BETHESDA, Md., Oct. 5, 2011 /PRNewswire/ --

THIRD QUARTER HIGHLIGHTS

• Adjusted diluted earnings per share (EPS) totaled $0.29, a 32 percent increase over prior year results;

• Worldwide comparable systemwide revenue per available room (REVPAR) rose 8.7 percent using actual dollars.  Average daily rate rose 5.3 percent using actual dollars;

• At the end of the third quarter, the company's worldwide pipeline of hotels under construction, awaiting conversion or approved for development increased to more than 105,000 rooms, including over 47,000 rooms outside North America and more than 26,000 rooms in Asia;

• Nearly 6,000 rooms were added to the worldwide lodging portfolio during the third quarter, including approximately 3,000 rooms in international markets and nearly 1,100 rooms converting from competitor brands;

• Marriott repurchased 18.0 million shares of the company's common stock for $550 million during the quarter.  Year-to-date through September 9, 2011, the company repurchased 36.5 million shares for $1.2 billion.

Marriott International, Inc. (NYSE: MAR) today reported third quarter 2011 results.

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THIRD QUARTER 2011 RESULTS

Third quarter 2011 adjusted net income totaled $104 million, a 25 percent increase compared to third quarter 2010 net income.  Adjusted diluted EPS totaled $0.29, a 32 percent increase from diluted EPS in the year-ago quarter.  On July 13, 2011, the company forecasted third quarter diluted EPS of $0.25 to $0.29.

The reported net loss was $179 million in the third quarter of 2011 compared to net income of $83 million in the year-ago quarter.  Reported diluted losses per share was $0.52 in the third quarter of 2011 compared to diluted EPS of $0.22 in the third quarter of 2010.

Adjusted results for the 2011 third quarter exclude $352 million pretax ($251 million after-tax and $0.73 per diluted share) of non-cash other charges.  Other charges include $324 million pretax of impairment charges, which Marriott previously disclosed, related to the timeshare segment.  Other charges also include an $18 million pretax impairment charge on an investment in equity securities due to a recent decline in the market price of these securities and a $10 million pretax write-off of both deferred contract acquisition costs and an accounts receivable balance related to one property whose owner filed for bankruptcy.  Adjusted results also exclude $32 million ($0.09 per diluted share) of tax expense recorded in the 2011 third quarter in conjunction with the write-off of international deferred tax assets related to the timeshare segment that Marriott determined were impaired, which the company also previously disclosed.

J.W. Marriott, Jr., Marriott International chairman and chief executive officer, said, "We were very pleased with our performance in the third quarter.  Despite continued economic uncertainty, revenue per available room growth was very strong and adjusted EPS rose 32 percent.

"After reaching targeted debt levels in mid 2010, we have been investing in growth while also returning substantial cash to our shareholders.  In the last 12 months, we have opened 33,000 new rooms while returning $1.4 billion to our shareholders through share repurchases and dividends.  Third quarter share repurchases alone totaled $550 million.

"The spin-off of our timeshare business is on track and we expect to conclude the transaction in the 2011 fourth quarter.  When complete, Marriott will have taken another innovative step, leading the industry as a manager and franchisor of the greatest lodging and timeshare brand portfolio in the business.

"We are cautiously optimistic about 2012 and are well-positioned for continued growth.  We expect to add approximately 30,000 rooms in 2012, most of which are already under construction and included in our 105,000 room development pipeline.  While there is considerable economic uncertainty, assuming worldwide systemwide REVPAR growth of 3 to 7 percent, our earnings per share could total $1.48 to $1.68 per share and return on invested capital could increase substantially."

For the 2011 third quarter, REVPAR for worldwide comparable systemwide properties increased 6.9 percent (an 8.7 percent increase using actual dollars).  Excluding the Middle East and Japan markets, worldwide comparable systemwide REVPAR rose 7.4 percent (a 9.0 percent increase using actual dollars).

International comparable systemwide REVPAR rose 6.9 percent (a 15.8 percent increase using actual dollars), including a 4.9 percent increase in average daily rate (a 13.6 percent increase using actual dollars) in the third quarter of 2011.  Excluding the Middle East and Japan markets, international comparable systemwide constant dollar REVPAR increased 9.2 percent (an 18.7 percent increase using actual dollars).

In North America, comparable systemwide REVPAR increased 6.9 percent in the third quarter of 2011, including a 3.3 percent increase in average daily rate.  Most North American markets reflected both strong demand increases and modest supply growth.  REVPAR for comparable systemwide North American full-service and luxury hotels (including Marriott Hotels & Resorts, The Ritz-Carlton and Renaissance Hotels) increased 6.5 percent in the third quarter with a 3.7 percent increase in average daily rate.  REVPAR for comparable systemwide North American limited-service hotels (including Courtyard, Residence Inn, SpringHill Suites, TownePlace Suites and Fairfield Inn & Suites) increased 7.3 percent in the third quarter with a 3.2 percent increase in average daily rate.

Marriott added 38 new properties (5,969 rooms) to its worldwide lodging portfolio in the 2011 third quarter, including the Ritz-Carlton Oman, the Boscolo Palace Roma, Autograph Collection, in Rome and the Courtyard Pune City Centre in India.  Five properties (1,234 rooms) exited the system during the quarter.  At quarter-end, the company's lodging group encompassed nearly 3,700 properties and timeshare resorts for a total of more than 638,000 rooms.

The company's worldwide pipeline of hotels under construction, awaiting conversion or approved for development totaled nearly 650 properties with over 105,000 rooms at quarter-end.

MARRIOTT REVENUES totaled nearly $2.9 billion in the 2011 third quarter compared to over $2.6 billion for the third quarter of 2010.  Base management and franchise fees rose 12 percent to $260 million reflecting higher REVPAR at existing hotels, fees from new hotels and, to a lesser extent, favorable foreign exchange rates.  Third quarter worldwide incentive management fees increased 38 percent to $29 million.  In the third quarter, 24 percent of company-managed hotels earned incentive management fees compared to 23 percent in the year-ago quarter.  Incentive management fees largely came from hotels outside of North America in both the 2011 and 2010 quarters.

North American comparable company-operated house profit margins increased 130 basis points in the third quarter primarily reflecting higher occupancy and rate increases.  House profit margins for comparable company-operated properties outside North America increased 40 basis points, challenged by lower REVPAR in the Middle East and Japan.

Owned, leased, corporate housing and other revenue, net of direct expenses, increased from $7 million in the 2010 third quarter to $35 million, largely reflecting $13 million of higher credit card and residential branding fees, $8 million of higher termination fees and improved operating results at leased hotels.

In the third quarter, Timeshare segment contract sales increased $15 million to $179 million from segment contract sales of $164 million in the year-ago quarter.  In the third quarter, 43 percent of timeshare contract sales came from new customers compared to 37 percent in the year ago quarter.  Average contract price improved 45 percent year-over-year while volume per guest increased 10 percent in the third quarter.

In the third quarter, Timeshare sales and services revenue, net of expenses, declined $20 million to $36 million largely due to the year-over-year unfavorable impact of a $15 million adjustment to the Marriott Rewards liability recorded in the year-ago quarter and, to a lesser extent, lower interest income on a smaller mortgage portfolio.

Adjusted Timeshare segment results include Timeshare sales and services revenue, net of direct expenses, as well as base management fees, gains and other income, equity in earnings (losses), interest expense and general, administrative and other expenses associated with the timeshare business.  Adjusted Timeshare segment results for the 2011 third quarter totaled $22 million and included $10 million of interest expense related to securitized Timeshare notes.  The adjustments to reported Timeshare segment results for the 2011 third quarter are shown on page A-10.  In the prior year quarter, Timeshare segment results totaled $38 million and included $12 million of interest expense related to securitized Timeshare notes as shown on page A-10.

ADJUSTED GENERAL, ADMINISTRATIVE and OTHER expenses for the 2011 third quarter increased 14 percent to $170 million, compared to expenses of $149 million in the year-ago quarter.  The adjustments to reported general, administrative and other expenses for the 2011 third quarter are shown on page A-1.  The increase in adjusted expenses reflected several non-routine items including $8 million of transaction-related expenses associated with the spin-off of the timeshare business, $5 million related to the increase of a guarantee reserve for one hotel and the write-off of deferred contract acquisition costs.  Adjusted general, administrative and other expenses also increased due to higher costs associated with growth in international markets and incentive compensation increases.  The increase in adjusted expenses was partially offset by $6 million of lower legal expenses.  The quarter-over-quarter variance also reflected the unfavorable impact of the $4 million reversal in the 2010 third quarter of an accrual related to a tax settlement on a European asset.

INTEREST EXPENSE decreased $2 million to $39 million in the third quarter, primarily due to lower average interest rates on and a decline in the outstanding balance of securitized Timeshare notes.

Adjusted Earnings before Interest Expense, Taxes, Depreciation and Amortization (EBITDA)

Marriott International adjusted EBITDA totaled $240 million in the 2011 third quarter, a 9 percent increase over EBITDA of $220 million in the year-ago quarter.  Adjusted EBITDA for the Timeshare segment declined 35 percent to $39 million in the 2011 third quarter largely due to lower interest income and the year-over-year unfavorable impact of a third quarter 2010 adjustment to the Marriott Rewards liability.  See pages A-12 and A-13 for the EBITDA and adjusted EBITDA calculations.

BALANCE SHEET

At the end of the third quarter 2011, total debt was $3,103 million, including $830 million of debt associated with securitized Timeshare mortgage notes, and cash balances totaled $220 million.  At year-end 2010, total debt was $2,829 million, including $1,016 million of debt associated with securitized Timeshare mortgage notes, and cash balances totaled $505 million.

COMMON STOCK

Weighted average fully diluted shares outstanding used to calculate adjusted diluted EPS totaled 356.8 million in the 2011 third quarter compared to 378.1 million in the year-ago quarter.

The company repurchased 18.0 million shares of common stock in the third quarter of 2011 at a cost of $550 million.  Year-to-date through September 9, 2011, Marriott repurchased 36.5 million shares of its stock for $1,225 million.  The remaining share repurchase authorization, as of September 9, 2011, totaled 12.4 million shares.

2011 OUTLOOK

The company's fourth quarter guidance assumes that the spin-off occurs at year-end 2011 and does not include pro forma adjustments or estimates of further transaction expenses.  Such transaction costs could be material in the fourth quarter of 2011.

For the fourth quarter, the company assumes North American comparable systemwide REVPAR will increase 6 to 8 percent.

Outside North America, the company assumes fourth quarter 2011 comparable systemwide REVPAR on a constant dollar basis will increase 3 to 5 percent, or 5 to 7 percent excluding the Middle East and Japan markets.  

On a worldwide basis, the company expects fourth quarter 2011 comparable systemwide REVPAR on a constant dollar basis will increase 5 to 7 percent, or 6 to 8 percent excluding the Middle East and Japan markets.

The company assumes fourth quarter 2011 Timeshare contract sales will total $200 million to $210 million and Timeshare sales and services revenue, net of direct expenses, will total approximately $68 million to $73 million.  With these assumptions, Timeshare segment results, including interest expense associated with securitized notes, are expected to total $45 million to $50 million for the 2011 fourth quarter.  Excluding the $324 million impairment charge recorded in the third quarter, adjusted Timeshare segment results, including interest expense associated with securitized notes, are expected to total $131 million to $136 million for full year 2011.  The adjustments to full year 2011 estimated Timeshare segment results are shown on page A-18.  The company further assumes that the timeshare spin-off will occur at year-end 2011.

The company expects investment spending in 2011 will total approximately $500 million to $600 million, including $50 million to $100 million for maintenance capital spending.  Investment spending will also include other capital expenditures (including property acquisitions), new mezzanine financing and mortgage notes, contract acquisition costs, and equity and other investments.  The company does not expect material investment spending associated with the Timeshare segment in 2011.

The company expects to add more than 30,000 rooms in 2011 as most hotels expected to open are already under construction or undergoing conversion from other brands.  

Based upon the assumptions above, the company expects full year 2011 adjusted EBITDA to total $1,112 million to $1,132 million, a 7 to 8 percent increase over the prior year's adjusted EBITDA.  This estimate of 2011 adjusted EBITDA reflects $13 million of transaction costs associated with the timeshare spin-off incurred in 2011 through the third quarter, but does not include transaction costs that may be incurred in the fourth quarter.  Adjusted EBITDA for full year 2010 totaled $1,044 million and is shown on page A-14.

2012 OUTLOOK

Given today's economic uncertainty regarding 2012, the company is providing the following assumptions which investors may find useful in making their own estimates of 2012 results.  With the exception of unit growth, these are not intended to be forecasts of future performance.

The company assumes full year 2012 comparable systemwide REVPAR on a constant dollar basis will increase 3 to 7 percent in North America, outside North America and worldwide.

The company expects to open approximately 30,000 rooms in 2012 as most hotels expected to open are already under construction or undergoing conversion from other brands.

Given these assumptions, full year 2012 fee revenue could total $1,420 million to $1,490 million.  The assumed 2012 fee revenue reflects no timeshare base fees but includes $63 million to $65 million of timeshare royalty fees.  The company's 2011 estimate of fee revenue totals $1,307 million to $1,317 million and includes $58 million to $60 million of timeshare base management fees, but does not reflect any timeshare royalty fees.

Also given these assumptions, owned, leased, corporate housing and other revenue, net of direct expense, could total $130 million to $150 million in 2012, reflecting stronger results from owned and leased hotels and higher credit card branding fees somewhat offset by lower termination fees.

For 2012, the company expects general, administrative and other expenses to total $660 million to $675 million, an increase of 3 to 5 percent over 2011 levels excluding Timeshare segment general, administrative and other expenses and transaction costs related to the timeshare spin-off.  Adjusted general, administrative and other expenses for 2011 are expected to total $723 million to $733 million reflecting $70 million to $75 million of Timeshare segment general, administrative and other expenses and $13 million of transaction costs incurred in 2011 through the third quarter related to the timeshare spin-off.  The adjustment to full year 2011 estimated general, administrative and other expenses is shown on page A-16.

Given these assumptions, 2012 diluted EPS could total $1.48 to $1.68.  The company estimates 2011 adjusted diluted EPS, excluding an estimated $0.10 to $0.11 diluted EPS impact from the Timeshare segment, could total $1.27 to $1.31.  The estimated diluted EPS impact of the Timeshare segment on 2011 results is shown on page A-18 and the estimated 2011 adjusted diluted EPS is shown on page A-19.

Marriott International, Inc. (NYSE: MAR) will conduct its quarterly earnings review for the investment community and news media on Thursday, October 6, 2011 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 and Upcoming Events" tab and click on the quarterly conference call link.  A replay will be available at that same website until October 6, 2012.

The telephone dial-in number for the conference call is 706-679-3455 and the conference ID is 89671624.  A telephone replay of the conference call will be available from 1 p.m. ET, Thursday, October 6, 2011 until 8 p.m. ET, Thursday, October 13, 2011.  To access the replay, call 404-537-3406.  The reservation number for the recording is 89671624.

Note on forward-looking statements:  This press release and accompanying schedules contain "forward-looking statements" within the meaning of federal securities laws, including statements concerning the timing of the planned spin-off of our timeshare operations and development business; REVPAR, profit margin and earnings trends, estimates and assumptions; the number of lodging properties we expect to add 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; the continuation and pace of the economic recovery; supply and demand changes for hotel rooms, corporate housing and our timeshare products; competitive conditions in the lodging industry; relationships with clients and property owners; the availability of capital to finance hotel growth and refurbishment; and unanticipated developments that prevent, delay or otherwise negatively affect the planned spin-off of our Timeshare segment.  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 October 5, 2011.  We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

MARRIOTT INTERNATIONAL, INC. (NYSE: MAR) is a leading lodging company with nearly 3,700 lodging properties in 72 countries and territories. Marriott International operates and franchises hotels under the Marriott, JW Marriott, The Ritz-Carlton, EDITION, Autograph Collection, Renaissance, AC Hotels by Marriott, Residence Inn, Courtyard, TownePlace Suites, Fairfield Inn & Suites, SpringHill Suites and Bulgari brand names; develops and operates vacation ownership resorts under the Marriott Vacation Club, The Ritz-Carlton Destination Club, and Grand Residences by Marriott brands; licenses and manages whole-ownership residential brands, including The Ritz-Carlton Residences, JW Marriott Residences and Marriott Residences; operates Marriott Executive Apartments; provides furnished corporate housing through its Marriott ExecuStay division; and operates conference centers. The company is headquartered in Bethesda, Maryland, USA, and had approximately 129,000 employees at 2010 year-end. It is ranked by FORTUNE as the lodging industry's most admired company and one of the best companies to work for.  In fiscal year 2010, Marriott International reported sales from continuing operations of nearly $12 billion. For more information or reservations, please visit our website at www.marriott.com, and for the latest company news, visit www.marriottnewscenter.com.

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