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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
_______________________________________ 
FORM 8-K
_______________________________________  
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 15, 2017
 _______________________________________ 
MARRIOTT INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
 _______________________________________ 
 
 
 
 
 
 
Delaware
 
1-13881
 
52-2055918
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)
 
 
 
 
10400 Fernwood Road, Bethesda, Maryland
 
20817
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code: (301) 380-3000
 _______________________________________ 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 




Item 2.02.
Results of Operations and Financial Condition.

Financial Results for the Quarter and Year Ended December 31, 2016
Marriott International, Inc. (“Marriott”) today issued a press release reporting financial results for the quarter and year ended December 31, 2016.
A copy of Marriott’s press release is attached as Exhibit 99 and incorporated by reference.

 
Item 9.01.
Financial Statements and Exhibits.

(d) Exhibits. The following exhibit is furnished with this report:
Exhibit 99
Press release issued on February 15, 2017, reporting financial results for the quarter and year ended December 31, 2016.

2


SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MARRIOTT INTERNATIONAL, INC.
 
 
 
 
 
Date: February 15, 2017
 
 
 
 
 
By: 
 
/s/ Bao Giang Val Bauduin
 
 
 
 
 
 
 
 
Bao Giang Val Bauduin
 
 
 
 
 
 
 
 
Controller and Chief Accounting Officer

3


EXHIBIT INDEX
 
 
 
 
Exhibit No.
  
Description
 
 
99
  
Press release issued on February 15, 2017, reporting financial results for the quarter and year ended December 31, 2016.


4
Exhibit
Exhibit 99


https://cdn.kscope.io/691d168aa9ae754bdbae91da5cfbdae7-marq32016pressrelease_image1.jpg    https://cdn.kscope.io/691d168aa9ae754bdbae91da5cfbdae7-marq32016pressrelease_image2.jpg
 
NEWS

CONTACT: Felicia Farrar McLemore
(301) 380-2702
felicia.mclemore@marriott.com

MARRIOTT INTERNATIONAL REPORTS FOURTH QUARTER 2016 RESULTS

HIGHLIGHTS

•
Fourth quarter reported diluted EPS totaled $0.62, a 19 percent decrease over prior year results. Fourth quarter adjusted diluted EPS totaled $0.85, a 20 percent increase over fourth quarter 2015 combined results. Adjusted 2016 fourth quarter results exclude merger-related costs. Combined 2015 fourth quarter results assume Marriott’s acquisition of Starwood and Starwood’s sale of its timeshare business had been completed on January 1, 2015;
 
•
North American comparable systemwide constant dollar RevPAR rose 1.1 percent in the 2016 fourth quarter, while worldwide comparable systemwide constant dollar RevPAR rose 0.8 percent;

•
During the twelve months ended December 31, 2016, Marriott and Starwood together added more than 68,000 rooms, including roughly 11,000 rooms converted from competitor brands and approximately 31,000 rooms in international markets;

•
At year-end, Marriott’s worldwide development pipeline increased to more than 420,000 rooms, including nearly 34,000 rooms approved, but not yet subject to signed contracts;

•
Fourth quarter reported net income totaled $244 million, a 21 percent increase over prior year results. Fourth quarter adjusted net income totaled $334 million, a 15 percent increase over prior year combined results;

•
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) totaled $756 million in the quarter, an 11 percent increase over fourth quarter 2015 combined adjusted EBITDA;

•
For full year 2016, Marriott repurchased 8.0 million shares of the company’s common stock for $573 million, including 4.3 million shares for $348 million in the fourth quarter.



1

BETHESDA, MD - February 15, 2017 - Marriott International, Inc. (NASDAQ: MAR) today reported fourth quarter 2016 results.

On September 23, 2016, Marriott completed its acquisition of Starwood Hotels & Resorts Worldwide (Starwood). The discussion in the first section below reflects reported results for the fourth quarter in accordance with US generally accepted accounting principles (GAAP). To further assist investors, the company is also providing (a) adjusted results that exclude merger-related costs; and (b) combined financials and selected performance information for full year 2016, the 2015 fourth quarter and full year 2015, that assume Marriott’s acquisition of Starwood and Starwood’s sale of its timeshare business had been completed on January 1, 2015, but use the estimated fair value of assets and liabilities as of the actual closing date of the acquisition. Combined results also reflect other adjustments as described below. Throughout this press release, the business associated with brands that were in Marriott’s portfolio before the Starwood acquisition are referred to as “Legacy-Marriott”, while the Starwood business and brands that the company acquired are referred to as “Legacy-Starwood.”

Arne M. Sorenson, president and chief executive officer of Marriott International, said, “The company delivered record high fee revenues in 2016, boosted by significant unit growth, RevPAR improvement, outstanding property-level margin gains and the acquisition of Starwood Hotels & Resorts. We added 11 leading brands to our portfolio as a result of the acquisition and welcomed the 6,000th hotel to our system. Together with owners and franchisees, Marriott and Starwood added more than 68,000 rooms during the year and, despite a tightening credit market, drove our pipeline of hotels under development to more than 420,000 rooms.

“Looking ahead, we’ve never been more optimistic about our long-term prospects. Our expected new rooms growth for 2017 remains healthy, customers love our hotels and loyalty programs, and owners and franchisees prefer our portfolio of brands more than ever. Around the globe, Marriott brands represent nearly one in four hotels under construction, and one in three hotels under construction in North America.


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“Our strategy of managing and franchising hotels under solid, long-term agreements is proven. Over the years, we’ve shown that this business model delivers meaningful growth in the number and variety of choices for our guests globally, while generating strong sustainable cash flow.

“In 2017, we anticipate growing our rooms distribution by 6 percent, net, and expect that our worldwide systemwide comparable constant dollar RevPAR for the combined portfolio will increase 1/2 to 2 1/2 percent. While we do not assume asset sales in our earnings guidance, we believe assets will be sold in 2017. Not including asset sales, we expect to return $1.5 billion to $2.0 billion to shareholders in share repurchases and dividends in 2017.”

Marriott International GAAP - Financial Results As Reported
Marriott reported net income totaled $244 million in the fourth quarter, a 21 percent increase over 2015 fourth quarter net income of $202 million. Reported diluted earnings per share (EPS) was $0.62 in the quarter, a 19 percent decrease from diluted EPS of $0.77 in the year-ago quarter.

Base management and franchise fees totaled $564 million in the 2016 fourth quarter, compared to $373 million in the year-ago quarter. Of the $191 million year-over-year increase in fees, $174 million relates to Legacy-Starwood results in the quarter.

Fourth quarter worldwide incentive management fees increased to $149 million compared to $81 million in the year-ago quarter. The $68 million increase largely reflects Legacy-Starwood fees in the quarter.

Owned, leased, and other revenue, net of direct expenses, totaled $169 million in the 2016 fourth quarter, compared to $76 million in the year-ago quarter.  The $93 million year-over-year increase includes $77 million of Legacy-Starwood results in the quarter. 

Depreciation, amortization, and other expenses totaled $71 million in the fourth quarter compared to $32 million in the year-ago quarter. The year-over-year increase largely reflects $39 million of Legacy-Starwood results in the quarter, including the effect of purchase accounting.

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Merger-related costs and charges totaled $136 million in the fourth quarter compared to none in the year-ago quarter. Included in the merger-related costs and charges are $55 million of severance and retention costs, $59 million of integration costs and $22 million of transaction costs.

General, administrative, and other expenses for the 2016 fourth quarter totaled $234 million compared to $188 million in the year-ago quarter.

Interest expense, net totaled $62 million in the fourth quarter compared to $36 million in the year-ago quarter.

Equity in earnings totaled $2 million in the fourth quarter compared to equity in earnings of $3 million in the year-ago quarter.

The provision for income taxes totaled $139 million in the fourth quarter, a 36.3 percent effective tax rate, compared to $82 million in the year-ago quarter.

Full year 2016 reported net income totaled $780 million, a 9 percent decrease from reported 2015 net income of $859 million.

Fourth Quarter 2016 Financial Results As Adjusted Compared to Fourth Quarter 2015 Combined Financial Results
This information is being presented to allow shareholders to more easily compare the 2016 fourth quarter adjusted results with the combined results for the fourth quarter of 2015. The combined results assume Marriott’s acquisition of Starwood and Starwood’s sale of its timeshare business had been completed on January 1, 2015, but use the estimated fair value of assets and liabilities as of the actual closing date of the acquisition.

Combined results discussed in this section make the following assumptions: (1) removes merger-related costs and charges; (2) removes a loss on cumulative translation adjustment related to Starwood's disposition of a hotel property in the 2016 second quarter; (3) adjusts income taxes to reflect the Company's combined 2016 effective tax rate of 32.5 percent; (4) adjusts weighted average shares outstanding to include shares issued to

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Starwood shareholders; and (5) adjusts debt to reflect borrowing on the Credit Facility and issuance of Series Q and R Notes on January 1, 2015. Adjusted results for the 2016 fourth quarter exclude merger-related costs and charges. See page A-3 for the calculation of adjusted results, as well as combined results for the year-ago quarter.

Fourth quarter 2016 adjusted net income totaled $334 million, a 15 percent increase over 2015 fourth quarter combined net income of $291 million. Adjusted net income for the fourth quarter of 2016 excludes $136 million ($90 million after-tax) of merger-related costs. Adjusted diluted EPS in the fourth quarter totaled $0.85, a 20 percent increase from combined diluted EPS of $0.71 in the year-ago quarter.

Base management and franchise fees totaled $564 million in the fourth quarter of 2016, a 5 percent increase over combined base management and franchise fees of $538 million in the year-ago quarter. The year-over-year increase largely reflects higher RevPAR and unit growth, partially offset by $3 million of unfavorable foreign exchange.

Fourth quarter incentive management fees decreased to $149 million, compared to combined fees of $150 million in the 2015 fourth quarter. Despite a 70 basis point decrease in worldwide comparable company-operated actual dollar RevPAR in the quarter, incentive fees were roughly flat due to higher property-level margins.

On November 7, the company estimated total fee revenue for the fourth quarter would be $695 million to $705 million. Actual total fee revenue of $713 million in the quarter was higher than estimated, reflecting RevPAR near the high end of the guidance range, as well as better than expected incentive fees.

Owned, leased, and other revenue, net of direct expenses, totaled $169 million, compared to combined revenue, net of expenses of $165 million in the year-ago quarter. The adjusted year-over-year increase largely reflects better results at owned and leased hotels, higher residential and credit card branding fees, partially offset by lower termination fees and the impact of Legacy-Starwood hotels previously sold.

On November 7, the company estimated owned, leased, and other revenue, net of direct expenses, for the fourth quarter would total $150 million to $155 million. Actual results

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of $169 million in the quarter were higher than estimated largely due to better than expected results at several owned and leased hotels, as well as higher than expected residential and credit card branding fees.

Depreciation, amortization, and other expenses for the 2016 fourth quarter totaled $71 million compared to combined expenses of $81 million in the year-ago quarter. The $10 million decrease year-over-year was largely due to Legacy-Starwood hotels previously sold, as well as properties moved to assets held for sale in the 2016 third quarter.

General, administrative, and other expenses for the 2016 fourth quarter totaled $234 million compared to combined expenses of $284 million in the year-ago quarter. The decrease in expenses year-over-year was largely due to general administrative cost savings, an $8 million favorable legal settlement and $4 million of net foreign exchange gains. On November 7, Marriott estimated general, administrative, and other expenses for the fourth quarter would total approximately $235 million to $240 million.

Interest expense, net totaled $62 million in the fourth quarter compared to combined net expense of $69 million in the year-ago quarter. The decrease was largely due to the maturity of Series G and H Senior Notes.

Equity in earnings totaled $2 million in the fourth quarter compared to combined equity in earnings of $13 million in the year-ago quarter. The 2015 fourth quarter benefited from the reversal of an $11 million litigation reserve.

The adjusted provision for income taxes totaled $185 million in the fourth quarter, a 35.6 percent effective rate, compared to the combined provision for taxes of $139 million in the 2015 fourth quarter. On November 7, Marriott estimated an effective tax rate of 32.5 percent for the quarter. The tax rate was higher than expected largely due to a tax rate change in France and a higher mix of earnings in higher tax rate jurisdictions.
 
For the fourth quarter, adjusted EBITDA totaled $756 million, an 11 percent increase over fourth quarter 2015 combined adjusted EBITDA of $682 million. Full year 2016 combined adjusted EBITDA totaled $2,987 million, a 9 percent increase over full year

6

2015 combined adjusted EBITDA of $2,743 million. See page A-12 for the adjusted EBITDA calculation.

Selected Performance Information
Combined information presented in this section assumes Marriott’s acquisition of Starwood and Starwood’s sale of its timeshare business had been completed on January 1, 2015.

The company added 116 new properties (22,043 rooms) to its worldwide lodging portfolio during the 2016 fourth quarter, including W Las Vegas, The Sanya EDITION and the JW Marriott Hotel Singapore South Beach. Ten properties (2,450 rooms) exited the system during the quarter. At year-end, Marriott’s lodging system encompassed 6,080 properties and timeshare resorts with nearly 1,191,000 rooms.

At year-end, the company’s worldwide development pipeline totaled 2,493 properties with more than 420,000 rooms, including 892 properties with roughly 161,000 rooms under construction and 218 properties with nearly 34,000 rooms approved for development, but not yet subject to signed contracts.

In the 2016 fourth quarter, worldwide comparable systemwide constant dollar RevPAR increased 0.8 percent (a 0.3 percent increase using actual dollars). North American comparable systemwide constant dollar RevPAR increased 1.1 percent (a 1.1 percent increase using actual dollars), and international comparable systemwide constant dollar RevPAR increased 0.2 percent (a 1.4 percent decline using actual dollars) for the same period. These RevPAR growth statistics compare the fourth quarter of 2016 to combined comparable systemwide RevPAR for the fourth quarter of 2015.

For full year 2016, worldwide comparable combined systemwide constant dollar RevPAR increased 1.8 percent (a 1.0 percent increase using actual dollars). North American comparable combined systemwide constant dollar RevPAR increased 2.3 percent (a 2.2 percent increase using actual dollars), and international comparable combined systemwide constant dollar RevPAR increased 0.7 percent (a 2.1 percent decline using actual dollars) for the same period.


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Worldwide comparable company-operated house profit margins increased 30 basis points in the fourth quarter due to improved productivity and lower utility costs. House profit margins for comparable company-operated properties outside North America were flat, while North American comparable company-operated house profit margins increased 50 basis points in the fourth quarter. These house profit margin statistics compare the fourth quarter of 2016 to combined comparable company-operated house profit margins for the fourth quarter of 2015.

For the full year 2016, worldwide comparable company-operated combined house profit margins increased 50 basis points due to improved productivity and lower utility costs. Full year combined house profit margins for comparable company-operated properties outside North America increased 20 basis points, while North America comparable company-operated combined house profit margins increased 70 basis points from the prior year.

Balance Sheet
At year-end, Marriott’s total debt was $8,506 million and cash balances totaled $858 million, compared to $4,107 million in debt and $96 million of cash at year-end 2015.

Marriott Common Stock
Weighted average fully diluted shares outstanding used to calculate reported diluted EPS totaled 394.0 million in the 2016 fourth quarter. Weighted average fully diluted shares outstanding used to calculate combined diluted EPS totaled 409.5 million in the year-ago quarter.

The company repurchased 4.3 million shares of common stock in the fourth quarter at a cost of $348 million at an average price of $80.11. For full year 2016, Marriott repurchased 8.0 million shares of its stock for $573 million at an average price of $71.55. To date in 2017, the company has repurchased 3.0 million shares for $253 million at an average price of $84.24.


8

OUTLOOK
The following outlook for the first quarter and full year 2017 does not include merger-related costs, which the company cannot accurately forecast, but expects will be significant on a full-year basis.

Beginning in the first quarter of 2017, branding fees from credit cards and residential sales will be reported in the Franchise fees line on the income statement. Those fees were previously reported in Owned, leased and other revenue. In 2016, combined fees from credit cards and residential sales totaled $52 million in the first quarter and $210 million for the full year. Application fees, relicensing fees and timeshare royalties will continue to be included in the Franchise fees line. Comparisons to prior year combined results throughout this Outlook section reflects this change in reporting. The company is issuing further schedules setting forth combined quarterly and full year combined financial information for both 2015 and 2016 that reflect this change in presentation. Those schedules will be included in a Form 8-K being filed today and will be available on Marriott’s Investor Relations website at http://www.marriott.com/investor once this release has been posted.

In the 2017 first quarter, the company plans to adopt Accounting Standard Update 2016-09 (“ASU 2016-09”), which changes the GAAP reporting of excess tax benefits associated with employee stock-based compensation. For modeling purposes, the company estimates there could be a $41 million tax benefit ($0.10 diluted earnings per share) in 2017. The benefit should be recognized in the 2017 first quarter when most shares vest.

For the 2017 first quarter, Marriott expects comparable systemwide RevPAR on a constant dollar basis for the combined company will increase 1 to 3 percent in North America and worldwide. Outside North America, the company expects comparable systemwide RevPAR on a constant dollar basis for the combined company will increase 1 to 2 percent. The company’s RevPAR guidance for the first quarter reflects the benefit of the U.S. Presidential inauguration and related events at Washington, D. C. hotels and the favorable shift of Easter into the second quarter.


9

The company assumes first quarter total fee revenue will total $740 million to $750 million, flat to up 1 percent compared to combined first quarter 2016 total fee revenue of $740 million. These fee revenue estimates reflect about $6 million of unfavorable foreign exchange and roughly $7 million of negative impact year-over-year of the leap day in 2016 on base management and franchise fees. The company estimates that incentive management fees will decrease roughly 10 percent year-over-year largely due to deferred fees recognized in the prior year, renovations and timing. Combined fee revenues from credit cards, residential sales, timeshare royalties, application fees and relicensing fees totaled approximately $88 million in the 2016 first quarter and should be flat year-over-year.

Marriott expects first quarter 2017 owned, leased, and other revenue, net of direct expenses, could total $60 million to $70 million, a 19 to 30 percent decrease compared to combined first quarter 2016 results of $86 million. The company estimates that Legacy-Starwood hotels previously sold will negatively impact revenue, net of direct expenses by roughly $4 million in the first quarter of 2017. The first quarter estimate also assumes $13 million of lower termination fees.
 
The company expects general, administrative, and other expenses will total $225 million to $230 million in the 2017 first quarter, a 7 to 9 percent decline compared to combined 2016 first quarter expenses of $246 million.

For the full year 2017, Marriott expects comparable systemwide RevPAR on a constant dollar basis for the combined company will be flat to up 2 percent in North America. The company expects comparable systemwide RevPAR on a constant dollar basis for the combined company will increase 1 to 3 percent outside North America and 0.5 to 2.5 percent worldwide.

For the combined company, Marriott anticipates gross room additions of 6 percent, net, for full year 2017.

The company assumes full year 2017 total fee revenue will total $3,175 million to $3,245 million, growth of 3 to 6 percent over combined 2016 total fee revenue of $3,072 million.

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These fee revenue estimates reflect $20 million to $25 million of unfavorable foreign exchange and roughly $7 million of negative impact year-over-year of the leap day in 2016 on base management and franchise fees. For the full year, the company expects that incentive management fees will be roughly flat compared to the prior year combined total of $562 million, reflecting RevPAR improvement and unit growth offset by renovations, terminations and about $15 million of unfavorable foreign exchange. Combined fee revenues from credit cards, residential sales, timeshare royalties, application fees and relicensing fees totaled approximately $350 million in 2016 and is expected to increase to approximately $400 million in 2017.

Marriott expects full year 2017 owned, leased, and other revenue, net of direct expenses, could total $345 million to $360 million, a 16 to 19 percent decrease compared to combined 2016 results of $426 million. The company estimates that Legacy-Starwood hotels previously sold and lower termination fees should reduce results by roughly $38 million year-over-year. The tough comparison to the Olympics in the prior year and lower results at hotels in New York should negatively impact revenue, net of direct expenses, by approximately $20 million for the full year.

For 2017, the company anticipates general, administrative, and other expenses will total $895 million to $905 million. With the uncertainty around the timing of the closing of the Starwood acquisition, the combined company had a significant number of open positions in 2016. As a result, the company is using a baseline of $1,080 million (equal to combined 2015 general, administrative, and other expenses increased by 4 percent) for purposes of evaluating general, administrative, and other expense synergies from the Starwood acquisition. Using that comparison, the company estimates $175 million to $185 million of synergies will be realized in 2017, increasing steadily throughout the year as integration progresses. The company continues to believe it will achieve a run-rate of $250 million of annual cost synergies.

Marriott expects full year 2017 adjusted EBITDA could total $3,075 million to $3,175 million, a 3 to 6 percent increase compared to full year 2016 combined adjusted EBITDA of $2,987 million. See page A-13 for the adjusted EBITDA calculation. Legacy-

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Starwood hotels previously sold contributed roughly $20 million of combined adjusted EBITDA in 2016.
 

First Quarter 2017
Full Year 2017
Total fee revenue1
$740 million to $750 million
$3,175 million to $3,245 million
Owned, leased and other revenue, net of direct expenses1
$60 million to $70 million
$345 million to $360 million
Depreciation, amortization, and other expenses
Approx. $70 million
Approx. $280 million
General, administrative, and other expenses
$225 million to $230 million
$895 million to $905 million
Operating income
$500 million to $525 million
$2,335 million to $2,430 million
Gains and other income
Approx. $0 million
Approx. $0 million
Net interest expense2
Approx. $65 million
Approx. $260 million
Equity in earnings (losses)
Approx. $10 million
$35 million to $40 million
Earnings per share3
$0.87 to $0.91
$3.79 to $3.97
Tax rate4
23.8 percent
30.8 percent
1Beginning in the first quarter of 2017, the company plans to report credit card and residential branding fees in Franchise fee revenue. Those fees have to date been reported in Owned, leased and other revenue. Combined credit card and residential branding fees totaled $52 million in First Quarter 2016 and $210 million for Full Year 2016.  
2Net of interest income
3Guidance for both First Quarter 2017 EPS and Full Year 2017 EPS includes the $0.10 expected favorable impact from the adoption of ASU 2016-09.
4The tax rate guidance for both First Quarter 2017 and Full Year 2017 includes the $41 million expected benefit from the adoption of ASU 2016-09, but does not include the impact of merger-related costs that may be incurred. Without the expected benefit from adoption of ASU 2016-09, the anticipated tax rate for both First Quarter 2017 and Full Year 2017 would be 32.7 percent.

The company expects investment spending in 2017 will total approximately $500 million to $700 million, including approximately $175 million for maintenance capital. Investment spending also includes other capital expenditures (including property acquisitions), new mezzanine financing and mortgage notes, contract acquisition costs, and equity and other investments. Assuming this level of investment spending and no asset sales, $1.5 billion to $2.0 billion could be returned to shareholders through share repurchases and dividends in 2017.

The company plans to continue to disclose adjusted results and EBITDA that exclude merger-related costs and charges arising from the Starwood acquisition.

Marriott International, Inc. (NASDAQ: MAR) will conduct its quarterly earnings review for the investment community and news media on Thursday, February 16, 2017 at 10

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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 February 16, 2018.
The telephone dial-in number for the conference call is 706-679-3455 and the conference ID is 43530480. A telephone replay of the conference call will be available from 1 p.m. ET, Thursday, February 16, 2017 until 8 p.m. ET, Thursday, February 23, 2017. To access the replay, call 404-537-3406. The conference ID for the recording is 43530480.

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 or annual report on Form 10-K. Risks that could affect forward-looking statements in this press release include changes in market conditions; changes in global and regional economies; supply and demand changes for hotel rooms; competitive conditions in the lodging industry; relationships with clients and property owners; the availability of capital to finance hotel growth and refurbishment; and the extent to which we are able to successfully integrate Starwood, manage our expanded operations, 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 February 15, 2017. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.


Marriott International, Inc. (NASDAQ: MAR) is the world’s largest hotel company based in Bethesda, Maryland, USA, with more than 6,000 properties in 122 countries and territories. Marriott operates and franchises hotels and licenses vacation ownership resorts. The company’s 30 leading brands include: Bulgari®, The Ritz-Carlton® and The Ritz-Carlton Reserve®, St. Regis®, W®, EDITION®, JW Marriott®, The Luxury Collection®, Marriott Hotels®, Westin®, Le Méridien®, Renaissance® Hotels, Sheraton®, Delta Hotels by MarriottSM, Marriott Executive Apartments®, Marriott Vacation Club®, Autograph Collection® Hotels, Tribute Portfolio™, Design Hotels™, Gaylord Hotels®, Courtyard®, Four Points® by Sheraton, SpringHill Suites®, Fairfield Inn & Suites®, Residence Inn®, TownePlace Suites®, AC Hotels by Marriott®, Aloft®, Element®, Moxy® Hotels, and Protea Hotels by Marriott®. The company also operates award-winning loyalty programs: Marriott Rewards®, which includes The Ritz-Carlton

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Rewards®, and Starwood Preferred Guest®. For more information, please visit our website at www.marriott.com, and for the latest company news, visit www.marriottnewscenter.com and @MarriottIntl.


IRPR#1

Tables follow

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MARRIOTT INTERNATIONAL, INC.
PRESS RELEASE SCHEDULES
QUARTER 4, 2016
TABLE OF CONTENTS
 
 
Consolidated Statements of Income - As Reported
Consolidated Statements of Income - Fourth Quarter Adjusted 2016 Compared to Combined 2015
Consolidated Statements of Income - Combined Full Year 2016 and 2015
Total Lodging Products
Combined Key Lodging Statistics
Combined Adjusted EBITDA/Adjusted EBITDA
Adjusted EBITDA Forecast - Full Year 2017
Non-GAAP Financial and Performance Measures



MARRIOTT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME - AS REPORTED
FOURTH QUARTER 2016 AND 2015
(in millions except per share amounts, unaudited)

 
As Reported
 
As Reported
 
Percent
 
Three Months Ended
 
Three Months Ended
 
Better/(Worse)
 
December 31, 2016
 
December 31, 2015
 
Reported 2016 vs. 2015
REVENUES
 
 
 
 
 
Base management fees
$
268

 
$
172

 
56

Franchise fees 1
296

 
201

 
47

Incentive management fees
149

 
81

 
84

   Total Fees
713

 
454

 
57

Owned, leased, and other revenue 2
536

 
257

 
109

Cost reimbursements 3
4,207

 
2,995

 
40

   Total Revenues
5,456

 
3,706

 
47

OPERATING COSTS AND EXPENSES
 
 
 
 
 
Owned, leased, and other - direct 4
367

 
181

 
(103
)
Reimbursed costs
4,207

 
2,995

 
(40
)
Depreciation, amortization, and other 5
71

 
32

 
(122
)
Merger-related costs and charges
136

 
—

 
*

General, administrative, and other 6
234

 
188

 
(24
)
   Total Expenses
5,015

 
3,396

 
(48
)
OPERATING INCOME
441

 
310

 
42

Gains and other income, net 7
2

 
7

 
(71
)
Interest expense
(75
)
 
(46
)
 
(63
)
Interest income
13

 
10

 
30

Equity in earnings 8
2

 
3

 
(33
)
INCOME BEFORE INCOME TAXES
383

 
284

 
35

Provision for income taxes
(139
)
 
(82
)
 
(70
)
NET INCOME
$
244

 
$
202

 
21

EARNINGS PER SHARE
 
 
 
 
 
   Earnings per share - basic
$
0.63

 
$
0.79

 
(20
)
   Earnings per share - diluted
$
0.62

 
$
0.77

 
(19
)

 
 
 
 
 
Basic Shares
387.9

 
256.9

 
 
Diluted Shares
394.0

 
262.4

 
 

* Calculated percentage is not meaningful.

1
Franchise fees include fees from our franchise agreements. The company currently plans to reclassify branding fees from owned, leased and other revenue beginning in the first quarter of 2017.
2
Owned, leased, and other revenue includes revenue from the properties we own or lease, termination fees, branding fees, and other revenue. The company currently plans to reclassify branding fees to franchise fees beginning in the first quarter of 2017.
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 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


MARRIOTT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME - AS REPORTED
FULL YEAR 2016 AND 2015
(in millions except per share amounts, unaudited)

 
As Reported
 
As Reported
 
Percent
 
Twelve Months Ended
 
Twelve Months Ended
 
Better/(Worse)
 
December 31, 2016
 
December 31, 2015
 
Reported 2016 vs. 2015
REVENUES
 
 
 
 
 
Base management fees
$
806

 
$
698

 
15

Franchise fees 1
988

 
853

 
16

Incentive management fees
425

 
319

 
33

   Total Fees
2,219


1,870

 
19

Owned, leased, and other revenue 2
1,307

 
986

 
33

Cost reimbursements 3
13,546

 
11,630

 
16

   Total Revenues
17,072


14,486

 
18

OPERATING COSTS AND EXPENSES
 
 
 
 
 
Owned, leased, and other - direct 4
900

 
733

 
(23
)
Reimbursed costs
13,546

 
11,630

 
(16
)
Depreciation, amortization, and other 5
168

 
139

 
(21
)
Merger-related costs and charges
386

 
—

 
*

General, administrative, and other 6
704

 
634

 
(11
)
   Total Expenses
15,704

 
13,136

 
(20
)
OPERATING INCOME
1,368

 
1,350

 
1

Gains and other income, net 7
5

 
27

 
(81
)
Interest expense
(234
)
 
(167
)
 
(40
)
Interest income
35

 
29

 
21

Equity in earnings 8
10

 
16

 
(38
)
INCOME BEFORE INCOME TAXES
1,184

 
1,255

 
(6
)
Provision for income taxes
(404
)
 
(396
)
 
(2
)
NET INCOME
$
780

 
$
859

 
(9
)
EARNINGS PER SHARE
 
 
 
 
 
   Earnings per share - basic
$
2.68

 
$
3.22

 
(17
)
   Earnings per share - diluted
$
2.64

 
$
3.15

 
(16
)

 
 
 
 
 
Basic Shares
290.9

 
267.3

 
 
Diluted Shares
295.7

 
272.8

 
 

* Calculated percentage is not meaningful.

1
Franchise fees include fees from our franchise agreements. The company currently plans to reclassify branding fees from owned, leased and other revenue beginning in the first quarter of 2017.
2
Owned, leased, and other revenue includes revenue from the properties we own or lease, termination fees, branding fees, and other revenue. The company currently plans to reclassify branding fees to franchise fees beginning in the first quarter of 2017.
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 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

MARRIOTT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOURTH QUARTER ADJUSTED 2016 COMPARED TO COMBINED 2015
(in millions except per share amounts, unaudited)
 
 
 
 
 
 
 
 
 
Percent
 
As Reported
 
Less:
 
As Adjusted **
 
Combined 10
 
Better/(Worse)
 
Three Months Ended
 
Merger-Related
 
Three Months Ended
 
Three Months Ended
 
Adjusted 2016 vs.
 
December 31, 2016
 
Costs 9
 
December 31, 2016
 
December 31, 2015
 
Combined 2015
REVENUES
 
 
 
 
 
 
 
 
 
Base management fees
$
268

 
$
—

 
$
268


$
265

 
1

Franchise fees 1
296

 
—

 
296

 
273

 
8

Incentive management fees
149

 
—

 
149

 
150

 
(1
)
   Total Fees
713

 
—

 
713

 
688

 
4

Owned, leased, and other revenue 2
536

 
—

 
536

 
565

 
(5
)
Cost reimbursements 3
4,207

 
—

 
4,207

 
4,321

 
(3
)
   Total Revenues
5,456

 
—

 
5,456

 
5,574

 
(2
)
OPERATING COSTS AND EXPENSES
 
 
 
 
 
 
 
 
Owned, leased, and other - direct 4
367

 
—

 
367

 
400

 
8

Reimbursed costs
4,207

 
—

 
4,207

 
4,321

 
3

Depreciation, amortization, and other 5
71

 
—

 
71

 
81

 
12

Merger-related costs and charges
136

 
136

 
—

 
—

 
—

General, administrative, and other 6
234

 
—

 
234

 
284

 
18

   Total Expenses
5,015

 
136

 
4,879

 
5,086

 
4

OPERATING INCOME / (LOSS)
441

 
(136
)
 
577

 
488

 
18

Gains (losses) and other income, net 7
2

 
—

 
2

 
(2
)
 
200

Interest expense
(75
)
 
—

 
(75
)
 
(81
)
 
7

Interest income
13

 
—

 
13

 
12

 
8

Equity in earnings 8
2

 
—

 
2

 
13

 
(85
)
INCOME / (LOSS) BEFORE INCOME TAXES
383

 
(136
)
 
519

 
430

 
21

(Provision) benefit for income taxes
(139
)
 
46

 
(185
)
 
(139
)
 
(33
)
NET INCOME / (LOSS)
$
244

 
$
(90
)
 
$
334

 
$
291

 
15

EARNINGS PER SHARE
 
 
 
 
 
 
 
 
 
   Earnings per share - basic
$
0.63

 
 
 
$
0.86

 
$
0.72

 
19

   Earnings per share - diluted
$
0.62

 
 
 
$
0.85

 
$
0.71

 
20


 
 
 
 
 
 
 
 
 
Basic Shares
387.9

 
 
 
387.9

 
403.0

 
 
Diluted Shares
394.0

 
 
 
394.0

 
409.5

 
 

** Denotes non-GAAP financial measures. See pages A-14 and A-15 for more information about these non-GAAP measures.

1
Franchise fees include fees from our franchise agreements. The company currently plans to reclassify branding fees from owned, leased and other revenue beginning in the first quarter of 2017.
2
Owned, leased, and other revenue includes revenue from the properties we own or lease, termination fees, branding fees, and other revenue. The company currently plans to reclassify branding fees to franchise fees beginning in the first quarter of 2017.
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 costs.
10
See pages A-14 and A-15 for basis of presentation of combined financial information.

A-3

MARRIOTT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME - COMBINED
FULL YEAR 2016 AND 2015
(in millions except per share amounts, unaudited)

 
Combined 9
 
Combined 9
 
Percent
 
Twelve Months Ended
 
Twelve Months Ended
 
Better/(Worse)
 
December 31, 2016
 
December 31, 2015
 
Combined 2016 vs. 2015
REVENUES
 
 
 
 
 
Base management fees
$
1,072

 
$
1,064

 
1

Franchise fees 1
1,228

 
1,146

 
7

Incentive management fees
562

 
529

 
6

   Total Fees
2,862

 
2,739

 
4

Owned, leased, and other revenue 2
2,141

 
2,251

 
(5
)
Cost reimbursements 3
17,480

 
16,936

 
3

   Total Revenues
22,483

 
21,926

 
3

OPERATING COSTS AND EXPENSES
 
 
 
 
 
Owned, leased, and other - direct 4
1,505

 
1,663

 
10

Reimbursed costs
17,480

 
16,936

 
(3
)
Depreciation, amortization, and other 5
313

 
347

 
10

General, administrative, and other 6
964

 
1,039

 
7

   Total Expenses
20,262

 
19,985

 
(1
)
OPERATING INCOME
2,221

 
1,941

 
14

Losses and other income, net 7
(22
)
 
(3
)
 
(633
)
Interest expense
(312
)
 
(314
)
 
1

Interest income
41

 
34

 
21

Equity in earnings 8
25

 
64

 
(61
)
INCOME BEFORE INCOME TAXES
1,953

 
1,722

 
13

Provision for income taxes
(652
)
 
(558
)
 
(17
)
NET INCOME
$
1,301

 
$
1,164

 
12

EARNINGS PER SHARE
 
 
 
 
 
   Earnings per share - basic
$
3.35

 
$
2.89

 
16

   Earnings per share - diluted
$
3.30

 
$
2.84

 
16

 
 
 
 
 
 
Basic Shares
388.7

 
402.9

 
 
Diluted Shares
394.4

 
409.4

 
 


1
Franchise fees include fees from our franchise agreements. The company currently plans to reclassify branding fees from owned, leased and other revenue beginning in the first quarter of 2017.
2
Owned, leased, and other revenue includes revenue from the properties we own or lease, termination fees, branding fees, and other revenue. The company currently plans to reclassify branding fees to franchise fees beginning in the first quarter of 2017.
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
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
See pages A-14 and A-15 for basis of presentation of combined financial information.

A-4

Marriott International, Inc.
Total Lodging Products
By Ownership Type
As of December 31, 2016

 
North America
Total International
Total Worldwide
 
Units

Rooms

Units

Rooms

Units

Rooms

Managed
827

250,363

994

271,189

1,821

521,552

JW Marriott Hotels
15

9,695

47

18,925

62

28,620

The Ritz-Carlton Hotels
39

11,410

51

14,474

90

25,884

The Ritz-Carlton Residences
34

4,733

8

416

42

5,149

The Ritz-Carlton Serviced Apartments
 
 
5

697

5

697

Luxury Collection
5

2,294

47

8,272

52

10,566

W Hotels
25

7,729

23

5,242

48

12,971

St. Regis
9

1,725

27

6,049

36

7,774

EDITION Hotels
2

567

2

699

4

1,266

EDITION Residences
1

25





1

25

Bulgari Hotels & Resorts
 
 
2

117

2

117

Bulgari Residences
 
 
1

5

1

5

Marriott Hotels
131

68,440

154

44,547

285

112,987

Sheraton
31

23,654

188

64,088

219

87,742

Westin
48

25,173

68

21,964

116

47,137

Renaissance Hotels
26

11,625

50

16,171

76

27,796

Le Meridien
4

720

75

20,952

79

21,672

Autograph Collection Hotels
3

1,065

4

670

7

1,735

Delta Hotels and Resorts
25

6,764





25

6,764

Gaylord Hotels
5

8,098





5

8,098

Marriott Executive Apartments

 
28

4,195

28

4,195

Tribute Portfolio
 
 
3

515

3

515

Courtyard
256

40,821

78

16,470

334

57,291

Residence Inn
114

17,155

5

517

119

17,672

Fairfield Inn & Suites
6

1,432

10

1,588

16

3,020

SpringHill Suites
30

4,854





30

4,854

Four Points
1

134

58

14,533

59

14,667

TownePlace Suites
15

1,740





15

1,740

Aloft
1

330

23

5,694

24

6,024

Protea Hotels
 
 
36

4,201

36

4,201

Element
1

180

1

188

2

368

Franchised
3,592

524,793

414

89,612

4,006

614,405

JW Marriott Hotels
10

4,469

7

1,742

17

6,211

The Ritz-Carlton Hotels
1

429





1

429

The Ritz-Carlton Residences
1

55





1

55

Luxury Collection
9

1,863

33

6,387

42

8,250

Bulgari Hotels & Resorts
 
 
1

85

1

85

Marriott Hotels
210

65,271

43

12,491

253

77,762

Sheraton
162

48,025

59

17,519

221

65,544

Westin
75

24,700

23

7,334

98

32,034

Renaissance Hotels
57

16,103

26

7,168

83

23,271

Le Meridien
16

3,753

11

2,873

27

6,626

Autograph Collection Hotels
61

13,234

38

9,622

99

22,856

Delta Hotels and Resorts
12

3,020





12

3,020

Tribute Portfolio
12

4,541

6

282

18

4,823

Courtyard
686

91,559

56

10,745

742

102,304

Residence Inn
611

71,718

2

200

613

71,918

Fairfield Inn & Suites
822

75,000

2

386

824

75,386

SpringHill Suites
329

37,672





329

37,672

Four Points
131

19,996

37

6,010

168

26,006

TownePlace Suites
286

28,512





286

28,512

Aloft
80

11,766

12

1,925

92

13,691

Protea Hotels
 
 
51

3,550

51

3,550

Element
19

2,813

2

293

21

3,106

Moxy Hotels
2

294

5

1,000

7

1,294




A-5

Marriott International, Inc.
Total Lodging Products
By Ownership Type
As of December 31, 2016

 
North America
Total International
Total Worldwide
 
Units

Rooms

Units

Rooms

Units

Rooms

Owned/Leased
33

10,805

37

10,034

70

20,839

JW Marriott Hotels
 
 
1

496

1

496

The Ritz-Carlton Hotels
 
 
2

553

2

553

Luxury Collection
 
 
3

468

3

468

W Hotels
1

509

2

665

3

1,174

St. Regis
1

238

1

160

2

398

Marriott Hotels
4

2,102

4

1,445

8

3,547

Sheraton
3

2,671

6

2,867

9

5,538

Westin
2

1,832

1

246

3

2,078

Renaissance Hotels
1

310

3

749

4

1,059

Tribute Portfolio
1

135

 
 
1

135

Courtyard
19

2,816

3

644

22

3,460

Residence Inn
1

192

1

140

2

332

Protea Hotels
 
 
10

1,601

10

1,601

Unconsolidated Joint Ventures
11

1,913

89

11,193

100

13,106

Autograph Collection Hotels
 
 
5

348

5

348

AC Hotels by Marriott
11

1,913

84

10,845

95

12,758

Timeshare*
66

17,127

17

3,575

83

20,702

Marriott Vacations Worldwide
48

10,665

14

2,355

62

13,020

Vistana
18

6,462

3

1,220

21

7,682

Grand Total
4,529

805,001

1,551

385,603

6,080

1,190,604


* 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

Marriott International, Inc.
Total Lodging Products
By Brand
As of December 31, 2016

 
North America
Total International
Total Worldwide
Total Systemwide
Units

Rooms

Units

Rooms

Units

Rooms

Luxury
153

45,741

263

65,452

416

111,193

JW Marriott Hotels
25

14,164

55

21,163

80

35,327

The Ritz-Carlton Hotels
40

11,839

53

15,027

93

26,866

The Ritz-Carlton Residences
35

4,788

8

416

43

5,204

The Ritz-Carlton Serviced Apartments
 
 
5

697

5

697

Luxury Collection
14

4,157

83

15,127

97

19,284

W Hotels
26

8,238

25

5,907

51

14,145

St. Regis
10

1,963

28

6,209

38

8,172

EDITION Hotels
2

567

2

699

4

1,266

EDITION Residences
1

25





1

25

Bulgari Hotels & Resorts
 
 
3

202

3

202

Bulgari Residences
 
 
1

5

1

5

Upper Upscale
889

331,236

795

236,046

1,684

567,282

Marriott Hotels
345

135,813

201

58,483

546

194,296

Sheraton
196

74,350

253

84,474

449

158,824

Westin
125

51,705

92

29,544

217

81,249

Renaissance Hotels
84

28,038

79

24,088

163

52,126

Le Meridien
20

4,473

86

23,825

106

28,298

Autograph Collection Hotels
64

14,299

47

10,640

111

24,939

Delta Hotels and Resorts
37

9,784





37

9,784

Gaylord Hotels
5

8,098





5

8,098

Marriott Executive Apartments
 
 
28

4,195

28

4,195

Tribute Portfolio
13

4,676

9

797

22

5,473

Limited-Service
3,421

410,897

476

80,530

3,897

491,427

Courtyard
961

135,196

137

27,859

1,098

163,055

Residence Inn
726

89,065

8

857

734

89,922

Fairfield Inn & Suites
828

76,432

12

1,974

840

78,406

SpringHill Suites
359

42,526





359

42,526

Four Points
132

20,130

95

20,543

227

40,673

TownePlace Suites
301

30,252





301

30,252

Aloft
81

12,096

35

7,619

116

19,715

AC Hotels by Marriott
11

1,913

84

10,845

95

12,758

Protea Hotels
 
 
97

9,352

97

9,352

Element
20

2,993

3

481

23

3,474

Moxy Hotels
2

294

5

1,000

7

1,294

Timeshare*
66

17,127

17

3,575

83

20,702

Marriott Vacations Worldwide
48

10,665

14

2,355

62

13,020

Vistana
18

6,462

3

1,220

21

7,682

Grand Total
4,529

805,001

1,551

385,603

6,080

1,190,604


* 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

MARRIOTT INTERNATIONAL, INC.
COMBINED KEY LODGING STATISTICS
Constant $

Comparable Company-Operated International Properties1
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended December 31, 2016 and December 31, 2015
 
 
REVPAR
 
Occupancy
 
Average Daily Rate
Region
 
2016
vs. 2015*
 
2016
vs. 2015*
 
2016
vs. 2015*
Greater China
 
$
92.39

0.8
 %
 
70.7
%
4.3
 %
pts.
 
$
130.60

-5.4
 %
Rest of Asia Pacific
 
$
117.34

1.1
 %
 
75.8
%
1.4
 %
pts.
 
$
154.83

-0.8
 %
Asia Pacific
 
$
100.78

0.9
 %
 
72.4
%
3.4
 %
pts.
 
$
139.12

-3.8
 %
 
 
 
 
 
 
 
 
 
 
 
Caribbean & Latin America
 
$
137.49

-3.1
 %
 
64.3
%
-2.1
 %
pts.
 
$
213.96

0.0
 %
Europe
 
$
115.09

1.3
 %
 
70.1
%
0.7
 %
pts.
 
$
164.15

0.3
 %
Middle East & Africa
 
$
119.24

-1.1
 %
 
67.8
%
0.6
 %
pts.
 
$
175.77

-2.0
 %
 
 
 
 
 
 
 
 
 
 
 
Total International2
 
$
110.54

0.2
 %
 
70.4
%
1.8
 %
pts.
 
$
157.04

-2.3
 %
 
 
 
 
 
 
 
 
 
 
 
Worldwide3
 
$
125.53

0.4
 %
 
71.0
%
0.7
 %
pts.
 
$
176.75

-0.6
 %


Comparable Systemwide International Properties1
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended December 31, 2016 and December 31, 2015
 
 
REVPAR
 
Occupancy
 
Average Daily Rate
Region
 
2016
vs. 2015*
 
2016
vs. 2015*
 
2016
vs. 2015*
Greater China
 
$
92.84

0.5
 %
 
70.6
%
4.1
 %
pts.
 
$
131.59

-5.3
 %
Rest of Asia Pacific
 
$
119.26

0.9
 %
 
75.2
%
0.9
 %
pts.
 
$
158.54

-0.3
 %
Asia Pacific
 
$
103.69

0.7
 %
 
72.5
%
2.8
 %
pts.
 
$
143.08

-3.2
 %
 
 
 
 
 
 
 
 
 
 
 
Caribbean & Latin America
 
$
106.02

-2.6
 %
 
60.8
%
-1.0
 %
pts.
 
$
174.34

-1.0
 %
Europe
 
$
110.24

1.7
 %
 
70.8
%
1.2
 %
pts.
 
$
155.77

0.0
 %
Middle East & Africa
 
$
114.01

-1.1
 %
 
67.3
%
0.5
 %
pts.
 
$
169.39

-1.8
 %
 
 
 
 
 
 
 
 
 
 
 
Total International2
 
$
107.28

0.2
 %
 
69.7
%
1.5
 %
pts.
 
$
153.99

-1.9
 %
 
 
 
 
 
 
 
 
 
 
 
Worldwide3
 
$
107.95

0.8
 %
 
69.6
%
0.4
 %
pts.
 
$
155.14

0.3
 %

* The 2015 statistics used to calculate change from the 2015 period to the 2016 period assume Marriott’s acquisition of Starwood and Starwood’s sale of its timeshare business had been completed on January 1, 2015.
1
International includes properties located outside the United States and Canada.
2
Includes JW Marriott, The Ritz-Carlton, W Hotels, The Luxury Collection, St. Regis, EDITION, Bulgari Hotels & Resorts, Marriott Hotels, Sheraton, Westin, Renaissance Hotels, Autograph Collection Hotels, Protea Hotels, Le Meridien, Courtyard, Residence Inn, Fairfield Inn & Suites, Four Points, Aloft Hotels, and AC Hotels by Marriott. Systemwide also includes Element Hotels and Moxy Hotels.
3
Includes JW Marriott, The Ritz-Carlton, W Hotels, The Luxury Collection, St. Regis, EDITION, Bulgari Hotels & Resorts, Marriott Hotels, Sheraton, Westin, Renaissance Hotels, Autograph Collection Hotels, Protea Hotels, Gaylord Hotels, Le Meridien, Tribute Portfolio, Courtyard, Residence Inn, Fairfield Inn & Suites, SpringHill Suites, TownePlace Suites, Four Points, Aloft Hotels, and AC Hotels by Marriott. Systemwide also includes Element Hotels and Moxy Hotels.



A-8


MARRIOTT INTERNATIONAL, INC.
COMBINED KEY LODGING STATISTICS
Constant $

Comparable Company-Operated International Properties 1
 
 
Twelve Months Ended December 31, 2016 and December 31, 2015*
 
 
REVPAR
 
Occupancy
 
Average Daily Rate
Region
 
2016
 
vs. 2015
 
2016
 
vs. 2015
 
2016
 
vs. 2015
Greater China
 
$
89.17

 
0.4
 %
 
67.5
%
 
3.7
 %
pts. 
 
$
132.16

 
-5.1
 %
Rest of Asia Pacific
 
$
112.69

 
3.7
 %
 
75.2
%
 
3.0
 %
pts. 
 
$
149.80

 
-0.5
 %
Asia Pacific
 
$
97.08

 
1.6
 %
 
70.1
%
 
3.4
 %
pts. 
 
$
138.52

 
-3.4
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Caribbean & Latin America
 
$
139.69

 
0.4
 %
 
65.3
%
 
-0.9
 %
pts. 
 
$
213.99

 
1.8
 %
Europe
 
$
124.87

 
0.8
 %
 
71.8
%
 
-0.5
 %
pts. 
 
$
173.84

 
1.5
 %
Middle East & Africa
 
$
106.49

 
-3.8
 %
 
64.6
%
 
0.6
 %
pts. 
 
$
164.90

 
-4.8
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total International2
 
$
109.05

 
0.3
 %
 
69.2
%
 
1.6
 %
pts. 
 
$
157.69

 
-2.1
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Worldwide3
 
$
128.37

 
1.6
 %
 
72.5
%
 
1.1
 %
pts. 
 
$
177.11

 
0.1
 %

Comparable Systemwide International Properties 1
 
 
Twelve Months Ended December 31, 2016 and December 31, 2015*
 
 
REVPAR
 
Occupancy
 
Average Daily Rate
Region
 
2016
 
vs. 2015
 
2016
 
vs. 2015
 
2016
 
vs. 2015
Greater China
 
$
89.33

 
0.2
 %
 
67.2
%
 
3.5
%
pts. 
 
$
132.92

 
-5.1
 %
Rest of Asia Pacific
 
$
114.07

 
4.0
 %
 
74.4
%
 
2.4
%
pts. 
 
$
153.35

 
0.7
 %
Asia Pacific
 
$
99.50

 
2.0
 %
 
70.2
%
 
3.1
%
pts. 
 
$
141.82

 
-2.5
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Caribbean & Latin America
 
$
116.98

 
-0.4
 %
 
63.5
%
 
0.0
%
pts. 
 
$
184.29

 
-0.3
 %
Europe
 
$
114.62

 
1.4
 %
 
70.6
%
 
0.1
%
pts. 
 
$
162.34

 
1.3
 %
Middle East & Africa
 
$
102.09

 
-3.5
 %
 
64.2
%
 
0.4
%
pts. 
 
$
159.12

 
-4.1
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total International2
 
$
106.39

 
0.7
 %
 
68.5
%
 
1.4
%
pts. 
 
$
155.31

 
-1.5
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Worldwide3
 
$
113.50

 
1.8
 %
 
72.5
%
 
0.6
%
pts. 
 
$
156.53

 
1.0
 %

* The full year 2016 statistics, as well as the 2015 statistics used to calculate change from the 2015 period to the 2016 period, assume Marriott’s acquisition of Starwood and Starwood’s sale of its timeshare business had been completed on January 1, 2015.
1
International includes properties located outside the United States and Canada.
2
Includes JW Marriott, The Ritz-Carlton, W Hotels, The Luxury Collection, St. Regis, EDITION, Bulgari Hotels & Resorts, Marriott Hotels, Sheraton, Westin, Renaissance Hotels, Autograph Collection Hotels, Protea Hotels, Le Meridien, Courtyard, Residence Inn, Fairfield Inn & Suites, Four Points, Aloft Hotels, and AC Hotels by Marriott. Systemwide also includes Element Hotels and Moxy Hotels.
3
Includes JW Marriott, The Ritz-Carlton, W Hotels, The Luxury Collection, St. Regis, EDITION, Bulgari Hotels & Resorts, Marriott Hotels, Sheraton, Westin, Renaissance Hotels, Autograph Collection Hotels, Protea Hotels, Gaylord Hotels, Le Meridien, Tribute Portfolio, Courtyard, Residence Inn, Fairfield Inn & Suites, SpringHill Suites, TownePlace Suites, Four Points, Aloft Hotels, and AC Hotels by Marriott. Systemwide also includes Element Hotels and Moxy Hotels.


A-9


MARRIOTT INTERNATIONAL, INC.
COMBINED KEY LODGING STATISTICS
Constant $

Comparable Company-Operated North American Properties1
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended December 31, 2016 and December 31, 2015
 
 
REVPAR
 
Occupancy
 
Average Daily Rate
Brand
 
2016
vs. 2015*
 
2016
vs. 2015*
 
2016
vs. 2015*
JW Marriott Hotels
 
$
179.45

3.2
 %
 
73.0
%
1.5
 %
pts.
 
$
245.66

1.0
 %
The Ritz-Carlton
 
$
241.05

3.2
 %
 
68.6
%
0.7
 %
pts.
 
$
351.28

2.1
 %
W Hotels
 
$
246.64

-1.1
 %
 
80.2
%
0.8
 %
pts.
 
$
307.71

-2.0
 %
Composite North American Luxury2
 
$
238.36

2.3
 %
 
73.3
%
1.1
 %
pts.
 
$
325.13

0.8
 %
Marriott Hotels
 
$
135.69

-0.9
 %
 
70.5
%
-0.4
 %
pts.
 
$
192.47

-0.4
 %
Sheraton Hotels
 
$
144.61

0.2
 %
 
72.1
%
-2.0
 %
pts.
 
$
200.70

3.0
 %
Westin Hotels
 
$
159.66

-1.1
 %
 
73.3
%
-1.6
 %
pts.
 
$
217.97

1.1
 %
Composite North American Upper Upscale3
 
$
143.03

-0.3
 %
 
71.9
%
-0.7
 %
pts.
 
$
198.87

0.7
 %
Composite North American Full-Service4 
 
$
160.65

0.4
 %
 
72.2
%
-0.4
 %
pts.
 
$
222.57

0.9
 %
Courtyard
 
$
94.56

0.2
 %
 
68.4
%
-0.8
 %
pts.
 
$
138.35

1.4
 %
Residence Inn
 
$
108.67

3.0
 %
 
75.2
%
0.2
 %
pts.
 
$
144.56

2.8
 %
Composite North American Limited-Service5
 
$
97.36

1.2
 %
 
70.5
%
-0.5
 %
pts.
 
$
138.10

1.8
 %
Composite - All
 
$
140.35

0.5
 %
 
71.6
%
-0.4
 %
pts.
 
$
195.91

1.1
 %

Comparable Systemwide North American Properties1
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended December 31, 2016 and December 31, 2015
 
 
REVPAR
 
Occupancy
 
Average Daily Rate
Brand
 
2016
vs. 2015*
 
2016
vs. 2015*
 
2016
vs. 2015*
JW Marriott Hotels
 
$
169.31

1.9
 %
 
71.9
%
0.9
 %
pts.
 
$
235.33

0.6
 %
The Ritz-Carlton
 
$
241.05

3.2
 %
 
68.6
%
0.7
 %
pts.
 
$
351.28

2.1
 %
W Hotels
 
$
246.64

-1.1
 %
 
80.2
%
0.8
 %
pts.
 
$
307.71

-2.0
 %
Composite North American Luxury2
 
$
227.14

2.0
 %
 
72.8
%
0.9
 %
pts.
 
$
311.92

0.7
 %
Marriott Hotels
 
$
113.78

-0.2
 %
 
67.4
%
0.0
 %
pts.
 
$
168.91

-0.2
 %
Sheraton Hotels
 
$
107.68

0.9
 %
 
68.2
%
-0.8
 %
pts.
 
$
157.97

2.0
 %
Westin Hotels
 
$
143.36

-0.1
 %
 
71.7
%
-1.1
 %
pts.
 
$
200.02

1.5
 %
Composite North American Upper Upscale3
 
$
122.03

0.6
 %
 
69.3
%
-0.2
 %
pts.
 
$
176.13

0.9
 %
Composite North American Full-Service4 
 
$
133.08

0.9
 %
 
69.7
%
-0.1
 %
pts.
 
$
191.06

1.0
 %
Courtyard
 
$
91.89

0.6
 %
 
67.8
%
-0.4
 %
pts.
 
$
135.45

1.2
 %
Residence Inn
 
$
104.05

2.0
 %
 
74.6
%
-0.1
 %
pts.
 
$
139.49

2.1
 %
Fairfield Inn
 
$
71.11

1.4
 %
 
65.4
%
-0.1
 %
pts.
 
$
108.68

1.5
 %
Composite North American Limited-Service5
 
$
88.22

1.3
 %
 
69.5
%
-0.2
 %
pts.
 
$
127.01

1.6
 %
Composite - All
 
$
108.23

1.1
 %
 
69.5
%
-0.1
 %
pts.
 
$
155.62

1.3
 %

* The 2015 statistics used to calculate change from the 2015 period to the 2016 period assume Marriott’s acquisition of Starwood and Starwood’s sale of its timeshare business had been completed on January 1, 2015.
1
Includes properties located in the United States and Canada.
2
Includes JW Marriott, The Ritz-Carlton, W Hotels, The Luxury Collection, St. Regis, and EDITION.
3
Includes Marriott Hotels, Sheraton, Westin, Renaissance Hotels, Autograph Collection Hotels, Gaylord Hotels, Le Meridien, and Tribute Portfolio.
4
Includes Composite North American Luxury and Composite North American Upper Upscale.
5
Includes Courtyard, Residence Inn, Fairfield Inn & Suites, SpringHill Suites, and TownePlace Suites. Systemwide also includes Four Points, Aloft Hotels and Element Hotels.


A-10


MARRIOTT INTERNATIONAL, INC.
COMBINED KEY LODGING STATISTICS
Constant $


Comparable Company-Operated North American Properties1
 
 
 
 
 
 
 
 
 
 
 
 
 
Twelve Months Ended December 31, 2016 and December 31, 2015*
 
 
REVPAR
 
Occupancy
 
Average Daily Rate
Brand
 
2016
vs. 2015
 
2016
vs. 2015
 
2016
vs. 2015
JW Marriott Hotels
 
$
187.02

4.0
 %
 
76.8
%
2.2
 %
pts.
 
$
243.57

1.1
 %
The Ritz-Carlton
 
$
252.40

3.6
 %
 
71.9
%
1.0
 %
pts.
 
$
350.99

2.2
 %
W Hotels
 
$
239.94

-2.2
 %
 
81.7
%
0.2
 %
pts.
 
$
293.82

-2.5
 %
Composite North American Luxury2
 
$
242.10

2.8
 %
 
76.3
%
1.4
 %
pts.
 
$
317.13

0.9
 %
Marriott Hotels
 
$
144.94

2.4
 %
 
75.4
%
0.7
 %
pts.
 
$
192.23

1.4
 %
Sheraton Hotels
 
$
149.49

2.1
 %
 
76.5
%
-0.5
 %
pts.
 
$
195.40

2.7
 %
Westin Hotels
 
$
167.21

0.9
 %
 
77.4
%
-0.6
 %
pts.
 
$
216.07

1.7
 %
Composite North American Upper Upscale3
 
$
149.92

2.3
 %
 
76.1
%
0.3
 %
pts.
 
$
196.98

1.8
 %
Composite North American Full-Service4 
 
$
166.97

2.4
 %
 
76.2
%
0.5
 %
pts.
 
$
219.25

1.7
 %
Courtyard
 
$
103.65

2.2
 %
 
73.1
%
0.3
 %
pts.
 
$
141.83

1.7
 %
Residence Inn
 
$
118.14

3.8
 %
 
79.0
%
0.6
 %
pts.
 
$
149.56

3.0
 %
Composite North American Limited-Service5
 
$
106.20

2.8
 %
 
75.0
%
0.5
 %
pts.
 
$
141.68

2.1
 %
Composite - All
 
$
147.48

2.5
 %
 
75.8
%
0.5
 %
pts.
 
$
194.64

1.8
 %

Comparable Systemwide North American Properties1
 
 
 
 
 
 
 
 
 
 
 
 
 
Twelve Months Ended December 31, 2016 and December 31, 2015*
 
 
REVPAR
 
Occupancy
 
Average Daily Rate
Brand
 
2016
vs. 2015
 
2016
vs. 2015
 
2016
vs. 2015
JW Marriott Hotels
 
$
178.91

3.5
 %
 
76.0
%
1.3
 %
pts.
 
$
235.47

1.8
 %
The Ritz-Carlton
 
$
252.40

3.6
 %
 
71.9
%
1.0
 %
pts.
 
$
350.99

2.2
 %
W Hotels
 
$
239.94

-2.2
 %
 
81.7
%
0.2
 %
pts.
 
$
293.82

-2.5
 %
Composite North American Luxury2
 
$
231.99

2.8
 %
 
76.0
%
1.2
 %
pts.
 
$
305.36

1.2
 %
Marriott Hotels
 
$
124.39

2.0
 %
 
72.4
%
0.3
 %
pts.
 
$
171.92

1.5
 %
Sheraton Hotels
 
$
115.58

2.4
 %
 
73.3
%
0.3
 %
pts.
 
$
157.73

2.0
 %
Westin Hotels
 
$
152.94

2.4
 %
 
76.9
%
0.1
 %
pts.
 
$
198.98

2.3
 %
Composite North American Upper Upscale3
 
$
130.44

2.5
 %
 
73.9
%
0.4
 %
pts.
 
$
176.52

1.9
 %
Composite North American Full-Service4 
 
$
141.11

2.6
 %
 
74.1
%
0.5
 %
pts.
 
$
190.41

1.9
 %
Courtyard
 
$
101.49

1.9
 %
 
72.9
%
0.0
 %
pts.
 
$
139.24

1.9
 %
Residence Inn
 
$
112.78

2.4
 %
 
79.0
%
-0.1
 %
pts.
 
$
142.78

2.6
 %
Fairfield Inn
 
$
77.96

1.2
 %
 
70.1
%
-0.5
 %
 
 
$
111.20

1.9
 %
Composite North American Limited-Service5
 
$
96.62

2.0
 %
 
74.2
%
0.0
 %
pts.
 
$
130.15

2.0
 %
Composite - All
 
$
116.47

2.3
 %
 
74.2
%
0.2
 %
pts.
 
$
157.00

2.0
 %

* The full year 2016 statistics, as well as the 2015 statistics used to calculate change from the 2015 period to the 2016 period, assume Marriott’s acquisition of Starwood and Starwood’s sale of its timeshare business had been completed on January 1, 2015.
1
Includes properties located in the United States and Canada.
2
Includes JW Marriott, The Ritz-Carlton, W Hotels, The Luxury Collection, St. Regis, and EDITION.
3
Includes Marriott Hotels, Sheraton, Westin, Renaissance Hotels, Autograph Collection Hotels, Gaylord Hotels, Le Meridien, and Tribute Portfolio.
4
Includes Composite North American Luxury and Composite North American Upper Upscale.
5
Includes Courtyard, Residence Inn, Fairfield Inn & Suites, SpringHill Suites, and TownePlace Suites. Systemwide also includes Four Points, Aloft Hotels and Element Hotels.


A-11


MARRIOTT INTERNATIONAL, INC.
NON-GAAP FINANCIAL MEASURES
COMBINED ADJUSTED EBITDA/ ADJUSTED EBITDA
($ in millions)
 
Fiscal Year 2016
 
Combined 1 First Quarter
 
Combined 1 Second Quarter
 
Combined 1 Third Quarter
 
Adjusted 2 Fourth Quarter
 
Combined
Total
Net income2
$
290

 
$
333

 
$
344

 
$
334

 
$
1,301

Interest expense
77

 
79

 
81

 
75

 
312

Tax provision
140

 
161

 
166

 
185

 
652

Depreciation and amortization
82

 
79

 
81

 
71

 
313

Depreciation classified in reimbursed costs
32

 
33

 
34

 
33

 
132

Interest expense from unconsolidated joint ventures
4

 
4

 
4

 
4

 
16

Depreciation and amortization from unconsolidated joint ventures
11

 
11

 
13

 
10

 
45

EBITDA **
636


700


723

 
712


2,771

 
 
 
 
 
 
 
 
 
 
Loss on asset dispositions and impairments, net
—

 
23

 
—

 
—

 
23

Share-based compensation (including share-based compensation reimbursed by third-party owners)
47

 
50

 
52

 
44

 
193

Adjusted EBITDA **
$
683


$
773

 
$
775

 
$
756


$
2,987

 
 
 
 
 
 
 
 
 
 
Increase over 2015 Combined Adjusted EBITDA **
3
%

7
%
 
14
%
 
11
%

9
%
 
Fiscal Year 20151
 
Combined
First
Quarter
 
Combined
Second
Quarter
 
Combined
Third
Quarter
 
Combined
Fourth
Quarter
 
Combined
Total
Net income 2
$
272

 
$
326

 
$
275

 
$
291

 
$
1,164

Interest expense
75

 
77

 
81

 
81

 
314

Tax provision
131

 
156

 
132

 
139

 
558

Depreciation and amortization
83

 
91

 
80

 
81

 
335

Depreciation classified in reimbursed costs
30

 
31

 
32

 
32

 
125

Interest expense from unconsolidated joint ventures
4

 
4

 
5

 
3

 
16

Depreciation and amortization from unconsolidated joint ventures
12

 
8

 
11

 
11

 
42

EBITDA **
607


693


616


638


2,554

 
 
 
 
 
 
 
 
 
 
EDITION impairment charge
12

 
—

 
—

 
—

 
12

Loss (gain) on asset dispositions and impairments, net
—

 
22

 
14

 
(7
)
 
29

Gain on redemption of preferred equity ownership interest
—

 
(41
)
 
—

 
—

 
(41
)
Share-based compensation (including share-based compensation reimbursed by third-party owners)
43

 
48

 
47

 
51

 
189

Adjusted EBITDA **
$
662

 
$
722

 
$
677

 
$
682

 
$
2,743


**
Denotes non-GAAP financial measures. Please see pages A-14 and A-15 for information about our reasons for providing these alternative financial measures and the limitations on their use.

1
See pages A-14 and A-15 for basis of presentation of combined financial information.
2
For the 2016 fourth quarter, see page A-3 for a reconciliation of net income to adjusted net income. For other periods presented, see pages A-14 and A-15 for a reconciliation to pro forma net income calculated in accordance with Article 11 of Regulation S-X.

A-12


MARRIOTT INTERNATIONAL, INC.
NON-GAAP FINANCIAL MEASURES
ADJUSTED EBITDA FORECAST
FULL YEAR 2017
($ in millions)

 
Range
 
 
 
Estimated
Fiscal Year 2017
 
Combined
Fiscal Year 20161
Net income 2
$
1,461

 
$
1,529

 
$
1,301

Interest expense
300

 
300

 
312

Tax provision
649

 
681

 
652

Depreciation and amortization
280

 
280

 
313

Depreciation classified in Reimbursed costs
145

 
145

 
132

Interest expense from unconsolidated joint ventures
10

 
10

 
16

Depreciation and amortization from unconsolidated joint ventures
40

 
40

 
45

EBITDA **
2,885


2,985


2,771

 
 
 
 
 
 
Loss (gain) on asset dispositions and impairments, net
—

 
—

 
23

Share-based compensation (including share-based compensation reimbursed by third-party owners)
190

 
190

 
193

Adjusted EBITDA **
$
3,075


$
3,175


$
2,987

 
 
 
 
 
 
Increase over 2016 Combined Adjusted EBITDA **
3
%
 
6
%
 
 

** Denotes non-GAAP financial measures. See pages A-14 and A-15 for information about our reasons for providing these alternative financial measures and the limitations on their use.

1
See pages A-14 and A-15 for basis of presentation of combined financial information and a reconciliation to pro forma net income calculated in accordance with Article 11 of Regulation S-X.
2
Estimated 2017 net income excludes merger-related costs, which the company cannot accurately forecast, but expects will be significant on a full-year basis.













A-13


MARRIOTT INTERNATIONAL, INC.
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, United States generally accepted accounting principles (“GAAP”). We discuss management’s reasons for reporting these non-GAAP measures below, and the press release schedules reconcile the most directly comparable GAAP measure to each non-GAAP measure that we refer to. Although management evaluates and presents these non-GAAP measures for the reasons described below, please be aware that these non-GAAP measures have limitations and should not be considered in isolation or as a substitute for revenue, operating income, income from continuing operations, net income, earnings per share or any other comparable operating measure prescribed by GAAP. In addition, we may calculate and/or present these non-GAAP financial measures differently than measures with the same or similar names that other companies report, and as a result, the non-GAAP measures we report may not be comparable to those reported by others.

Combined Financial Information. The unaudited combined financial information presented on pages A-3, A-4, A-12, and A-13 give 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 January 1, 2015, and are presented to facilitate comparisons with our results following the acquisition of Starwood. The unaudited combined financial information also uses the estimated fair value of assets and liabilities on September 23, 2016, the closing date of the acquisition, and makes the following assumptions: (1) removes merger-related costs and charges; (2) removes a loss on cumulative translation adjustment related to Starwood's disposition of a hotel property in the 2016 second quarter; (3) adjusts income taxes to reflect the Company's combined 2016 effective tax rate of 32.5%; (4) adjusts weighted-average shares outstanding to include shares issued to Starwood shareholders; and (5) adjusts debt to reflect borrowing on the Credit Facility and issuance of Series Q and R Notes on January 1, 2015.

The 2016 fourth quarter adjusted net income presented herein represents reported net income adjusted to eliminate merger-related costs, net of tax at the actual effective tax rate.

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.
 
Earnings Before Interest Expense, Taxes, Depreciation and Amortization (“EBITDA”), Combined EBITDA, Adjusted EBITDA, and Combined Adjusted EBITDA. EBITDA and Combined EBITDA reflect adjusted net income or combined net income, as applicable, excluding the impact of interest expense, depreciation, amortization, and provision for income taxes. Our non-GAAP measures of Adjusted EBITDA and Combined Adjusted EBITDA further adjust EBITDA or Combined EBITDA, respectively, to exclude the following items: (1) gains and losses on asset dispositions and impairments; (2) the pre-tax EDITION impairment charges in the 2015 first quarter; (3) the pre-tax preferred equity investment gain in the 2015 second quarter; and (4) share-based compensation expense for all periods presented.

Combined net income on pages A-3, A-4, A-12, and A-13 includes additional adjustments that are not prescribed by Article 11 of Regulation S-X. The following tables present reconciliations of pro forma net income in accordance with Article 11 to combined net income. (For the 2016 fourth quarter, see page A-3 for a reconciliation of GAAP net income to adjusted net income.)
 
2016
(in millions)
First Quarter
 
Second Quarter
 
Third Quarter
Pro forma net income under Article 11
$
291

 
$
209

 
$
179

Merger-related costs and charges
3

 
16

 
220

Income taxes (1)
(4
)
 
17

 
(55
)
Loss on cumulative translation adjustment
—

 
91

 
—

Combined net income
$
290

 
$
333

 
$
344

 
 
2015
(in millions)
First Quarter
 
Second Quarter
 
Third Quarter
 
Fourth Quarter
Pro forma net income under Article 11
$
264

 
$
335

 
$
280

 
$
306

Merger-related costs and charges
16

 
8

 
3

 
5

Income taxes (1)
(8
)
 
(17
)
 
(8
)
 
(20
)
Combined net income
$
272

 
$
326

 
$
275

 
$
291

(1)
Combined net income applies an effective income tax rate of 32.5% for all periods presented. For pro forma net income under Article 11, we applied the historical effective tax rates for Marriott and Starwood.

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

A-14


and Combined 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 Combined Consolidated Statements of Income, 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 Available Room (“RevPAR”) as a performance measure. We believe RevPAR is a meaningful indicator of our performance because it measures the period-over-period change in room revenues for comparable properties. RevPAR may not be comparable to similarly titled measures, such as revenues. We calculate RevPAR by dividing room sales (recorded in local currency) for comparable properties by room nights available for the period. We present growth in both comparative Legacy-Marriott RevPAR and comparative pro forma combined company RevPAR on a constant dollar basis, which we calculate by applying exchange rates for the current period to each period presented. We believe constant dollar analysis provides valuable information regarding our properties’ performance as it removes currency fluctuations from the presentation of such results.


A-15