revenue, net of direct expenses, totaled
Adjusted depreciation, amortization, and other expenses for the 2017 third quarter totaled
Adjusted general, administrative, and other expenses for the 2017 third quarter totaled
Interest expense, net, totaled
The adjusted provision for income taxes totaled
For the third quarter, adjusted EBITDA totaled
Third Quarter 2017 Financial Results As Adjusted Compared to
On
Marriott estimated owned, leased, and other revenue, net of direct expenses, for the third quarter would total approximately
The company estimated general, administrative, and other expenses for the third quarter would total approximately
The company estimated interest expense, net, for the third quarter would total approximately
The company estimated gains and other income for the third quarter would total approximately
Selected Performance Information
Combined information for the 2016 third quarter presented in this section assumes Marriott's acquisition of Starwood and Starwood's sale of its timeshare business had been completed on
The company added 138 new properties (22,772 rooms) to its worldwide lodging portfolio during the 2017 third quarter, including The St. Regis, Astana in
At quarter-end, the company's worldwide development pipeline totaled 2,622 properties with approximately 450,000 rooms, including 975 properties with more than 175,000 rooms under construction and 222 properties with 41,000 rooms approved for development, but not yet subject to signed contracts.
In the 2017 third quarter, worldwide comparable systemwide constant dollar RevPAR increased 2.1 percent (a 2.4 percent increase using actual dollars). North American comparable systemwide constant dollar RevPAR increased 0.4 percent (a 0.6 percent increase using actual dollars), and international comparable systemwide constant dollar RevPAR increased 6.7 percent (a 7.8 percent increase using actual dollars) for the same period. These RevPAR growth statistics compare the third quarter of 2017 to combined comparable systemwide RevPAR for the third quarter of 2016.
In the 2017 third quarter, 64 percent of worldwide company-managed hotels earned incentive management fees.
Worldwide comparable company-operated house profit margins increased 40 basis points in the third quarter, largely due to higher RevPAR, solid cost controls and synergies from the Starwood acquisition. House profit margins for comparable company-operated properties outside
Balance Sheet
At quarter-end, Marriott's total debt was
Weighted average fully diluted shares outstanding used to calculate reported diluted EPS totaled 376.6 million in the 2017 third quarter, compared to 270.5 million shares in the year-ago quarter. Weighted average fully diluted shares outstanding used to calculate combined diluted EPS totaled 394.4 million in the 2016 third quarter.
The company repurchased 7.8 million shares of common stock in the third quarter at a cost of
OUTLOOK
The following outlook for the fourth quarter and full year 2017 does not include merger-related adjustments, which the company cannot accurately forecast, but could total roughly
Branding fees from credit cards and residential sales are reported in the Franchise fees line on the income statement. Prior to the first quarter of 2017, those fees were reported in Owned, leased and other revenue. In 2016, combined fees from credit cards and residential sales totaled
For the 2017 fourth quarter, Marriott expects comparable systemwide RevPAR on a constant dollar basis will increase 2 to 3 percent in North America. The company's guidance for fourth quarter RevPAR growth in
Marriott expects fourth quarter 2017 owned, leased, and other revenue, net of direct expenses, could total approximately
The company anticipates general, administrative, and other expenses for the fourth quarter will total
Marriott expects fourth quarter 2017 adjusted EBITDA could total
For the full year 2017, Marriott expects comparable systemwide RevPAR on a constant dollar basis for the combined company will increase 1 to 2 percent in
Marriott anticipates gross room additions of nearly 7 percent and room deletions of 1 to 1.5 percent for full year 2017.
The company assumes full year 2017 total fee revenue will total
Marriott expects full year 2017 owned, leased, and other revenue, net of direct expenses, could total approximately
Marriott expects full year 2017 adjusted EBITDA could total
Fourth Quarter 2017 |
Full Year 2017 | |
Total fee revenue1 |
|
|
Owned, leased, and other revenue, net of direct expenses1 |
Approx. |
Approx. |
Depreciation, amortization, and other expenses |
Approx. |
Approx. |
General, administrative, and other expenses |
|
|
Operating income |
|
|
Gains and other income |
Approx. |
Approx. |
Net interest expense2 |
Approx. |
Approx. |
Equity in earnings (losses) |
Approx. |
Approx. |
Earnings per share3 |
|
|
Tax rate4 |
33.2 percent |
30.2 percent |
1Beginning in the first quarter of 2017, the company reports credit card and residential branding fees in Franchise fees revenue. Prior to first quarter of 2017, those fees were reported in Owned, leased and other revenue. Combined credit card and residential branding fees totaled
2Net of interest income
3Guidance for Full Year 2017 EPS includes the
4The tax rate guidance for Full Year 2017 includes the
The company expects investment spending in 2017 will total approximately
The company plans to continue to disclose adjusted results and EBITDA that exclude merger-related costs and charges arising from the Starwood acquisition.
The telephone dial-in number for the conference call is 706-679-3455 and the conference ID is 86389048. A telephone replay of the conference call will be available from
Note on forward-looking statements: This press release and accompanying schedules contain "forward-looking statements" within the meaning of federal securities laws, including RevPAR, profit margin and earnings trends, estimates and assumptions; the number of lodging properties we expect to add to or remove from our system in the future; our expectations about investment spending; and similar statements concerning anticipated future events and expectations that are not historical facts. We caution you that these statements are not guarantees of future performance and are subject to numerous risks and uncertainties, including those we identify below and other risk factors that we identify in our most recent quarterly report on Form 10-Q. Risks that could affect forward-looking statements in this press release include changes in market conditions; changes in global and
regional economies; supply and demand changes for hotel rooms; competitive conditions in the lodging industry; relationships with clients and property owners; the availability of capital to finance hotel growth and refurbishment; and the extent to which we are able to continue successfully integrating Starwood and realize the anticipated benefits of combining Starwood and Marriott. Any of these factors could cause actual results to differ materially from the expectations we express or imply in this press release. We make these forward-looking statements as of
IRPR#1
Tables follow
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PRESS RELEASE SCHEDULES | |||||||||||||||
QUARTER 3, 2017 | |||||||||||||||
TABLE OF CONTENTS | |||||||||||||||
Consolidated Statements of Income - As Reported |
A-1 | ||||||||||||||
Consolidated Statements of Income - Adjusted 2017 Compared to Combined 2016 |
A-3 | ||||||||||||||
Total Lodging Products |
A-5 | ||||||||||||||
Combined Key Lodging Statistics |
A-8 | ||||||||||||||
Adjusted EBITDA/ Combined Adjusted EBITDA |
A-12 | ||||||||||||||
Adjusted EBITDA Forecast - Fourth Quarter 2017 |
A-13 | ||||||||||||||
Adjusted EBITDA Forecast - Full Year 2017 |
A-14 | ||||||||||||||
Non-GAAP Financial and Performance Measures |
A-15 |
| |||||||
CONSOLIDATED STATEMENTS OF INCOME - AS REPORTED | |||||||
THIRD QUARTER 2017 AND 2016 | |||||||
(in millions except per share amounts, unaudited) | |||||||
As Reported |
As Reported |
Percent |
|||||
Three Months Ended |
Three Months Ended |
Better/(Worse) |
|||||
|
|
Reported 2017 vs. 2016 |
|||||
REVENUES |
|||||||
Base management fees |
$ 269 |
$ 180 |
49 |
||||
Franchise fees 1 |
426 |
290 |
47 |
||||
Incentive management fees |
136 |
81 |
68 |
||||
Total Fees |
831 |
551 |
51 |
||||
Owned, leased, and other revenue 2 |
452 |
239 |
89 |
||||
Cost reimbursements 3 |
4,380 |
3,152 |
39 |
||||
Total Revenues |
5,663 |
3,942 |
44 |
||||
OPERATING COSTS AND EXPENSES |
|||||||
Owned, leased, and other - direct 4 |
356 |
194 |
(84) |
||||
Reimbursed costs |
4,380 |
3,152 |
(39) |
||||
Depreciation, amortization, and other 5 |
68 |
36 |
(89) |
||||
Merger-related costs and charges |
28 |
228 |
88 |
||||
General, administrative, and other 6 |
199 |
161 |
(24) |
||||
Total Expenses |
5,031 |
3,771 |
(33) |
||||
OPERATING INCOME |
632 |
171 |
270 |
||||
Gains and other income, net 7 |
6 |
3 |
100 |
||||
Interest expense |
(73) |
(55) |
(33) |
||||
Interest income |
9 |
9 |
- |
||||
Equity in earnings 8 |
6 |
3 |
100 |
||||
INCOME BEFORE INCOME TAXES |
580 |
131 |
343 |
||||
Provision for income taxes |
(188) |
(61) |
(208) |
||||
NET INCOME |
$ 392 |
$ 70 |
460 |
||||
EARNINGS PER SHARE |
|||||||
Earnings per share - basic |
$ 1.05 |
$ 0.26 |
304 |
||||
Earnings per share - diluted |
$ 1.04 |
$ 0.26 |
300 |
||||
Basic Shares |
372.3 |
266.2 |
|||||
Diluted Shares |
376.6 |
270.5 |
|||||
1 Franchise fees include fees from our franchise agreements, application and relicensing fees, licensing fees from our timeshare, credit card programs, and residential branding fees. Beginning in the 2017 first quarter, we reclassified branding fees for third-party residential sales and credit card licensing to the "Franchise fees" caption from the "Owned, leased, and other" caption. We adjusted prior amounts to conform to current period presentation. | |||||||
2 Owned, leased, and other revenueincludes revenue from the properties we own or lease, termination fees, and other revenue. | |||||||
3 Cost reimbursementsinclude reimbursements from properties for company-funded operating expenses. | |||||||
4 Owned, leased, and other - directexpenses include operating expenses related to our owned or leased hotels, including lease payments and pre-opening expenses. | |||||||
5 Depreciation, amortization, and other expenses include depreciation for fixed assets, amortization of capitalized costs incurred to acquire management, franchise, and license agreements, and any related impairments, accelerations, or write-offs. | |||||||
6 General, administrative, and other expenses include our corporate and business segments overhead costs and general expenses. | |||||||
7 Gains and other income, net includes gains and losses on the sale of real estate, the sale or other-than-temporary impairment of joint ventures and investments, and results from cost method investments. | |||||||
8 Equity in earnings include our equity in earnings or losses of unconsolidated equity method investments. | |||||||
A-1 |
| |||||||
CONSOLIDATED STATEMENTS OF INCOME - AS REPORTED | |||||||
THIRD QUARTER YEAR-TO-DATE 2017 AND 2016 | |||||||
(in millions except per share amounts, unaudited) | |||||||
As Reported |
As Reported |
Percent |
|||||
Nine Months Ended |
Nine Months Ended |
Better/(Worse) |
|||||
|
|
Reported 2017 vs. 2016 |
|||||
REVENUES |
|||||||
Base management fees |
$ 818 |
$ 538 |
52 |
||||
Franchise fees 1 |
1,207 |
813 |
48 |
||||
Incentive management fees |
437 |
276 |
58 |
||||
Total Fees |
2,462 |
1,627 |
51 |
||||
Owned, leased, and other revenue 2 |
1,349 |
650 |
108 |
||||
Cost reimbursements 3 |
13,208 |
9,339 |
41 |
||||
Total Revenues |
17,019 |
11,616 |
47 |
||||
OPERATING COSTS AND EXPENSES |
|||||||
Owned, leased, and other - direct 4 |
1,069 |
533 |
(101) |
||||
Reimbursed costs |
13,208 |
9,339 |
(41) |
||||
Depreciation, amortization, and other 5 |
218 |
97 |
(125) |
||||
Merger-related costs and charges |
100 |
250 |
60 |
||||
General, administrative, and other 6 |
635 |
470 |
(35) |
||||
Total Expenses |
15,230 |
10,689 |
(42) |
||||
OPERATING INCOME |
1,789 |
927 |
93 |
||||
Gains and other income, net 7 |
31 |
3 |
933 |
||||
Interest expense |
(216) |
(159) |
(36) |
||||
Interest income |
24 |
22 |
9 |
||||
Equity in earnings 8 |
29 |
8 |
263 |
||||
INCOME BEFORE INCOME TAXES |
1,657 |
801 |
107 |
||||
Provision for income taxes |
(486) |
(265) |
(83) |
||||
NET INCOME |
$ 1,171 |
$ 536 |
118 |
||||
EARNINGS PER SHARE |
|||||||
Earnings per share - basic |
$ 3.09 |
$ 2.08 |
49 |
||||
Earnings per share - diluted |
$ 3.06 |
$ 2.04 |
50 |
||||
Basic Shares |
378.5 |
258.3 |
|||||
Diluted Shares |
383.2 |
262.7 |
|||||
1 Franchise fees include fees from our franchise agreements, application and relicensing fees, licensing fees from our timeshare, credit card programs, and residential branding fees. Beginning in the 2017 first quarter, we reclassified branding fees for third-party residential sales and credit card licensing to the "Franchise fees" caption from the "Owned, leased, and other" caption. We adjusted prior amounts to conform to current period presentation. | |||||||
2 Owned, leased, and other revenue includes revenue from the properties we own or lease, termination fees, and other revenue. | |||||||
3 Cost reimbursements include reimbursements from properties for company-funded operating expenses. | |||||||
4 Owned, leased, and other - directexpenses include operating expenses related to our owned or leased hotels, including lease payments and pre-opening expenses. | |||||||
5 Depreciation, amortization, and other expenses include depreciation for fixed assets, amortization of capitalized costs incurred to acquire management, franchise, and license agreements, and any related impairments, accelerations, or write-offs. | |||||||
6 General, administrative, and other expenses include our corporate and business segments overhead costs and general expenses. | |||||||
7 Gains and other income, net includes gains and losses on the sale of real estate, the sale or other-than-temporary impairment of joint ventures and investments, and results from cost method investments. | |||||||
8 Equity in earnings include our equity in earnings or losses of unconsolidated equity method investments. | |||||||
A-2 |
| ||||||||||||
ADJUSTED/COMBINED STATEMENTS OF INCOME | ||||||||||||
THIRD QUARTER ADJUSTED 2017 COMPARED TO COMBINED 2016 | ||||||||||||
(in millions except per share amounts, unaudited) | ||||||||||||
Percent | ||||||||||||
As Reported |
Less: |
As Adjusted ** |
Combined10 ** |
Better/(Worse) | ||||||||
Three Months Ended |
Merger-related |
Three Months Ended |
Three Months Ended |
Adjusted 2017 vs. | ||||||||
|
Adjustments 9 |
|
|
Combined 2016 | ||||||||
REVENUES |
||||||||||||
Base management fees |
$ 269 |
$ - |
$ 269 |
$ 266 |
1 | |||||||
Franchise fees 1 |
426 |
- |
426 |
378 |
13 | |||||||
Incentive management fees |
136 |
- |
136 |
127 |
7 | |||||||
Total Fees |
831 |
- |
831 |
771 |
8 | |||||||
Owned, leased, and other revenue 2 |
452 |
3 |
449 |
499 |
(10) | |||||||
Cost reimbursements 3 |
4,380 |
- |
4,380 |
4,384 |
- | |||||||
Total Revenues |
5,663 |
3 |
5,660 |
5,654 |
- | |||||||
OPERATING COSTS AND EXPENSES |
||||||||||||
Owned, leased, and other - direct 4 |
356 |
1 |
355 |
383 |
7 | |||||||
Reimbursed costs |
4,380 |
- |
4,380 |
4,384 |
- | |||||||
Depreciation, amortization, and other 5 |
68 |
(2) |
70 |
81 |
14 | |||||||
Merger-related costs and charges |
28 |
28 |
- |
- |
- | |||||||
General, administrative, and other 6 |
199 |
(2) |
201 |
237 |
15 | |||||||
Total Expenses |
5,031 |
25 |
5,006 |
5,085 |
2 | |||||||
OPERATING INCOME / (LOSS) |
632 |
(22) |
654 |
569 |
15 | |||||||
Gains and other income, net 7 |
6 |
- |
6 |
6 |
- | |||||||
Interest expense |
(73) |
- |
(73) |
(80) |
9 | |||||||
Interest income |
9 |
- |
9 |
11 |
(18) | |||||||
Equity in earnings 8 |
6 |
- |
6 |
4 |
50 | |||||||
INCOME / (LOSS) BEFORE INCOME TAXES |
580 |
(22) |
602 |
510 |
18 | |||||||
(Provision) benefit for income taxes |
(188) |
1 |
(189) |
(166) |
(14) | |||||||
NET INCOME / (LOSS) |
$ 392 |
$ (21) |
$ 413 |
$ 344 |
20 | |||||||
EARNINGS PER SHARE |
||||||||||||
Earnings per share - basic |
$ 1.05 |
$ 1.11 |
$ 0.88 |
26 | ||||||||
Earnings per share - diluted |
$ 1.04 |
$ 1.10 |
$ 0.87 |
26 | ||||||||
Basic Shares |
372.3 |
372.3 |
388.9 |
|||||||||
Diluted Shares |
376.6 |
376.6 |
394.4 |
|||||||||
** Denotes non-GAAP financial measures. See pages A-15 and A-16 for more information about these non-GAAP measures. |
||||||||||||
1 Franchise fees include fees from our franchise agreements, application and relicensing fees, licensing fees from our timeshare, credit card programs, and residential branding fees. Beginning in the | ||||||||||||
2017 first quarter, we reclassified branding fees for third-party residential sales and credit card licensing to the "Franchise fees" caption from the "Owned, leased, and other" caption. | ||||||||||||
We adjusted prior amounts to conform to current period presentation. |
||||||||||||
2 Owned, leased, and other revenueincludes revenue from the properties we own or lease, termination fees, and other revenue. |
||||||||||||
3 Cost reimbursements include reimbursements from properties for company-funded operating expenses. |
||||||||||||
4 Owned, leased, and other - directexpenses include operating expenses related to our owned or leased hotels, including lease payments and pre-opening expenses. |
||||||||||||
5 Depreciation, amortization, and other expenses include depreciation for fixed assets, amortization of capitalized costs incurred to acquire management, franchise, and license agreements, | ||||||||||||
and any related impairments, accelerations, or write-offs. |
||||||||||||
6 General, administrative, and other expenses include our corporate and business segments overhead costs and general expenses. |
||||||||||||
7 Gains and other income, net includes gains and losses on the sale of real estate, the sale or other-than-temporary impairment of joint ventures and investments, and results from cost method | ||||||||||||
investments. |
||||||||||||
8 Equity in earnings include our equity in earnings or losses of unconsolidated equity method investments. |
||||||||||||
9 The adjusted consolidated statements of income are presented before the impact of merger-related adjustments. |
||||||||||||
10 For basis of presentation of 2016 combined financial information, see the Form 8-K relating to our unaudited combined financial information that we filed with the U. | ||||||||||||
Commission on |
||||||||||||
A-3 | ||||||||||||
| |||||||||||
ADJUSTED/COMBINED STATEMENTS OF INCOME | |||||||||||
THIRD QUARTER YEAR-TO-DATE ADJUSTED 2017 COMPARED TO COMBINED 2016 | |||||||||||
(in millions except per share amounts, unaudited) | |||||||||||
Percent |
|||||||||||
As Reported |
Less: |
As Adjusted ** |
Combined10 ** |
Better/(Worse) |
|||||||
Nine Months Ended |
Merger-related |
Nine Months Ended |
Nine Months Ended |
Adjusted 2017 vs. |
|||||||
|
Adjustments 9 |
|
|
Combined 2016 |
|||||||
REVENUES |
|||||||||||
Base management fees |
$ 818 |
$ - |
$ 818 |
$ 804 |
2 |
||||||
Franchise fees 1 |
1,207 |
- |
1,207 |
1,082 |
12 |
||||||
Incentive management fees |
437 |
- |
437 |
413 |
6 |
||||||
Total Fees |
2,462 |
- |
2,462 |
2,299 |
7 |
||||||
Owned, leased, and other revenue 2 |
1,349 |
3 |
1,346 |
1,455 |
(7) |
||||||
Cost reimbursements 3 |
13,208 |
- |
13,208 |
13,273 |
- |
||||||
Total Revenues |
17,019 |
3 |
17,016 |
17,027 |
- |
||||||
OPERATING COSTS AND EXPENSES |
|||||||||||
Owned, leased, and other - direct 4 |
1,069 |
- |
1,069 |
1,138 |
6 |
||||||
Reimbursed costs |
13,208 |
- |
13,208 |
13,273 |
- |
||||||
Depreciation, amortization, and other 5 |
218 |
1 |
217 |
242 |
10 |
||||||
Merger-related costs and charges |
100 |
100 |
- |
- |
- |
||||||
General, administrative, and other 6 |
635 |
(2) |
637 |
730 |
13 |
||||||
Total Expenses |
15,230 |
99 |
15,131 |
15,383 |
2 |
||||||
OPERATING INCOME / (LOSS) |
1,789 |
(96) |
1,885 |
1,644 |
15 |
||||||
Gains (losses) and other income, net 7 |
31 |
- |
31 |
(24) |
229 |
||||||
Interest expense |
(216) |
- |
(216) |
(237) |
9 |
||||||
Interest income |
24 |
- |
24 |
28 |
(14) |
||||||
Equity in earnings 8 |
29 |
- |
29 |
23 |
26 |
||||||
INCOME / (LOSS) BEFORE INCOME TAXES |
1,657 |
(96) |
1,753 |
1,434 |
22 |
||||||
(Provision) benefit for income taxes |
(486) |
27 |
(513) |
(467) |
(10) |
||||||
NET INCOME / (LOSS) |
$ 1,171 |
$ (69) |
$ 1,240 |
$ 967 |
28 |
||||||
EARNINGS PER SHARE |
|||||||||||
Earnings per share - basic |
$ 3.09 |
$ 3.28 |
$ 2.49 |
32 |
|||||||
Earnings per share - diluted |
$ 3.06 |
$ 3.24 |
$ 2.45 |
32 |
|||||||
Basic Shares |
378.5 |
378.5 |
388.8 |
||||||||
Diluted Shares |
383.2 |
383.2 |
394.4 |
||||||||
** Denotes non-GAAP financial measures. See pages A-15 and A-16 for more information about these non-GAAP measures. | |||||||||||
1 Franchise fees include fees from our franchise agreements, application and relicensing fees, licensing fees from our timeshare, credit card programs, and residential branding fees. Beginning in the 2017 first quarter, we reclassified branding fees for third-party residential sales and credit card licensing to the "Franchise fees" caption from the "Owned, leased, and other" caption. We adjusted prior amounts to conform to current period presentation. | |||||||||||
2 Owned, leased, and other revenue includes revenue from the properties we own or lease, termination fees, and other revenue. | |||||||||||
3 Cost reimbursements include reimbursements from properties for company-funded operating expenses. | |||||||||||
4 Owned, leased, and other - direct expenses include operating expenses related to our owned or leased hotels, including lease payments and pre-opening expenses. | |||||||||||
5 Depreciation, amortization, and other expenses include depreciation for fixed assets, amortization of capitalized costs incurred to acquire management, franchise, and license agreements, and any related impairments, accelerations, or write-offs. | |||||||||||
6 General, administrative, and other expenses include our corporate and business segments overhead costs and general expenses. | |||||||||||
7 Gains (losses) and other income, net includes gains and losses on the sale of real estate, the sale or other-than-temporary impairment of joint ventures and investments, and results from cost method investments. | |||||||||||
8 Equity in earnings include our equity in earnings or losses of unconsolidated equity method investments. | |||||||||||
9 The adjusted consolidated statements of income are presented before the impact of merger-related adjustments. | |||||||||||
10 For basis of presentation of 2016 combined financial information, see the Form 8-K relating to our unaudited combined financial information that we filed with the U. | |||||||||||
A-4 |
| ||||||
TOTAL LODGING PRODUCTS | ||||||
As of | ||||||
|
|
Total Worldwide | ||||
Units |
Rooms |
Units |
Rooms |
Units |
Rooms | |
Managed |
835 |
252,379 |
1,040 |
279,097 |
1,875 |
531,476 |
JW Marriott Hotels |
15 |
9,709 |
47 |
18,925 |
62 |
28,634 |
The Ritz-Carlton Hotels |
40 |
11,764 |
54 |
14,947 |
94 |
26,711 |
The |
34 |
4,538 |
9 |
625 |
43 |
5,163 |
|
5 |
697 |
5 |
697 | ||
Luxury Collection |
5 |
2,294 |
48 |
8,230 |
53 |
10,524 |
|
26 |
7,950 |
24 |
5,661 |
50 |
13,611 |
W Residences |
9 |
1,078 |
6 |
532 |
15 |
1,610 |
St. Regis |
10 |
1,990 |
31 |
7,049 |
41 |
9,039 |
St. Regis Residences |
6 |
467 |
6 |
516 |
12 |
983 |
EDITION Hotels |
2 |
567 |
2 |
699 |
4 |
1,266 |
EDITION Residences |
1 |
25 |
1 |
25 | ||
Bulgari Hotels & Resorts |
3 |
237 |
3 |
237 | ||
Bulgari Residences |
1 |
5 |
1 |
5 | ||
Marriott Hotels |
131 |
69,576 |
159 |
46,313 |
290 |
115,889 |
Sheraton |
30 |
23,208 |
184 |
63,155 |
214 |
86,363 |
Sheraton Residences |
2 |
262 |
2 |
262 | ||
Westin |
46 |
25,127 |
68 |
21,844 |
114 |
46,971 |
|
1 |
65 |
1 |
264 |
2 |
329 |
Renaissance Hotels |
28 |
12,134 |
50 |
16,188 |
78 |
28,322 |
Le Meridien |
4 |
720 |
73 |
20,200 |
77 |
20,920 |
Autograph Collection Hotels |
3 |
989 |
6 |
1,456 |
9 |
2,445 |
|
25 |
6,764 |
25 |
6,764 | ||
Gaylord Hotels |
5 |
8,108 |
5 |
8,108 | ||
Marriott Executive Apartments |
28 |
4,195 |
28 |
4,195 | ||
Tribute Portfolio |
3 |
559 |
3 |
559 | ||
Courtyard |
254 |
40,429 |
79 |
16,723 |
333 |
57,152 |
Residence Inn |
106 |
16,207 |
5 |
517 |
111 |
16,724 |
Fairfield Inn & Suites |
6 |
1,432 |
16 |
2,344 |
22 |
3,776 |
SpringHill Suites |
30 |
4,854 |
30 |
4,854 | ||
Four Points |
1 |
134 |
61 |
14,921 |
62 |
15,055 |
TownePlace Suites |
15 |
1,740 |
15 |
1,740 | ||
Aloft |
1 |
330 |
28 |
6,726 |
29 |
7,056 |
Protea Hotels |
36 |
4,265 |
36 |
4,265 | ||
Element |
1 |
180 |
4 |
933 |
5 |
1,113 |
Moxy Hotels |
1 |
109 |
1 |
109 | ||
A-5 |
| ||||||
TOTAL LODGING PRODUCTS | ||||||
As of | ||||||
|
|
Total Worldwide | ||||
Units |
Rooms |
Units |
Rooms |
Units |
Rooms | |
Franchised |
3,798 |
553,100 |
451 |
96,612 |
4,249 |
649,712 |
JW Marriott Hotels |
10 |
4,425 |
6 |
1,624 |
16 |
6,049 |
The Ritz-Carlton Hotels |
1 |
429 |
1 |
429 | ||
The |
1 |
55 |
1 |
55 | ||
Luxury Collection |
9 |
1,891 |
37 |
6,868 |
46 |
8,759 |
Luxury Collection Residences |
1 |
91 |
1 |
64 |
2 |
155 |
Bulgari Hotels & Resorts |
1 |
85 |
1 |
85 | ||
Marriott Hotels |
212 |
66,137 |
48 |
13,297 |
260 |
79,434 |
Sheraton |
161 |
47,765 |
60 |
17,075 |
221 |
64,840 |
Westin |
80 |
26,262 |
24 |
7,432 |
104 |
33,694 |
|
2 |
201 |
2 |
201 | ||
Renaissance Hotels |
58 |
16,323 |
27 |
7,441 |
85 |
23,764 |
Le Meridien |
18 |
4,286 |
15 |
4,022 |
33 |
8,308 |
Autograph Collection Hotels |
70 |
15,247 |
45 |
10,838 |
115 |
26,085 |
|
22 |
5,267 |
22 |
5,267 | ||
Tribute Portfolio |
15 |
4,733 |
8 |
797 |
23 |
5,530 |
Courtyard |
714 |
95,110 |
58 |
10,986 |
772 |
106,096 |
Residence Inn |
627 |
73,883 |
3 |
287 |
630 |
74,170 |
Fairfield Inn & Suites |
870 |
79,399 |
4 |
755 |
874 |
80,154 |
SpringHill Suites |
352 |
40,464 |
352 |
40,464 | ||
Four Points |
137 |
20,900 |
43 |
6,743 |
180 |
27,643 |
TownePlace Suites |
314 |
31,510 |
314 |
31,510 | ||
Aloft |
96 |
14,235 |
12 |
1,928 |
108 |
16,163 |
Protea Hotels |
45 |
3,343 |
45 |
3,343 | ||
Element |
25 |
3,581 |
2 |
293 |
27 |
3,874 |
Moxy Hotels |
3 |
906 |
12 |
2,734 |
15 |
3,640 |
Owned/Leased |
31 |
9,613 |
37 |
10,024 |
68 |
19,637 |
JW Marriott Hotels |
1 |
496 |
1 |
496 | ||
The Ritz-Carlton Hotels |
2 |
553 |
2 |
553 | ||
Luxury Collection |
3 |
465 |
3 |
465 | ||
|
1 |
509 |
2 |
665 |
3 |
1,174 |
St. Regis |
1 |
238 |
1 |
160 |
2 |
398 |
Marriott Hotels |
3 |
1,664 |
5 |
1,625 |
8 |
3,289 |
Sheraton |
3 |
2,671 |
6 |
2,866 |
9 |
5,537 |
Westin |
1 |
1,073 |
1 |
246 |
2 |
1,319 |
Renaissance Hotels |
1 |
317 |
3 |
749 |
4 |
1,066 |
Tribute Portfolio |
1 |
135 |
1 |
135 | ||
Courtyard |
19 |
2,814 |
3 |
644 |
22 |
3,458 |
Residence Inn |
1 |
192 |
1 |
140 |
2 |
332 |
Protea Hotels |
9 |
1,415 |
9 |
1,415 | ||
|
25 |
4,423 |
96 |
12,086 |
121 |
16,509 |
Autograph Collection Hotels |
6 |
419 |
6 |
419 | ||
|
25 |
4,423 |
90 |
11,667 |
115 |
16,090 |
Timeshare* |
70 |
18,117 |
18 |
3,770 |
88 |
21,887 |
Marriott Vacations Worldwide |
51 |
11,249 |
14 |
2,355 |
65 |
13,604 |
Vistana |
19 |
6,868 |
4 |
1,415 |
23 |
8,283 |
Grand Total |
4,759 |
837,632 |
1,642 |
401,589 |
6,401 |
1,239,221 |
*Timeshare property and room counts are included on this table in their geographical locations. For external reporting purposes, these counts are captured in the Corporate segment. | ||||||
A-6 |
| ||||||
TOTAL LODGING PRODUCTS | ||||||
As of | ||||||
|
|
Total Worldwide | ||||
Total Systemwide |
Units |
Rooms |
Units |
Rooms |
Units |
Rooms |
Luxury |
172 |
48,020 |
290 |
69,103 |
462 |
117,123 |
JW Marriott Hotels |
25 |
14,134 |
54 |
21,045 |
79 |
35,179 |
The Ritz-Carlton Hotels |
41 |
12,193 |
56 |
15,500 |
97 |
27,693 |
The |
35 |
4,593 |
9 |
625 |
44 |
5,218 |
|
5 |
697 |
5 |
697 | ||
Luxury Collection |
14 |
4,185 |
88 |
15,563 |
102 |
19,748 |
Luxury Collection Residences |
1 |
91 |
1 |
64 |
2 |
155 |
|
27 |
8,459 |
26 |
6,326 |
53 |
14,785 |
W Residences |
9 |
1,078 |
6 |
532 |
15 |
1,610 |
St. Regis |
11 |
2,228 |
32 |
7,209 |
43 |
9,437 |
St. Regis Residences |
6 |
467 |
6 |
516 |
12 |
983 |
EDITION Hotels |
2 |
567 |
2 |
699 |
4 |
1,266 |
EDITION Residences |
1 |
25 |
1 |
25 | ||
Bulgari Hotels & Resorts |
4 |
322 |
4 |
322 | ||
Bulgari Residences |
1 |
5 |
1 |
5 | ||
Full Service |
920 |
338,772 |
822 |
241,243 |
1,742 |
580,015 |
Marriott Hotels |
346 |
137,377 |
212 |
61,235 |
558 |
198,612 |
Sheraton |
194 |
73,644 |
250 |
83,096 |
444 |
156,740 |
Sheraton Residences |
2 |
262 |
2 |
262 | ||
Westin |
127 |
52,462 |
93 |
29,522 |
220 |
81,984 |
|
3 |
266 |
1 |
264 |
4 |
530 |
Renaissance Hotels |
87 |
28,774 |
80 |
24,378 |
167 |
53,152 |
Le Meridien |
22 |
5,006 |
88 |
24,222 |
110 |
29,228 |
Autograph Collection Hotels |
73 |
16,236 |
57 |
12,713 |
130 |
28,949 |
|
47 |
12,031 |
47 |
12,031 | ||
Gaylord Hotels |
5 |
8,108 |
5 |
8,108 | ||
Marriott Executive Apartments |
28 |
4,195 |
28 |
4,195 | ||
Tribute Portfolio |
16 |
4,868 |
11 |
1,356 |
27 |
6,224 |
Limited Service |
3,597 |
432,723 |
512 |
87,473 |
4,109 |
520,196 |
Courtyard |
987 |
138,353 |
140 |
28,353 |
1,127 |
166,706 |
Residence Inn |
734 |
90,282 |
9 |
944 |
743 |
91,226 |
Fairfield Inn & Suites |
876 |
80,831 |
20 |
3,099 |
896 |
83,930 |
SpringHill Suites |
382 |
45,318 |
382 |
45,318 | ||
Four Points |
138 |
21,034 |
104 |
21,664 |
242 |
42,698 |
TownePlace Suites |
329 |
33,250 |
329 |
33,250 | ||
Aloft |
97 |
14,565 |
40 |
8,654 |
137 |
23,219 |
|
25 |
4,423 |
90 |
11,667 |
115 |
16,090 |
Protea Hotels |
90 |
9,023 |
90 |
9,023 | ||
Element |
26 |
3,761 |
6 |
1,226 |
32 |
4,987 |
Moxy Hotels |
3 |
906 |
13 |
2,843 |
16 |
3,749 |
Timeshare* |
70 |
18,117 |
18 |
3,770 |
88 |
21,887 |
Marriott Vacations Worldwide |
51 |
11,249 |
14 |
2,355 |
65 |
13,604 |
Vistana |
19 |
6,868 |
4 |
1,415 |
23 |
8,283 |
Grand Total |
4,759 |
837,632 |
1,642 |
401,589 |
6,401 |
1,239,221 |
*Timeshare property and room counts are included on this table in their geographical locations. For external reporting purposes, these counts are captured in the Corporate segment. | ||||||
A-7 |
| ||||||||||
COMBINED KEY LODGING STATISTICS | ||||||||||
In Constant $ | ||||||||||
| ||||||||||
Three Months Ended | ||||||||||
REVPAR |
Occupancy |
Average Daily Rate | ||||||||
Brand |
2017 |
vs. 2016* |
2017 |
vs. 2016* |
2017 |
vs. 2016* | ||||
|
|
-2.9% |
75.4% |
-1.0% |
pts. |
|
-1.5% | |||
The Ritz-Carlton |
|
1.8% |
73.4% |
0.0% |
pts. |
|
1.8% | |||
|
|
-3.3% |
84.6% |
-0.6% |
pts. |
|
-2.6% | |||
Composite North American Luxury1 |
|
-0.9% |
77.9% |
-0.6% |
pts. |
|
-0.1% | |||
|
|
-0.8% |
78.1% |
0.0% |
pts. |
|
-0.8% | |||
Sheraton |
|
-0.5% |
80.1% |
-0.6% |
pts. |
|
0.3% | |||
Westin |
|
-0.8% |
80.6% |
-0.5% |
pts. |
|
-0.2% | |||
Composite North American Upper Upscale2 |
|
-0.4% |
78.7% |
-0.2% |
pts. |
|
-0.1% | |||
North American Full-Service3 |
|
-0.6% |
78.6% |
-0.3% |
pts. |
|
-0.2% | |||
Courtyard |
|
-0.5% |
75.6% |
0.0% |
pts. |
|
-0.5% | |||
|
|
-0.8% |
83.8% |
0.0% |
pts. |
|
-0.8% | |||
Composite North American Limited-Service4 |
|
-0.5% |
78.0% |
-0.1% |
pts. |
|
-0.3% | |||
North American - All5 |
|
-0.5% |
78.4% |
-0.2% |
pts. |
|
-0.2% | |||
| ||||||||||
Three Months Ended | ||||||||||
REVPAR |
Occupancy |
Average Daily Rate | ||||||||
Brand |
2017 |
vs. 2016* |
2017 |
vs. 2016* |
2017 |
vs. 2016* | ||||
|
|
-0.7% |
76.8% |
-0.4% |
pts. |
|
-0.1% | |||
The Ritz-Carlton |
|
1.8% |
73.4% |
0.0% |
pts. |
|
1.8% | |||
|
|
-3.3% |
84.6% |
-0.6% |
pts. |
|
-2.6% | |||
Composite North American Luxury1 |
|
-0.2% |
78.2% |
-0.3% |
pts. |
|
0.2% | |||
|
|
-0.3% |
75.1% |
-0.5% |
pts. |
|
0.4% | |||
Sheraton |
|
-0.9% |
77.4% |
-0.8% |
pts. |
|
0.1% | |||
Westin |
|
-0.4% |
80.0% |
-1.1% |
pts. |
|
0.9% | |||
Composite North American Upper Upscale2 |
|
-0.3% |
76.7% |
-0.6% |
pts. |
|
0.5% | |||
North American Full-Service3 |
|
-0.3% |
76.9% |
-0.6% |
pts. |
|
0.5% | |||
Courtyard |
|
0.8% |
76.9% |
0.5% |
pts. |
|
0.1% | |||
|
|
0.4% |
83.6% |
0.0% |
pts. |
|
0.4% | |||
|
|
2.5% |
77.2% |
1.7% |
pts. |
|
0.3% | |||
Composite North American Limited-Service4 |
|
1.2% |
79.0% |
0.5% |
pts. |
|
0.6% | |||
North American - All5 |
|
0.4% |
78.0% |
0.0% |
pts. |
|
0.4% | |||
* The 2016 statistics used to calculate change from the 2016 period to the 2017 period assume Marriott's acquisition of Starwood and Starwood's sale of its timeshare business had been completed on | ||||||||||
1 | ||||||||||
2 | ||||||||||
3 Includes Composite North American Luxury and Composite North American Upper Upscale. | ||||||||||
4 Includes Courtyard, | ||||||||||
5 Includes North American Full-Service and North American Limited-Service. | ||||||||||
A-8 |
| ||||||||||
COMBINED KEY LODGING STATISTICS | ||||||||||
In Constant $ | ||||||||||
| ||||||||||
Three Months Ended | ||||||||||
REVPAR |
Occupancy |
Average Daily Rate | ||||||||
Region |
2017 |
vs. 2016* |
2017 |
vs. 2016* |
2017 |
vs. 2016* | ||||
|
|
10.6% |
75.1% |
6.6% |
pts. |
|
0.9% | |||
Rest of |
|
6.2% |
77.0% |
3.5% |
pts. |
|
1.4% | |||
|
|
8.7% |
75.8% |
5.5% |
pts. |
|
0.8% | |||
|
|
0.0% |
63.8% |
1.7% |
pts. |
|
-2.6% | |||
|
|
8.0% |
79.9% |
3.0% |
pts. |
|
3.9% | |||
|
|
-0.7% |
62.9% |
0.9% |
pts. |
|
-2.2% | |||
Other International1 |
|
4.8% |
71.2% |
2.1% |
pts. |
|
1.7% | |||
International - All2 |
|
6.5% |
73.5% |
3.8% |
pts. |
|
1.0% | |||
Worldwide3 |
|
2.4% |
76.0% |
1.7% |
pts. |
|
0.0% | |||
| ||||||||||
Three Months Ended | ||||||||||
REVPAR |
Occupancy |
Average Daily Rate | ||||||||
Region |
2017 |
vs. 2016* |
2017 |
vs. 2016* |
2017 |
vs. 2016* | ||||
|
|
10.6% |
74.3% |
6.6% |
pts. |
|
0.8% | |||
Rest of |
|
5.3% |
76.0% |
2.5% |
pts. |
|
1.8% | |||
|
|
7.9% |
75.0% |
4.8% |
pts. |
|
1.0% | |||
|
|
1.9% |
62.6% |
1.9% |
pts. |
|
-1.2% | |||
|
|
8.7% |
79.0% |
3.7% |
pts. |
|
3.7% | |||
|
|
-0.3% |
62.9% |
1.1% |
pts. |
|
-2.1% | |||
Other International1 |
|
5.9% |
71.3% |
2.6% |
pts. |
|
2.0% | |||
International - All2 |
|
6.7% |
72.9% |
3.6% |
pts. |
|
1.5% | |||
Worldwide3 |
|
2.1% |
76.6% |
1.1% |
pts. |
|
0.7% | |||
* The 2016 statistics used to calculate change from the 2016 period to the 2017 period assume Marriott's acquisition of Starwood and Starwood's sale of its timeshare business had been completed on | ||||||||||
1 Includes | ||||||||||
2 | ||||||||||
3 Includes North American - All and International - All. | ||||||||||
A-9 |
| ||||||||||
COMBINED KEY LODGING STATISTICS | ||||||||||
In Constant $ | ||||||||||
| ||||||||||
Nine Months Ended | ||||||||||
REVPAR |
Occupancy |
Average Daily Rate | ||||||||
Brand |
2017 |
vs. 2016* |
2017 |
vs. 2016* |
2017 |
vs. 2016* | ||||
|
|
2.5% |
77.6% |
1.0% |
pts. |
|
1.2% | |||
The Ritz-Carlton |
|
4.0% |
74.6% |
1.4% |
pts. |
|
2.0% | |||
|
|
-1.1% |
82.5% |
0.0% |
pts. |
|
-1.0% | |||
Composite North American Luxury1 |
|
2.0% |
78.3% |
0.9% |
pts. |
|
0.8% | |||
|
|
1.3% |
77.4% |
0.7% |
pts. |
|
0.4% | |||
Sheraton |
|
2.1% |
78.1% |
0.0% |
pts. |
|
2.1% | |||
Westin |
|
1.4% |
78.2% |
-0.2% |
pts. |
|
1.8% | |||
Composite North American Upper Upscale2 |
|
1.7% |
77.3% |
0.3% |
pts. |
|
1.3% | |||
North American Full-Service3 |
|
1.8% |
77.4% |
0.4% |
pts. |
|
1.2% | |||
Courtyard |
|
0.0% |
74.0% |
-0.3% |
pts. |
|
0.4% | |||
|
|
2.5% |
81.0% |
1.0% |
pts. |
|
1.3% | |||
Composite North American Limited-Service4 |
|
0.9% |
76.2% |
0.0% |
pts. |
|
0.9% | |||
North American - All5 |
|
1.6% |
77.0% |
0.3% |
pts. |
|
1.2% | |||
| ||||||||||
Nine Months Ended | ||||||||||
REVPAR |
Occupancy |
Average Daily Rate | ||||||||
Brand |
2017 |
vs. 2016* |
2017 |
vs. 2016* |
2017 |
vs. 2016* | ||||
|
|
2.8% |
78.2% |
0.9% |
pts. |
|
1.6% | |||
The Ritz-Carlton |
|
4.0% |
74.6% |
1.4% |
pts. |
|
2.0% | |||
|
|
-1.1% |
82.5% |
0.0% |
pts. |
|
-1.0% | |||
Composite North American Luxury1 |
|
2.3% |
78.1% |
0.9% |
pts. |
|
1.0% | |||
|
|
0.9% |
74.0% |
0.1% |
pts. |
|
0.7% | |||
Sheraton |
|
0.9% |
74.4% |
-0.1% |
pts. |
|
1.1% | |||
Westin |
|
1.7% |
78.0% |
-0.3% |
pts. |
|
2.1% | |||
Composite North American Upper Upscale2 |
|
1.4% |
75.0% |
0.1% |
pts. |
|
1.3% | |||
North American Full-Service3 |
|
1.5% |
75.3% |
0.2% |
pts. |
|
1.3% | |||
Courtyard |
|
0.7% |
74.4% |
0.2% |
pts. |
|
0.4% | |||
|
|
1.4% |
80.4% |
0.0% |
pts. |
|
1.4% | |||
|
|
2.8% |
72.8% |
1.4% |
pts. |
|
0.8% | |||
Composite North American Limited-Service4 |
|
1.4% |
75.8% |
0.4% |
pts. |
|
0.9% | |||
North American - All5 |
|
1.5% |
75.6% |
0.3% |
pts. |
|
1.1% | |||
* The 2016 statistics used to calculate change from the 2016 period to the 2017 period assume Marriott's acquisition of Starwood and Starwood's sale of its timeshare business had been completed on | ||||||||||
1 | ||||||||||
2 | ||||||||||
3 Includes Composite North American Luxury and Composite North American Upper Upscale. | ||||||||||
4 Includes Courtyard, | ||||||||||
5 Includes North American Full-Service and North American Limited-Service. |
||||||||||
A-10 |
| ||||||||||
COMBINED KEY LODGING STATISTICS | ||||||||||
In Constant $ | ||||||||||
| ||||||||||
Nine Months Ended | ||||||||||
REVPAR |
Occupancy |
Average Daily Rate | ||||||||
Region |
2017 |
vs. 2016* |
2017 |
vs. 2016* |
2017 |
vs. 2016* | ||||
|
|
8.2% |
70.5% |
6.7% |
pts. |
|
-2.1% | |||
Rest of |
|
6.2% |
75.0% |
3.5% |
pts. |
|
1.2% | |||
|
|
7.3% |
72.1% |
5.6% |
pts. |
|
-1.0% | |||
|
|
3.0% |
65.7% |
2.3% |
pts. |
|
-0.6% | |||
|
|
7.3% |
74.1% |
2.2% |
pts. |
|
4.0% | |||
|
|
0.2% |
64.4% |
1.3% |
pts. |
|
-1.8% | |||
Other International1 |
|
4.5% |
69.3% |
2.0% |
pts. |
|
1.5% | |||
International - All2 |
|
5.7% |
70.7% |
3.8% |
pts. |
|
0.1% | |||
Worldwide3 |
|
3.3% |
73.9% |
2.0% |
pts. |
|
0.5% | |||
| ||||||||||
Nine Months Ended | ||||||||||
REVPAR |
Occupancy |
Average Daily Rate | ||||||||
Region |
2017 |
vs. 2016* |
2017 |
vs. 2016* |
2017 |
vs. 2016* | ||||
|
|
8.4% |
70.0% |
6.7% |
pts. |
|
-2.1% | |||
Rest of |
|
5.0% |
74.2% |
2.6% |
pts. |
|
1.2% | |||
|
|
6.7% |
71.8% |
5.0% |
pts. |
|
-0.7% | |||
|
|
3.4% |
63.9% |
1.9% |
pts. |
|
0.3% | |||
|
|
7.9% |
72.0% |
3.1% |
pts. |
|
3.3% | |||
|
|
0.5% |
64.3% |
1.5% |
pts. |
|
-1.8% | |||
Other International1 |
|
5.3% |
68.2% |
2.4% |
pts. |
|
1.6% | |||
International - All2 |
|
5.9% |
69.8% |
3.5% |
pts. |
|
0.5% | |||
Worldwide3 |
|
2.6% |
73.9% |
1.2% |
pts. |
|
0.9% | |||
* The 2016 statistics used to calculate change from the 2016 period to the 2017 period assume Marriott's acquisition of Starwood and Starwood's sale of its timeshare business had been completed on | ||||||||||
1 Includes | ||||||||||
2 | ||||||||||
3 Includes North American - All and International - All. | ||||||||||
A-11 |
| |||||||||
NON-GAAP FINANCIAL MEASURES | |||||||||
ADJUSTED EBITDA/ COMBINED ADJUSTED EBITDA | |||||||||
($ in millions) | |||||||||
Fiscal Year 2017 |
|||||||||
First |
Second |
Third |
Total |
||||||
Net income, as reported |
$ 365 |
$ 414 |
$ 392 |
$ 1,171 |
|||||
Interest expense |
70 |
73 |
73 |
216 |
|||||
Tax provision |
120 |
178 |
188 |
486 |
|||||
Depreciation and amortization |
65 |
85 |
68 |
218 |
|||||
Depreciation classified in reimbursed costs |
32 |
33 |
28 |
93 |
|||||
Interest expense from unconsolidated joint ventures |
1 |
3 |
2 |
6 |
|||||
Depreciation and amortization from unconsolidated joint ventures |
11 |
10 |
10 |
31 |
|||||
EBITDA ** |
664 |
796 |
761 |
2,221 |
|||||
Gain on asset dispositions and impairments, net |
- |
(24) |
- |
(24) |
|||||
Merger-related costs and charges |
51 |
21 |
28 |
100 |
|||||
Share-based compensation (including share-based compensation reimbursed by third-party owners) |
35 |
41 |
42 |
118 |
|||||
Adjusted EBITDA ** |
$ 750 |
$ 834 |
$ 831 |
$ 2,415 |
|||||
Increase over 2016 Adjusted EBITDA ** |
64% |
69% |
64% |
66% |
1 |
||||
Increase over 2016 Combined Adjusted EBITDA ** |
10% |
8% |
7% |
8% |
2 |
||||
Fiscal Year 2016 | |||||||||
First |
Second |
Third |
Fourth |
Total | |||||
Net income, as reported |
$ 219 |
$ 247 |
$ 70 |
$ 244 |
$ 780 | ||||
Interest expense |
47 |
57 |
55 |
75 |
234 | ||||
Tax provision |
107 |
97 |
61 |
139 |
404 | ||||
Depreciation and amortization |
31 |
30 |
36 |
71 |
168 | ||||
Depreciation classified in reimbursed costs |
14 |
14 |
15 |
33 |
76 | ||||
Interest expense from unconsolidated joint ventures |
1 |
1 |
1 |
4 |
7 | ||||
Depreciation and amortization from unconsolidated joint ventures |
3 |
3 |
4 |
10 |
20 | ||||
EBITDA ** |
422 |
449 |
242 |
576 |
1,689 | ||||
Merger-related costs and charges |
8 |
14 |
228 |
136 |
386 | ||||
Share-based compensation (including share-based compensation reimbursed by third-party owners) |
28 |
31 |
36 |
44 |
139 | ||||
Adjusted EBITDA ** |
$ 458 |
$ 494 |
$ 506 |
$ 756 |
$ 2,214 | ||||
Starwood pre-acquisition and other adjustments |
225 |
279 |
269 |
- |
773 | ||||
Combined Adjusted EBITDA ** |
$ 683 |
$ 773 |
$ 775 |
$ 756 |
$ 2,987 | ||||
** Denotes non-GAAP financial measures. Please see pages A-15 and A-16 for information about our reasons for providing these alternative financial measures and the limitations on their use. | |||||||||
1 Represents the percentage increase of Adjusted EBITDA of | |||||||||
2 Represents the percentage increase of Adjusted EBITDA of | |||||||||
A-12 |
| ||||||
NON-GAAP FINANCIAL MEASURES | ||||||
ADJUSTED EBITDA FORECAST | ||||||
FOURTH QUARTER 2017 | ||||||
($ in millions) | ||||||
Range |
||||||
Estimated |
Adjusted |
|||||
Net income 1 |
$ 358 |
$ 367 |
||||
Interest expense |
74 |
74 |
||||
Tax provision |
178 |
184 |
||||
Depreciation and amortization |
70 |
70 |
||||
Depreciation classified in reimbursed costs |
32 |
32 |
||||
Interest expense from unconsolidated joint ventures |
4 |
4 |
||||
Depreciation and amortization from unconsolidated joint ventures |
9 |
9 |
||||
EBITDA ** |
725 |
740 |
||||
Share-based compensation (including share-based compensation reimbursed by third-party owners) |
37 |
37 |
||||
Adjusted EBITDA ** |
$ 762 |
$ 777 |
$ 756 |
|||
Increase over 2016 Adjusted EBITDA ** |
1% |
3% |
||||
** Denotes non-GAAP financial measures. See pages A-15 and A-16 for information about our reasons for providing these alternative financial measures and the limitations on their use. | ||||||
1Estimated 2017 net income excludes merger-related costs and charges, which the company cannot accurately forecast, but expects will be significant on a full-year basis. | ||||||
2See page A-12 for a reconciliation of Adjusted EBITDA. | ||||||
A-13 |
| ||||||
NON-GAAP FINANCIAL MEASURES | ||||||
ADJUSTED EBITDA FORECAST | ||||||
FULL YEAR 2017 | ||||||
($ in millions) | ||||||
Range |
||||||
Estimated |
Combined |
|||||
Net income 1 |
$ 1,602 |
$ 1,611 |
||||
Interest expense |
290 |
290 |
||||
Tax provision |
691 |
697 |
||||
Depreciation and amortization |
288 |
288 |
||||
Depreciation classified in reimbursed costs |
125 |
125 |
||||
Interest expense from unconsolidated joint ventures |
10 |
10 |
||||
Depreciation and amortization from unconsolidated joint ventures |
40 |
40 |
||||
EBITDA ** |
3,046 |
3,061 |
||||
Gain on asset dispositions and impairments, net |
(24) |
(24) |
||||
Share-based compensation (including share-based compensation reimbursed by third-party owners) |
155 |
155 |
||||
Adjusted EBITDA ** |
$ 3,177 |
$ 3,192 |
$ 2,987 |
|||
Increase over 2016 Combined Adjusted EBITDA ** |
6% |
7% |
||||
** Denotes non-GAAP financial measures. See pages A-15 and A-16 for information about our reasons for providing these alternative financial measures and the limitations on their use. | ||||||
1Estimated 2017 net income excludes merger-related costs and charges, which the company cannot accurately forecast, but expects will be significant on a full-year basis. | ||||||
2See page A-12 for a reconciliation of Combined Adjusted EBITDA. | ||||||
A-14 |
NON-GAAP FINANCIAL AND PERFORMANCE MEASURES
In our press release and schedules, and on the related conference call, we report certain financial measures that are not required by, or presented in accordance with,
Adjusted Measures That Exclude Merger-Related Adjustments. Management evaluates certain non-GAAP measures that exclude transaction and transition costs and purchase accounting adjustments associated with the Starwood merger because those non-GAAP measures allow for period-over period comparisons of our ongoing operations before the impact of these items. These non-GAAP measures, which are reconciled to the comparable GAAP measures on pages A-3 and A-4, include adjusted owned, leased, and other revenue, adjusted owned, leased, and other-direct expenses, adjusted depreciation, amortization, and other expenses, adjusted general, administrative, and other expenses, adjusted provision for income taxes, and as a result of the adjustments, adjusted total revenues, adjusted total expenses, adjusted operating income, adjusted income before taxes, adjusted net income, and adjusted EPS. Non-GAAP adjusted net income and its components and adjusted EPS are not, and should not be viewed as, substitutes for net income and EPS as reported under GAAP.
Combined Financial Information. The 2016 unaudited combined financial information presented on pages A-3, A-4, A-12, A-13, and A-14 gives effect to Marriott's acquisition of Starwood, and Starwood's sale of its timeshare business, as if these two transactions (the "Transactions") had occurred on
Marriott presents the combined financial information for informational purposes only and the combined financial information is not necessarily indicative of what the combined company's results of operations would actually have been had the Transactions been completed on the date indicated. In addition, the combined financial information does not purport to project the future operating results of the combined company.
Combined net income includes adjustments that are not prescribed by Article 11 of Regulation S-X. The following table presents a reconciliation of pro forma net income in accordance with Article 11 to combined net income presented on the previous pages.
2016 |
|||||||||
(in millions) |
First Quarter |
Second Quarter |
Third Quarter |
Year-to-Date Total |
|||||
Pro forma net income under Article 11 |
$ 291 |
$ 209 |
$ 179 |
$ 679 |
|||||
Merger-related costs and charges |
3 |
16 |
220 |
239 |
|||||
Income taxes 1 |
(4) |
17 |
(55) |
(42) |
|||||
Loss on cumulative translation adjustment |
— |
91 |
— |
91 |
|||||
Combined net income |
$ 290 |
$ 333 |
$ 344 |
$ 967 |
|||||
1 Combined net income applies an effective income tax rate of 32.5%. For pro forma net income under Article 11, we applied the historical effective tax rates for Marriott and Starwood. |
|||||||||
Earnings Before Interest Expense, Taxes, Depreciation and Amortization ("EBITDA"), Adjusted EBITDA, and Combined Adjusted EBITDA. EBITDA reflects net income, excluding the impact of interest expense, depreciation, amortization, and provision for income taxes. Our non-GAAP measure of Adjusted EBITDA further adjusts EBITDA to exclude the pre-tax transaction and transition costs associated with the Starwood merger, which we recorded in the "Merger-related costs and charges" caption of our Consolidated Statements of Income (our "Income Statements"), gains and losses on asset dispositions, and share-based compensation expense for all periods presented.
Our 2016 non-GAAP measure of Combined Adjusted EBITDA also includes Starwood pre-acquisition and other adjustments, which assume the Transactions had been completed on
A-15
NON-GAAP FINANCIAL AND PERFORMANCE MEASURES
We believe that Adjusted EBITDA and Combined Adjusted EBITDA are meaningful indicators of our operating performance because they permit period-over-period comparisons of our ongoing core operations before these items and facilitate our comparison of results before these items with results from other lodging companies. We use such measures to evaluate companies because they exclude certain items that can vary widely across different industries or among companies within the same industry. For example, interest expense can be dependent on a company's capital structure, debt levels, and credit ratings. Accordingly, the impact of interest expense on earnings can vary significantly among companies. The tax positions of companies can also vary because of their differing abilities to take advantage of tax benefits and because of the tax policies of the jurisdictions in which they operate. As a result, effective tax rates and provisions for income taxes can vary considerably among companies. Our Adjusted EBITDA and Combined Adjusted EBITDA also exclude depreciation and amortization expense which we report under "Depreciation, amortization, and other" as well as depreciation included under "Reimbursed costs" in our Income Statements, because companies utilize productive assets of different ages and use different methods of both acquiring and depreciating productive assets. These differences can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies. We also excluded share-based compensation expense in all periods presented in order to address considerable variability among companies in recording compensation expense because companies use share-based payment awards differently, both in the type and quantity of awards granted.
RevPAR. In addition to the foregoing non-GAAP financial measures, we present Revenue per
A-16
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