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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): November 7, 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))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter)
 
Emerging growth company
o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
o
 



Item 2.02.
Results of Operations and Financial Condition.

Financial Results for the Quarter Ended September 30, 2017
Marriott International, Inc. (“Marriott”) today issued a press release reporting financial results for the quarter ended September 30, 2017.
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 November 7, 2017, reporting financial results for the quarter ended September 30, 2017.

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: November 7, 2017
 
 
 
 
 
By: 
 
/s/ Bao Giang Val Bauduin
 
 
 
 
 
 
 
 
Bao Giang Val Bauduin
 
 
 
 
 
 
 
 
Controller and Chief Accounting Officer

3


EXHIBIT INDEX
 
 
 
 
Exhibit No.
  
Description
 
 
99
  


4
Exhibit
Exhibit 99


https://cdn.kscope.io/e2c29e4739463b34391a8488da8a8268-marq32016pressrelease_image1.jpg    https://cdn.kscope.io/e2c29e4739463b34391a8488da8a8268-marq32016pressrelease_image2.jpg
 
NEWS

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

MARRIOTT INTERNATIONAL REPORTS THIRD QUARTER 2017 RESULTS HIGHLIGHTS

•
Third quarter reported diluted EPS totaled $1.04, a 300 percent increase over prior year results. Third quarter adjusted diluted EPS totaled $1.10, a 26 percent increase over third quarter 2016 combined results. Adjusted 2017 third quarter results exclude merger-related adjustments. Combined 2016 third quarter results assume Marriott’s acquisition of Starwood and Starwood’s sale of its timeshare business had been completed on January 1, 2015;

•
Worldwide comparable systemwide constant dollar RevPAR rose 2.1 percent in the 2017 third quarter, while North American comparable systemwide constant dollar RevPAR rose 0.4 percent;

•
The company added nearly 22,800 rooms during the third quarter, including more than 3,600 rooms converted from competitor brands and roughly 8,000 rooms in international markets;

•
At quarter-end, Marriott’s worldwide development pipeline increased to approximately 450,000 rooms, including 41,000 rooms approved, but not yet subject to signed contracts;

•
Third quarter reported net income totaled $392 million, a 460 percent increase over prior year results. Third quarter adjusted net income totaled $413 million, a 20 percent increase over prior year combined results;

•
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) totaled $831 million in the quarter, a 64 percent increase over third quarter 2016 adjusted EBITDA and a 7 percent increase over third quarter 2016 combined adjusted EBITDA;

•
Marriott repurchased 7.8 million shares of the company’s common stock for $800 million during the third quarter. Year-to-date through November 7, the company repurchased 23.9 million shares for $2.4 billion.

BETHESDA, MD - November 7, 2017 - Marriott International, Inc. (NASDAQ: MAR) today reported third quarter 2017 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 third quarter in

1

accordance with US generally accepted accounting principles (GAAP). To further assist investors, the company is also providing (a) adjusted results that exclude merger-related adjustments; and (b) combined financials and selected performance information for 2016 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.”

Branding fees from credit cards and residential sales are reported in the Franchise fees line on the income statement. Prior to the first quarter of 2017, those fees were reported in Owned, leased and other revenue. Reported results for the 2016 periods on pages A-1 and A-2 and combined results on pages A-3 and A-4 have been reclassified to conform to the current reporting.

Arne M. Sorenson, president and chief executive officer of Marriott International, said, “In the third quarter, many of our hotels were rocked by destructive hurricanes in the Caribbean, Texas, and Florida and the earthquakes in Mexico.  Our hotels in these markets continue to serve aid workers and emergency personnel, as well as guests displaced by property damage.  We are very proud of our associates who delivered great hospitality during this challenging time.

“The business related to the hurricane response increased North American lodging demand modestly in the third quarter, even as business transient and group demand was in line with expectations.  Outside North America, strong leisure demand in Asia and Europe drove RevPAR above our guidance.

“Owners and franchisees remain attracted to our terrific brands and strong hotel economics.  New project signings and approvals added 36,000 rooms to our development pipeline in the third quarter, increasing it to a record 450,000 rooms by the quarter-end, equal to 36 percent of our current distribution.  More than half of those rooms under development are located outside North America and 40 percent should fly one of Marriott’s luxury or upper upscale flags.

“It’s been just over a year since the completion of the Starwood acquisition.  We are pleased with our progress on the integration. Our properties and general and administrative functions have already realized meaningful cost savings.  From the date of the acquisition through last week, we have recycled assets

2

totaling more than $1.1 billion of our $1.5 billion goal.  Year-to-date through November 7, we have already returned $2.7 billion to shareholders through dividends and share repurchase and believe we could return nearly $3.5 billion in 2017.

“For 2018, we expect comparable systemwide RevPAR on a constant dollar basis will increase 1 to 3 percent worldwide and 3 to 5 percent outside North America, while RevPAR in North America should be flat to up 2 percent. Group revenue pace for our North American full-service hotels is up nearly 2 percent.

“We anticipate our number of rooms will increase roughly 7 percent, gross, in 2018, while rooms deletions should total 1 to 1.5 percent during the year.”

Third Quarter 2017 GAAP - Financial Results As Reported
Marriott reported net income totaled $392 million in the 2017 third quarter, a 460 percent increase over 2016 third quarter net income of $70 million. Reported diluted earnings per share (EPS) was $1.04 in the quarter, a 300 percent increase from diluted EPS of $0.26 in the year-ago quarter.

Base management and franchise fees totaled $695 million in the 2017 third quarter, compared to $470 million in the year-ago quarter. The year-over-year increase in these fees is primarily attributable to the Starwood acquisition, higher RevPAR, unit growth and higher branding fees.

Third quarter worldwide incentive management fees increased to $136 million, compared to $81 million in the year-ago quarter. The year-over-year increase was largely attributable to the Starwood acquisition.

Owned, leased, and other revenue, net of direct expenses, totaled $96 million in the 2017 third quarter, compared to $45 million in the year-ago quarter.  The year-over-year increase is primarily attributable to the Starwood acquisition, partially offset by lower results in Brazil due to the Olympics in the year-ago quarter.

Depreciation, amortization, and other expenses totaled $68 million in the third quarter, compared to $36 million in the year-ago quarter. The year-over-year increase is primarily attributable to the Starwood acquisition.


3

General, administrative, and other expenses for the 2017 third quarter totaled $199 million, compared to $161 million in the year-ago quarter. The year-over-year increase is primarily attributable to the Starwood acquisition, inclusive of general administrative cost savings from combined company synergies.

Interest expense, net, totaled $64 million in the third quarter compared to $46 million in the year-ago quarter. The increase largely reflects a higher commercial paper balance, higher Senior Note balances due to debt assumed in the Starwood acquisition, which the company subsequently exchanged for new Marriott Senior Notes, partially offset by the maturity of Series I Senior Notes.

Equity in earnings for the 2017 third quarter totaled $6 million, compared to $3 million in the year-ago quarter. The year-over-year increase is primarily attributable to the Starwood acquisition.

The provision for income taxes totaled $188 million in the third quarter, a 32.4 percent effective tax rate, compared to $61 million in the year-ago quarter, a 46.6 percent effective tax rate. The provision for the third quarter of 2017 includes a $6 million tax benefit resulting from the adoption of Accounting Standards Update 2016-09 (“ASU 2016-09”), which changes the GAAP reporting of excess tax benefits associated with employee stock-based compensation. In the third quarter of 2016, income before taxes included $237 million of merger-related costs, most of which were incurred in jurisdictions with lower tax rates.

For the third quarter, adjusted EBITDA totaled $831 million, a 64 percent increase over third quarter 2016 adjusted EBITDA of $506 million. See page A-12 for the adjusted EBITDA calculation.

Third Quarter 2017 Financial Results As Adjusted Compared to Third Quarter 2016 Combined Financial Results
This information is being presented to allow shareholders to more easily compare the 2017 third quarter adjusted results with the combined results for the third quarter of 2016. The combined results assume Marriott’s acquisition of Starwood and Starwood’s sale of its timeshare business had been completed on January 1, 2015, but use the estimated fair value of assets and liabilities as of the actual closing date of the acquisition.

Combined results for the 2016 third quarter discussed in this section make the following assumptions: (1) removes merger-related adjustments; (2) adjusts income taxes to reflect the company's combined 2016 effective tax rate of 32.5 percent; (3) adjusts weighted average shares outstanding to include shares issued

4

to Starwood shareholders; and (4) 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 2017 third quarter exclude merger-related adjustments. See page A-3 for the calculation of adjusted results, as well as combined results for the year-ago quarter.

Third quarter 2017 adjusted net income totaled $413 million, a 20 percent increase over 2016 third quarter combined net income of $344 million. Adjusted net income for the third quarter of 2017 excludes $22 million ($21 million after-tax) of merger-related adjustments. Adjusted diluted EPS in the third quarter totaled $1.10, a 26 percent increase from combined diluted EPS of $0.87 in the year-ago quarter.

Base management and franchise fees totaled $695 million in the third quarter of 2017, an 8 percent increase over combined base management and franchise fees of $644 million in the year-ago quarter. The year-over-year increase largely reflects higher RevPAR, unit growth and an increase in branding fees.

Third quarter incentive management fees increased to $136 million, compared to combined fees of $127 million in the 2016 third quarter. The year-over-year increase was largely due to higher net house profit at many properties outside North America.

Adjusted owned, leased, and other revenue, net of direct expenses, totaled $94 million, compared to combined revenue, net of direct expenses of $116 million in the year-ago quarter. The adjusted year-over-year decrease largely reflects the impact of hotels previously sold and lower results in Brazil and New York, partially offset by stronger results at other owned and leased hotels and $9 million of favorable purchase accounting revisions. Combined revenue, net of expenses, for the third quarter of 2016 included $15 million of results from hotels subsequently sold.

Adjusted depreciation, amortization, and other expenses for the 2017 third quarter totaled $70 million, compared to combined expenses of $81 million in the year-ago quarter. The year-over-year decrease was largely due to hotels previously sold or properties moved to assets held for sale.

Adjusted general, administrative, and other expenses for the 2017 third quarter totaled $201 million, compared to combined expenses of $237 million in the year-ago quarter. The decrease in expenses year-over-year was largely due to general and administrative cost savings and $4 million of favorable purchase accounting revisions.


5

Interest expense, net, totaled $64 million in the third quarter, compared to combined net expense of $69 million in the year-ago quarter. The decrease was largely due to the maturity of Series I Senior Notes.

The adjusted provision for income taxes totaled $189 million in the third quarter, a 31.4 percent effective rate, compared to the combined provision for taxes of $166 million in the 2016 third quarter, a 32.5 percent effective rate. The adjusted provision for the third quarter of 2017 includes a $5 million tax benefit resulting from the adoption of ASU 2016-09.
 
For the third quarter, adjusted EBITDA totaled $831 million, a 7 percent increase over third quarter 2016 combined adjusted EBITDA of $775 million. Combined adjusted EBITDA for the third quarter of 2016 included $15 million of results from hotels subsequently sold. See page A-12 for the adjusted EBITDA and combined adjusted EBITDA calculations.

Third Quarter 2017 Financial Results As Adjusted Compared to August 7, 2017 Guidance
On August 7, 2017, the company estimated total fee revenue for the third quarter would be $810 million to $825 million. Actual total fee revenue of $831 million in the quarter was higher than estimated, largely reflecting RevPAR at the high end of the guidance range, better than expected branding fees, favorable foreign exchange and $3 million of previously deferred incentive management fees.

Marriott estimated owned, leased, and other revenue, net of direct expenses, for the third quarter would total approximately $75 million. Actual adjusted results of $94 million in the quarter were higher than estimated, largely due to $9 million of favorable purchase accounting revisions, $4 million of termination fees and better than expected results at hotels in Canada.

The company estimated general, administrative, and other expenses for the third quarter would total approximately $215 million to $220 million. Actual adjusted expenses of $201 million in the quarter were lower than expected largely due to a $6 million state tax incentive, $4 million of favorable purchase accounting revisions, and timing.

The company estimated interest expense, net, for the third quarter would total approximately $60 million. Actual net expense of $64 million in the quarter was higher than expected, largely due to $3 million of unfavorable purchase accounting revisions.


6

The company estimated gains and other income for the third quarter would total approximately $0 million. Actual gains of $6 million in the quarter were higher than expected, largely due to a settlement with tax authorities related to the sale of Starwood properties in 2008.

Selected Performance Information
Combined information for the 2016 third quarter presented in this section assumes Marriott’s acquisition of Starwood and Starwood’s sale of its timeshare business had been completed on January 1, 2015.

The company added 138 new properties (22,772 rooms) to its worldwide lodging portfolio during the 2017 third quarter, including The St. Regis, Astana in Kazakhstan, the Bulgari Hotel Beijing, and the Weligama Bay Marriott Resort & Spa, the company’s first hotel in Sri Lanka. Twenty-seven properties (4,700 rooms) exited the system during the quarter. At quarter-end, Marriott’s lodging system encompassed 6,401 properties and timeshare resorts with more than 1,239,000 rooms.

At quarter-end, the company’s worldwide development pipeline totaled 2,622 properties with approximately 450,000 rooms, including 975 properties with more than 175,000 rooms under construction and 222 properties with 41,000 rooms approved for development, but not yet subject to signed contracts.

In the 2017 third quarter, worldwide comparable systemwide constant dollar RevPAR increased 2.1 percent (a 2.4 percent increase using actual dollars). North American comparable systemwide constant dollar RevPAR increased 0.4 percent (a 0.6 percent increase using actual dollars), and international comparable systemwide constant dollar RevPAR increased 6.7 percent (a 7.8 percent increase using actual dollars) for the same period. These RevPAR growth statistics compare the third quarter of 2017 to combined comparable systemwide RevPAR for the third quarter of 2016.

In the 2017 third quarter, 64 percent of worldwide company-managed hotels earned incentive management fees. In North America, 55 percent of company-managed hotels earned incentive management fees in the quarter, while 72 percent of company-managed hotels outside North America earned incentive management fees. In addition, the company earned 64 percent of its incentive management fees in the 2017 third quarter at properties outside North America.

Worldwide comparable company-operated house profit margins increased 40 basis points in the third quarter, largely due to higher RevPAR, solid cost controls and synergies from the Starwood acquisition. House profit margins for comparable company-operated properties outside North America rose 130 basis

7

points, while North American comparable company-operated house profit margins declined 20 basis points in the third quarter. These house profit margin statistics compare the third quarter of 2017 to combined comparable company-operated house profit margins for the third quarter of 2016.

Balance Sheet
At quarter-end, Marriott’s total debt was $8,669 million and cash balances totaled $508 million, compared to $8,506 million in debt and $858 million of cash at year-end 2016.

Marriott Common Stock
Weighted average fully diluted shares outstanding used to calculate reported diluted EPS totaled 376.6 million in the 2017 third quarter, compared to 270.5 million shares in the year-ago quarter. Weighted average fully diluted shares outstanding used to calculate combined diluted EPS totaled 394.4 million in the 2016 third quarter.

The company repurchased 7.8 million shares of common stock in the third quarter at a cost of $800 million at an average price of $103.01. Year-to-date through November 7, the company has repurchased 23.9 million shares for $2.4 billion at an average price of $98.17.

OUTLOOK
The following outlook for the fourth quarter and full year 2017 does not include merger-related adjustments, which the company cannot accurately forecast, but could total roughly $150 million on a full-year basis.

Branding fees from credit cards and residential sales are reported in the Franchise fees line on the income statement. Prior to the first quarter of 2017, those fees were reported in Owned, leased and other revenue. In 2016, combined fees from credit cards and residential sales totaled $60 million in the fourth 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 reflect this change in reporting. On February 15, 2017, the company issued further schedules setting forth combined quarterly and full year combined financial information for both 2015 and 2016 that reflect this change in presentation, and included those schedules in a Form 8-K filed on that date. Those schedules are available on Marriott’s Investor Relations website at http://www.marriott.com/investor.


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For the 2017 fourth quarter, Marriott expects comparable systemwide RevPAR on a constant dollar basis will increase 2 to 3 percent in North America. The company’s guidance for fourth quarter RevPAR growth in North America reflects the shift of the Jewish holidays, which occurred in the third quarter of 2017 compared to the fourth quarter of 2016. The company expects fourth quarter comparable systemwide RevPAR on a constant dollar basis will increase 3 to 5 percent outside North America and 2 to 3 percent worldwide.

Marriott expects fourth quarter 2017 owned, leased, and other revenue, net of direct expenses, could total approximately $90 million. This estimate reflects the negative impact of hotels previously sold, including the Sheraton Centre Toronto.

The company anticipates general, administrative, and other expenses for the fourth quarter will total $240 million to $245 million. Compared to the expense estimates the company provided on August 7, these estimates reflect expenses delayed from the third quarter.

Marriott expects fourth quarter 2017 adjusted EBITDA could total $762 million to $777 million. This estimate reflects the negative impact of hotels previously sold. See page A-13 for the adjusted EBITDA calculation.

For the full year 2017, Marriott expects comparable systemwide RevPAR on a constant dollar basis for the combined company will increase 1 to 2 percent in North America, roughly 5 percent outside North America and 2 to 3 percent worldwide.
  
Marriott anticipates gross room additions of nearly 7 percent and room deletions of 1 to 1.5 percent for full year 2017.

The company assumes full year 2017 total fee revenue will total $3,287 million to $3,297 million. Compared to the total fee revenue estimates the company provided on August 7, these fee revenue estimates reflect the outperformance in the third quarter, higher worldwide RevPAR guidance and higher branding and relicensing fees.

Marriott expects full year 2017 owned, leased, and other revenue, net of direct expenses, could total approximately $367 million. This estimate reflects the negative impact of hotels previously sold. Compared to the owned, leased and other revenue, net of direct expenses, estimates the company provided

9

on August 7, these estimates reflect the outperformance in the third quarter, partially offset by the impact of the sale of the Sheraton Centre Toronto.

Marriott expects full year 2017 adjusted EBITDA could total $3,177 million to $3,192 million. This estimate reflects the negative impact of hotels previously sold. See page A-14 for the adjusted EBITDA calculation.
 
Fourth Quarter 2017
Full Year 2017
Total fee revenue1
$825 million to $835 million
$3,287 million to $3,297 million
Owned, leased, and other revenue, net of direct expenses1
Approx. $90 million
Approx. $367 million
Depreciation, amortization, and other expenses
Approx. $70 million
Approx. $288 million
General, administrative, and other expenses
$240 million to $245 million
$877 million to $882 million
Operating income
$600 million to $615 million
$2,485 million to $2,500 million
Gains and other income
Approx. $0 million
Approx. $31 million
Net interest expense2
Approx. $65 million
Approx. $257 million
Equity in earnings (losses)
Approx. $5 million
Approx. $34 million
Earnings per share3
$0.98 to $1.00
$4.22 to $4.24
Tax rate4
33.2 percent
30.2 percent
1 
Beginning in the first quarter of 2017, the company reports credit card and residential branding fees in Franchise fees revenue. Prior to first quarter of 2017, those fees were reported in Owned, leased and other revenue. Combined credit card and residential branding fees totaled $60 million in the Fourth Quarter of 2016 and $210 million for Full Year 2016.
2 
Net of interest income
3 
Guidance for Full Year 2017 EPS includes the $0.13 expected favorable impact from the adoption of ASU 2016-09.
4 
The tax rate guidance for Full Year 2017 includes the $51 million benefit from the adoption of ASU 2016-09, but does not include the impact of merger-related adjustments that have been or may be made. Without the benefit from adoption of ASU 2016-09, the anticipated tax rate for Full Year 2017 would be 33.0 percent.
The company expects investment spending in 2017 will total approximately $550 million to $650 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 additional asset sales, nearly $3.5 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 Wednesday, November 8, 2017 at 10:00 a.m. Eastern Time (ET). The conference call will be webcast simultaneously via Marriott’s investor relations website at

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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 November 8, 2018.
The telephone dial-in number for the conference call is 706-679-3455 and the conference ID is 86389048. A telephone replay of the conference call will be available from 1:30 p.m. ET, Wednesday, November 8, 2017 until 11:00 p.m. ET, Wednesday, November 15, 2017. To access the replay, call 404-537-3406. The conference ID for the recording is 86389048.
Note on forward-looking statements: This press release and accompanying schedules contain “forward-looking statements” within the meaning of federal securities laws, including RevPAR, profit margin and earnings trends, estimates and assumptions; the number of lodging properties we expect to add to or remove from our system in the future; our expectations about investment spending; and similar statements concerning anticipated future events and expectations that are not historical facts. We caution you that these statements are not guarantees of future performance and are subject to numerous risks and uncertainties, including those we identify below and other risk factors that we identify in our most recent quarterly report on Form 10-Q. Risks that could affect forward-looking statements in this press release include changes in market conditions; changes in global and regional economies; supply and demand changes for hotel rooms; competitive conditions in the lodging industry; relationships with clients and property owners; the availability of capital to finance hotel growth and refurbishment; and the extent to which we are able to continue successfully integrating Starwood and realize the anticipated benefits of combining Starwood and Marriott. Any of these factors could cause actual results to differ materially from the expectations we express or imply in this press release. We make these forward-looking statements as of November 7, 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 6,400 properties in 126 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 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 3, 2017
TABLE OF CONTENTS
 
 
Consolidated Statements of Income - As Reported
Consolidated Statements of Income - Adjusted 2017 Compared to Combined 2016
Total Lodging Products
Combined Key Lodging Statistics
Adjusted EBITDA/ Combined Adjusted EBITDA
Adjusted EBITDA Forecast - Fourth Quarter 2017
Adjusted EBITDA Forecast - Full Year 2017
Non-GAAP Financial and Performance Measures



MARRIOTT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME - AS REPORTED
THIRD QUARTER 2017 AND 2016
(in millions except per share amounts, unaudited)
 
 
 
 
 
 
 
As Reported
 
As Reported
 
Percent
 
Three Months Ended
 
Three Months Ended
 
Better/(Worse)
 
September 30, 2017
 
September 30, 2016
 
Reported 2017 vs. 2016
REVENUES
 
 
 
 
 
Base management fees
$
269

 
$
180

 
49

Franchise fees 1
426

 
290

 
47

Incentive management fees
136

 
81

 
68

   Total Fees
831

 
551

 
51

Owned, leased, and other revenue 2
452

 
239

 
89

Cost reimbursements 3
4,380

 
3,152

 
39

   Total Revenues
5,663

 
3,942

 
44

 
 
 
 
 
 
OPERATING COSTS AND EXPENSES
 
 
 
 
 
Owned, leased, and other - direct 4
356

 
194

 
(84
)
Reimbursed costs
4,380

 
3,152

 
(39
)
Depreciation, amortization, and other 5
68

 
36

 
(89
)
Merger-related costs and charges
28

 
228

 
88

General, administrative, and other 6
199

 
161

 
(24
)
   Total Expenses
5,031

 
3,771

 
(33
)
 
 
 
 
 
 
OPERATING INCOME
632

 
171

 
270

 
 
 
 
 
 
Gains and other income, net 7
6

 
3

 
100

Interest expense
(73
)
 
(55
)
 
(33
)
Interest income
9

 
9

 
—

Equity in earnings 8
6

 
3

 
100

INCOME BEFORE INCOME TAXES
580

 
131

 
343

Provision for income taxes
(188
)
 
(61
)
 
(208
)
NET INCOME
$
392

 
$
70

 
460

 
 
 
 
 
 
EARNINGS PER SHARE
 
 
 
 
 
   Earnings per share - basic
$
1.05

 
$
0.26

 
304

   Earnings per share - diluted
$
1.04

 
$
0.26

 
300

 
 
 
 
 
 
Basic Shares
372.3

 
266.2

 
 
Diluted Shares
376.6

 
270.5

 
 


1 
Franchise fees include fees from our franchise agreements, application and relicensing fees, licensing fees from our timeshare, credit card programs, and residential branding fees. Beginning in the 2017 first quarter, we reclassified branding fees for third-party residential sales and credit card licensing to the “Franchise fees” caption from the “Owned, leased, and other” caption. We adjusted prior amounts to conform to current period presentation.
2 
Owned, leased, and other revenue includes revenue from the properties we own or lease, termination fees, and other revenue.
3 
Cost reimbursements include reimbursements from properties for company-funded operating expenses.
4 
Owned, leased, and other - direct expenses include operating expenses related to our owned or leased hotels, including lease payments and pre-opening expenses.
5 
Depreciation, amortization, and other expenses include depreciation for fixed assets, amortization of capitalized costs incurred to acquire management, franchise, and license agreements, and any related impairments, accelerations, or write-offs.
6 
General, administrative, and other expenses include our corporate and business segments overhead costs and general expenses.
7 
Gains 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
THIRD QUARTER YEAR-TO-DATE 2017 AND 2016
(in millions except per share amounts, unaudited)
 
 
 
 
 
 
 
As Reported
 
As Reported
 
Percent
 
Nine Months Ended
 
Nine Months Ended
 
Better/(Worse)
 
September 30, 2017
 
September 30, 2016
 
Reported 2017 vs. 2016
REVENUES
 
 
 
 
 
Base management fees
$
818

 
$
538

 
52

Franchise fees 1
1,207

 
813

 
48

Incentive management fees
437

 
276

 
58

   Total Fees
2,462

 
1,627

 
51

Owned, leased, and other revenue 2
1,349

 
650

 
108

Cost reimbursements 3
13,208

 
9,339

 
41

   Total Revenues
17,019

 
11,616

 
47

 
 
 
 
 
 
OPERATING COSTS AND EXPENSES
 
 
 
 
Owned, leased, and other - direct 4
1,069

 
533

 
(101
)
Reimbursed costs
13,208

 
9,339

 
(41
)
Depreciation, amortization, and other 5
218

 
97

 
(125
)
Merger-related costs and charges
100

 
250

 
60

General, administrative, and other 6
635

 
470

 
(35
)
   Total Expenses
15,230

 
10,689

 
(42
)
 
 
 
 
 
 
OPERATING INCOME
1,789

 
927

 
93

 
 
 
 
 
 
Gains and other income, net 7
31

 
3

 
933

Interest expense
(216
)
 
(159
)
 
(36
)
Interest income
24

 
22

 
9

Equity in earnings 8
29

 
8

 
263

INCOME BEFORE INCOME TAXES
1,657

 
801

 
107

Provision for income taxes
(486
)
 
(265
)
 
(83
)
NET INCOME
$
1,171

 
$
536

 
118

 
 
 
 
 
 
EARNINGS PER SHARE
 
 
 
 
 
   Earnings per share - basic
$
3.09

 
$
2.08

 
49

   Earnings per share - diluted
$
3.06

 
$
2.04

 
50

 
 
 
 
 
 
Basic Shares
378.5

 
258.3

 
 
Diluted Shares
383.2

 
262.7

 
 


1 
Franchise fees include fees from our franchise agreements, application and relicensing fees, licensing fees from our timeshare, credit card programs, and residential branding fees. Beginning in the 2017 first quarter, we reclassified branding fees for third-party residential sales and credit card licensing to the “Franchise fees” caption from the “Owned, leased, and other” caption. We adjusted prior amounts to conform to current period presentation.
2 
Owned, leased, and other revenue includes revenue from the properties we own or lease, termination fees, and other revenue.
3 
Cost reimbursements include reimbursements from properties for company-funded operating expenses.
4 
Owned, leased, and other - 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.
ADJUSTED/COMBINED STATEMENTS OF INCOME
THIRD QUARTER ADJUSTED 2017 COMPARED TO COMBINED 2016
(in millions except per share amounts, unaudited)

 
 
 
 
 
 
 
 
 
Percent
 
As Reported
 
Less:
 
As Adjusted**
 
Combined 10 **
 
Better/(Worse)
 
Three Months Ended
 
Merger-related
 
Three Months Ended
 
Three Months Ended
 
Adjusted 2017 vs.
 
September 30, 2017
 
Adjustments 9
 
September 30, 2017
 
September 30, 2016
 
Combined 2016
REVENUES
 
 
 
 
 
 
 
 
 
Base management fees
$
269

 
$
—

 
$
269

 
$
266

 
1

Franchise fees 1
426

 
—

 
426

 
378

 
13

Incentive management fees
136

 
—

 
136

 
127

 
7

   Total Fees
831


—

 
831

 
771

 
8

Owned, leased, and other revenue 2
452

 
3

 
449

 
499

 
(10
)
Cost reimbursements 3
4,380

 
—

 
4,380

 
4,384

 
—

   Total Revenues
5,663


3

 
5,660

 
5,654

 
—

 
 
 
 
 
 
 
 
 
 
OPERATING COSTS AND EXPENSES
 
 
 
 
 
 
 
 
 
Owned, leased, and other - direct 4
356

 
1

 
355

 
383

 
7

Reimbursed costs
4,380

 
—

 
4,380

 
4,384

 
—

Depreciation, amortization, and other 5
68

 
(2
)
 
70

 
81

 
14

Merger-related costs and charges
28

 
28

 
—

 
—

 
—

General, administrative, and other 6
199

 
(2
)
 
201

 
237

 
15

   Total Expenses
5,031

 
25

 
5,006

 
5,085

 
2

 
 
 
 
 
 
 
 
 
 
OPERATING INCOME / (LOSS)
632

 
(22
)
 
654

 
569

 
15

 
 
 
 
 
 
 
 
 
 
Gains and other income, net 7
6

 
—

 
6

 
6

 
—

Interest expense
(73
)
 
—

 
(73
)
 
(80
)
 
9

Interest income
9

 
—

 
9

 
11

 
(18
)
Equity in earnings 8
6

 
—

 
6

 
4

 
50

INCOME / (LOSS) BEFORE INCOME TAXES
580

 
(22
)
 
602

 
510

 
18

(Provision) benefit for income taxes
(188
)
 
1

 
(189
)
 
(166
)
 
(14
)
NET INCOME / (LOSS)
$
392

 
$
(21
)
 
$
413

 
$
344

 
20

 
 
 
 
 
 
 
 
 
 
EARNINGS PER SHARE
 
 
 
 
 
 
 
 
 
   Earnings per share - basic
$
1.05

 
 
 
$
1.11

 
$
0.88

 
26

   Earnings per share - diluted
$
1.04

 
 
 
$
1.10

 
$
0.87

 
26

 
 
 
 
 
 
 
 
 
 
Basic Shares
372.3

 
 
 
372.3

 
388.9

 
 
Diluted Shares
376.6

 
 
 
376.6

 
394.4

 
 

** Denotes non-GAAP financial measures. See pages A-15 and A-16 for more information about these non-GAAP measures.

1 
Franchise fees include fees from our franchise agreements, application and relicensing fees, licensing fees from our timeshare, credit card programs, and residential branding fees. Beginning in the 2017 first quarter, we reclassified branding fees for third-party residential sales and credit card licensing to the “Franchise fees” caption from the “Owned, leased, and other” caption. We adjusted prior amounts to conform to current period presentation.
2 
Owned, leased, and other revenue includes revenue from the properties we own or lease, termination fees, and other revenue.
3 
Cost reimbursements include reimbursements from properties for company-funded operating expenses.
4 
Owned, leased, and other - direct expenses include operating expenses related to our owned or leased hotels, including lease payments and pre-opening expenses.
5 
Depreciation, amortization, and other expenses include depreciation for fixed assets, amortization of capitalized costs incurred to acquire management, franchise, and license agreements, and any related impairments, accelerations, or write-offs.
6 
General, administrative, and other expenses include our corporate and business segments overhead costs and general expenses.
7 
Gains and other income, net includes gains and losses on the sale of real estate, the sale or other-than-temporary impairment of joint ventures and investments, and results from cost method investments.
8 
Equity in earnings include our equity in earnings or losses of unconsolidated equity method investments.
9 
The adjusted consolidated statements of income are presented before the impact of merger-related adjustments.
10 
For basis of presentation of 2016 combined financial information, see the Form 8-K relating to our unaudited combined financial information that we filed with the U.S Securities and Exchange Commission on February 15, 2017.


A-3

MARRIOTT INTERNATIONAL, INC.
ADJUSTED/COMBINED STATEMENTS OF INCOME
THIRD QUARTER YEAR-TO-DATE ADJUSTED 2017 COMPARED TO COMBINED 2016
(in millions except per share amounts, unaudited)

 
 
 
 
 
 
 
 
 
Percent
 
As Reported
 
Less:
 
As Adjusted**
 
Combined 10 **
 
Better/(Worse)
 
Nine Months Ended
 
Merger-related
 
Nine Months Ended
 
Nine Months Ended
 
Adjusted 2017 vs.
 
September 30, 2017
 
Adjustments 9
 
September 30, 2017
 
September 30, 2016
 
Combined 2016
REVENUES
 
 
 
 
 
 
 
 
 
Base management fees
$
818

 
$
—

 
$
818

 
$
804

 
2

Franchise fees 1
1,207

 
—

 
1,207

 
1,082

 
12

Incentive management fees
437

 
—

 
437

 
413

 
6

   Total Fees
2,462


—

 
2,462

 
2,299

 
7

Owned, leased, and other revenue 2
1,349

 
3

 
1,346

 
1,455

 
(7
)
Cost reimbursements 3
13,208

 
—

 
13,208

 
13,273

 
—

   Total Revenues
17,019


3

 
17,016

 
17,027

 
—

 
 
 
 
 
 
 
 
 
 
OPERATING COSTS AND EXPENSES
 
 
 
 
 
 
 
 
 
Owned, leased, and other - direct 4
1,069

 
—

 
1,069

 
1,138

 
6

Reimbursed costs
13,208

 
—

 
13,208

 
13,273

 
—

Depreciation, amortization, and other 5
218

 
1

 
217

 
242

 
10

Merger-related costs and charges
100

 
100

 
—

 
—

 
—

General, administrative, and other 6
635

 
(2
)
 
637

 
730

 
13

   Total Expenses
15,230

 
99

 
15,131

 
15,383

 
2

 
 
 
 
 
 
 
 
 
 
OPERATING INCOME / (LOSS)
1,789

 
(96
)
 
1,885

 
1,644

 
15

 
 
 
 
 
 
 
 
 
 
Gains (losses) and other income, net 7
31

 
—

 
31

 
(24
)
 
229

Interest expense
(216
)
 
—

 
(216
)
 
(237
)
 
9

Interest income
24

 
—

 
24

 
28

 
(14
)
Equity in earnings 8
29

 
—

 
29

 
23

 
26

INCOME / (LOSS) BEFORE INCOME TAXES
1,657

 
(96
)
 
1,753

 
1,434

 
22

(Provision) benefit for income taxes
(486
)
 
27

 
(513
)
 
(467
)
 
(10
)
NET INCOME / (LOSS)
$
1,171

 
$
(69
)
 
$
1,240

 
$
967

 
28

 
 
 
 
 
 
 
 
 
 
EARNINGS PER SHARE
 
 
 
 
 
 
 
 
 
   Earnings per share - basic
$
3.09

 
 
 
$
3.28

 
$
2.49

 
32

   Earnings per share - diluted
$
3.06

 
 
 
$
3.24

 
$
2.45

 
32

 
 
 
 
 
 
 
 
 
 
Basic Shares
378.5

 
 
 
378.5

 
388.8

 
 
Diluted Shares
383.2

 
 
 
383.2

 
394.4

 
 

** Denotes non-GAAP financial measures. See pages A-15 and A-16 for more information about these non-GAAP measures.

1 
Franchise fees include fees from our franchise agreements, application and relicensing fees, licensing fees from our timeshare, credit card programs, and residential branding fees. Beginning in the 2017 first quarter, we reclassified branding fees for third-party residential sales and credit card licensing to the “Franchise fees” caption from the “Owned, leased, and other” caption. We adjusted prior amounts to conform to current period presentation.
2 
Owned, leased, and other revenue includes revenue from the properties we own or lease, termination fees, and other revenue.
3 
Cost reimbursements include reimbursements from properties for company-funded operating expenses.
4 
Owned, leased, and other - direct expenses include operating expenses related to our owned or leased hotels, including lease payments and pre-opening expenses.
5 
Depreciation, amortization, and other expenses include depreciation for fixed assets, amortization of capitalized costs incurred to acquire management, franchise, and license agreements, and any related impairments, accelerations, or write-offs.
6 
General, administrative, and other expenses include our corporate and business segments overhead costs and general expenses.
7 
Gains (losses) and other income, net includes gains and losses on the sale of real estate, the sale or other-than-temporary impairment of joint ventures and investments, and results from cost method investments.
8 
Equity in earnings include our equity in earnings or losses of unconsolidated equity method investments.
9 
The adjusted consolidated statements of income are presented before the impact of merger-related adjustments.
10 
For basis of presentation of 2016 combined financial information, see the Form 8-K relating to our unaudited combined financial information that we filed with the U.S Securities and Exchange Commission on February 15, 2017.


A-4

MARRIOTT INTERNATIONAL, INC.
TOTAL LODGING PRODUCTS
As of September 30, 2017

 
North America
Total International
Total Worldwide
 
Units
Rooms
Units
Rooms
Units
Rooms
Managed
835

252,379

1,040

279,097

1,875

531,476

JW Marriott Hotels
15

9,709

47

18,925

62

28,634

The Ritz-Carlton Hotels
40

11,764

54

14,947

94

26,711

The Ritz-Carlton Residences
34

4,538

9

625

43

5,163

The Ritz-Carlton Serviced Apartments
 
 
5

697

5

697

Luxury Collection
5

2,294

48

8,230

53

10,524

W Hotels
26

7,950

24

5,661

50

13,611

W Residences
9

1,078

6

532

15

1,610

St. Regis
10

1,990

31

7,049

41

9,039

St. Regis Residences
6

467

6

516

12

983

EDITION Hotels
2

567

2

699

4

1,266

EDITION Residences
1

25





1

25

Bulgari Hotels & Resorts
 
 
3

237

3

237

Bulgari Residences
 
 
1

5

1

5

Marriott Hotels
131

69,576

159

46,313

290

115,889

Sheraton
30

23,208

184

63,155

214

86,363

Sheraton Residences
 
 
2

262

2

262

Westin
46

25,127

68

21,844

114

46,971

Westin Residences
1

65

1

264

2

329

Renaissance Hotels
28

12,134

50

16,188

78

28,322

Le Meridien
4

720

73

20,200

77

20,920

Autograph Collection Hotels
3

989

6

1,456

9

2,445

Delta Hotels and Resorts
25

6,764





25

6,764

Gaylord Hotels
5

8,108





5

8,108

Marriott Executive Apartments

 
28

4,195

28

4,195

Tribute Portfolio
 
 
3

559

3

559

Courtyard
254

40,429

79

16,723

333

57,152

Residence Inn
106

16,207

5

517

111

16,724

Fairfield Inn & Suites
6

1,432

16

2,344

22

3,776

SpringHill Suites
30

4,854





30

4,854

Four Points
1

134

61

14,921

62

15,055

TownePlace Suites
15

1,740





15

1,740

Aloft
1

330

28

6,726

29

7,056

Protea Hotels
 
 
36

4,265

36

4,265

Element
1

180

4

933

5

1,113

Moxy
 
 
1

109

1

109




A-5

MARRIOTT INTERNATIONAL, INC.
TOTAL LODGING PRODUCTS
As of September 30, 2017

 
North America
Total International
Total Worldwide
 
Units
Rooms
Units
Rooms
Units
Rooms
Franchised
3,798

553,100

451

96,612

4,249

649,712

JW Marriott Hotels
10

4,425

6

1,624

16

6,049

The Ritz-Carlton Hotels
1

429

 
 
1

429

The Ritz-Carlton Residences
1

55

 
 
1

55

Luxury Collection
9

1,891

37

6,868

46

8,759

Luxury Collection Residences
1

91

1

64

2

155

Bulgari Hotels & Resorts
 
 
1

85

1

85

Marriott Hotels
212

66,137

48

13,297

260

79,434

Sheraton
161

47,765

60

17,075

221

64,840

Westin
80

26,262

24

7,432

104

33,694

Westin Residences
2

201

 
 
2

201

Renaissance Hotels
58

16,323

27

7,441

85

23,764

Le Meridien
18

4,286

15

4,022

33

8,308

Autograph Collection Hotels
70

15,247

45

10,838

115

26,085

Delta Hotels and Resorts
22

5,267

 
 
22

5,267

Tribute Portfolio
15

4,733

8

797

23

5,530

Courtyard
714

95,110

58

10,986

772

106,096

Residence Inn
627

73,883

3

287

630

74,170

Fairfield Inn & Suites
870

79,399

4

755

874

80,154

SpringHill Suites
352

40,464

 
 
352

40,464

Four Points
137

20,900

43

6,743

180

27,643

TownePlace Suites
314

31,510

 
 
314

31,510

Aloft
96

14,235

12

1,928

108

16,163

Protea Hotels
 
 
45

3,343

45

3,343

Element
25

3,581

2

293

27

3,874

Moxy Hotels
3

906

12

2,734

15

3,640

Owned/Leased
31

9,613

37

10,024

68

19,637

JW Marriott Hotels


1

496

1

496

The Ritz-Carlton Hotels
 
 
2

553

2

553

Luxury Collection
 
 
3

465

3

465

W Hotels
 
1

509

2

665

3

1,174

St. Regis
1

238

1

160

2

398

Marriott Hotels
3

1,664

5

1,625

8

3,289

Sheraton
3

2,671

6

2,866

9

5,537

Westin
1

1,073

1

246

2

1,319

Renaissance Hotels
1

317

3

749

4

1,066

Tribute Portfolio
1

135

 
 
1

135

Courtyard
19

2,814

3

644

22

3,458

Residence Inn
1

192

1

140

2

332

Protea Hotels
 
 
9

1,415

9

1,415

Unconsolidated Joint Ventures
25

4,423

96

12,086

121

16,509

Autograph Collection Hotels
 
 
6

419

6

419

AC Hotels by Marriott
25

4,423

90

11,667

115

16,090

Timeshare*
70

18,117

18

3,770

88

21,887

Marriott Vacations Worldwide
51

11,249

14

2,355

65

13,604

Vistana
19

6,868

4

1,415

23

8,283

Grand Total
4,759

837,632

1,642

401,589

6,401

1,239,221


* Timeshare property and room counts are included on this table in their geographical locations.  For external reporting purposes, these counts are captured in the Corporate segment.

A-6

MARRIOTT INTERNATIONAL, INC.
TOTAL LODGING PRODUCTS
As of September 30, 2017
 
North America
Total International
Total Worldwide
Total Systemwide
Units
Rooms
Units
Rooms
Units
Rooms
Luxury
172

48,020

290

69,103

462

117,123

JW Marriott Hotels
25

14,134

54

21,045

79

35,179

The Ritz-Carlton Hotels
41

12,193

56

15,500

97

27,693

The Ritz-Carlton Residences
35

4,593

9

625

44

5,218

The Ritz-Carlton Serviced Apartments
 
 
5

697

5

697

Luxury Collection
14

4,185

88

15,563

102

19,748

Luxury Collection Residences
1

91

1

64

2

155

W Hotels
27

8,459

26

6,326

53

14,785

W Residences
9

1,078

6

532

15

1,610

St. Regis
11

2,228

32

7,209

43

9,437

St. Regis Residences
6

467

6

516

12

983

EDITION Hotels
2

567

2

699

4

1,266

EDITION Residences
1

25





1

25

Bulgari Hotels & Resorts
 
 
4

322

4

322

Bulgari Residences
 
 
1

5

1

5

Full Service
920

338,772

822

241,243

1,742

580,015

Marriott Hotels
346

137,377

212

61,235

558

198,612

Sheraton
194

73,644

250

83,096

444

156,740

Sheraton Residences
 
 
2

262

2

262

Westin
127

52,462

93

29,522

220

81,984

Westin Residences
3

266

1

264

4

530

Renaissance Hotels
87

28,774

80

24,378

167

53,152

Le Meridien
22

5,006

88

24,222

110

29,228

Autograph Collection Hotels
73

16,236

57

12,713

130

28,949

Delta Hotels and Resorts
47

12,031





47

12,031

Gaylord Hotels
5

8,108





5

8,108

Marriott Executive Apartments
 
 
28

4,195

28

4,195

Tribute Portfolio
16

4,868

11

1,356

27

6,224

Limited Service
3,597

432,723

512

87,473

4,109

520,196

Courtyard
987

138,353

140

28,353

1,127

166,706

Residence Inn
734

90,282

9

944

743

91,226

Fairfield Inn & Suites
876

80,831

20

3,099

896

83,930

SpringHill Suites
382

45,318





382

45,318

Four Points
138

21,034

104

21,664

242

42,698

TownePlace Suites
329

33,250





329

33,250

Aloft
97

14,565

40

8,654

137

23,219

AC Hotels by Marriott
25

4,423

90

11,667

115

16,090

Protea Hotels
 
 
90

9,023

90

9,023

Element
26

3,761

6

1,226

32

4,987

Moxy Hotels
3

906

13

2,843

16

3,749

Timeshare*
70

18,117

18

3,770

88

21,887

Marriott Vacations Worldwide
51

11,249

14

2,355

65

13,604

Vistana
19

6,868

4

1,415

23

8,283

Grand Total
4,759

837,632

1,642

401,589

6,401

1,239,221

* Timeshare property and room counts are included on this table in their geographical locations.  For external reporting purposes, these counts are captured in the Corporate segment.

A-7

MARRIOTT INTERNATIONAL, INC.
COMBINED KEY LODGING STATISTICS
In Constant $

Comparable Company-Operated North American Properties
 
 
Three Months Ended September 30, 2017 and September 30, 2016
 
 
REVPAR
 
Occupancy
 
Average Daily Rate
Brand
 
2017
 
vs. 2016*
 
2017
 
vs. 2016*
 
2017
 
vs. 2016*
JW Marriott
 
$
149.62

 
-2.9
 %
 
75.4
%
 
-1.0
 %
pts.
 
$
198.35

 
-1.5
 %
The Ritz-Carlton
 
$
242.43

 
1.8
 %
 
73.4
%
 
0.0
 %
pts.
 
$
330.37

 
1.8
 %
W Hotels
 
$
241.20

 
-3.3
 %
 
84.6
%
 
-0.6
 %
pts.
 
$
284.93

 
-2.6
 %
Composite North American Luxury 1
 
$
229.18

 
-0.9
 %
 
77.9
%
 
-0.6
 %
pts.
 
$
294.09

 
-0.1
 %
Marriott Hotels
 
$
145.20

 
-0.8
 %
 
78.1
%
 
0.0
 %
pts.
 
$
185.79

 
-0.8
 %
Sheraton
 
$
156.57

 
-0.5
 %
 
80.1
%
 
-0.6
 %
pts.
 
$
195.55

 
0.3
 %
Westin
 
$
179.58

 
-0.8
 %
 
80.6
%
 
-0.5
 %
pts.
 
$
222.86

 
-0.2
 %
Composite North American Upper Upscale 2
 
$
150.81

 
-0.4
 %
 
78.7
%
 
-0.2
 %
pts.
 
$
191.62

 
-0.1
 %
North American Full-Service 3
 
$
164.62

 
-0.6
 %
 
78.6
%
 
-0.3
 %
pts.
 
$
209.52

 
-0.2
 %
Courtyard
 
$
105.21

 
-0.5
 %
 
75.6
%
 
0.0
 %
pts.
 
$
139.10

 
-0.5
 %
Residence Inn
 
$
130.82

 
-0.8
 %
 
83.8
%
 
0.0
 %
pts.
 
$
156.16

 
-0.8
 %
Composite North American Limited-Service 4
 
$
110.81

 
-0.5
 %
 
78.0
%
 
-0.1
 %
pts.
 
$
142.07

 
-0.3
 %
North American - All 5
 
$
147.91

 
-0.5
 %
 
78.4
%
 
-0.2
 %
pts.
 
$
188.69

 
-0.2
 %

Comparable Systemwide North American Properties
 
 
Three Months Ended September 30, 2017 and September 30, 2016
 
 
REVPAR
 
Occupancy
 
Average Daily Rate
Brand
 
2017
 
vs. 2016*
 
2017
 
vs. 2016*
 
2017
 
vs. 2016*
JW Marriott
 
$
157.22

 
-0.7
 %
 
76.8
%
 
-0.4
 %
pts.
 
$
204.83

 
-0.1
 %
The Ritz-Carlton
 
$
242.43

 
1.8
 %
 
73.4
%
 
0.0
 %
pts.
 
$
330.37

 
1.8
 %
W Hotels
 
$
241.20

 
-3.3
 %
 
84.6
%
 
-0.6
 %
pts.
 
$
284.93

 
-2.6
 %
Composite North American Luxury 1
 
$
220.67

 
-0.2
 %
 
78.2
%
 
-0.3
 %
pts.
 
$
282.23

 
0.2
 %
Marriott Hotels
 
$
128.24

 
-0.3
 %
 
75.1
%
 
-0.5
 %
pts.
 
$
170.87

 
0.4
 %
Sheraton
 
$
123.23

 
-0.9
 %
 
77.4
%
 
-0.8
 %
pts.
 
$
159.29

 
0.1
 %
Westin
 
$
162.47

 
-0.4
 %
 
80.0
%
 
-1.1
 %
pts.
 
$
203.02

 
0.9
 %
Composite North American Upper Upscale 2
 
$
134.65

 
-0.3
 %
 
76.7
%
 
-0.6
 %
pts.
 
$
175.53

 
0.5
 %
North American Full-Service 3
 
$
143.65

 
-0.3
 %
 
76.9
%
 
-0.6
 %
pts.
 
$
186.88

 
0.5
 %
Courtyard
 
$
108.12

 
0.8
 %
 
76.9
%
 
0.5
 %
pts.
 
$
140.53

 
0.1
 %
Residence Inn
 
$
125.47

 
0.4
 %
 
83.6
%
 
0.0
 %
pts.
 
$
150.14

 
0.4
 %
Fairfield Inn & Suites
 
$
89.87

 
2.5
 %
 
77.2
%
 
1.7
 %
pts.
 
$
116.37

 
0.3
 %
Composite North American Limited-Service 4
 
$
105.89

 
1.2
 %
 
79.0
%
 
0.5
 %
pts.
 
$
134.10

 
0.6
 %
North American - All 5
 
$
122.69

 
0.4
 %
 
78.0
%
 
0.0
 %
pts.
 
$
157.23

 
0.4
 %

* The 2016 statistics used to calculate change from the 2016 period to the 2017 period assume Marriott’s acquisition of Starwood and Starwood’s sale of its timeshare business had been completed on January 1, 2015.
1 
Includes JW Marriott, The Ritz-Carlton, W Hotels, The Luxury Collection, St. Regis, and EDITION.
2 
Includes Marriott Hotels, Sheraton, Westin, Renaissance Hotels, Autograph Collection Hotels, Delta Hotels, Gaylord Hotels, Le Meridien, and Tribute Portfolio.
3 
Includes Composite North American Luxury and Composite North American Upper Upscale.
4 
Includes Courtyard, Residence Inn, Fairfield Inn & Suites, SpringHill Suites, Four Points, TownePlace Suites, and AC Hotels. Systemwide also includes Aloft Hotels and Element Hotels.
5 
Includes North American Full-Service and North American Limited-Service.

A-8


MARRIOTT INTERNATIONAL, INC.
COMBINED KEY LODGING STATISTICS
In Constant $

Comparable Company-Operated International Properties
 
 
Three Months Ended September 30, 2017 and September 30, 2016
 
 
REVPAR
 
Occupancy
 
Average Daily Rate
Region
 
2017
 
vs. 2016*
 
2017
 
vs. 2016*
 
2017
 
vs. 2016*
Greater China
 
$
92.60

 
10.6
 %
 
75.1
%
 
6.6
%
pts. 
 
$
123.30

 
0.9
 %
Rest of Asia Pacific
 
$
119.30

 
6.2
 %
 
77.0
%
 
3.5
%
pts. 
 
$
154.99

 
1.4
 %
Asia Pacific
 
$
102.03

 
8.7
 %
 
75.8
%
 
5.5
%
pts. 
 
$
134.67

 
0.8
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Caribbean & Latin America
 
$
109.80

 
0.0
 %
 
63.8
%
 
1.7
%
pts. 
 
$
172.08

 
-2.6
 %
Europe
 
$
172.62

 
8.0
 %
 
79.9
%
 
3.0
%
pts. 
 
$
216.16

 
3.9
 %
Middle East & Africa
 
$
84.98

 
-0.7
 %
 
62.9
%
 
0.9
%
pts. 
 
$
135.13

 
-2.2
 %
Other International 1
 
$
131.58

 
4.8
 %
 
71.2
%
 
2.1
%
pts.
 
$
184.69

 
1.7
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
International - All 2
 
$
116.77

 
6.5
 %
 
73.5
%
 
3.8
%
pts. 
 
$
158.85

 
1.0
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Worldwide 3
 
$
132.65

 
2.4
 %
 
76.0
%
 
1.7
%
pts. 
 
$
174.54

 
0.0
 %

Comparable Systemwide International Properties
 
 
Three Months Ended September 30, 2017 and September 30, 2016
 
 
REVPAR
 
Occupancy
 
Average Daily Rate
Region
 
2017
 
vs. 2016*
 
2017
 
vs. 2016*
 
2017
 
vs. 2016*
Greater China
 
$
92.38

 
10.6
 %
 
74.3
%
 
6.6
%
pts. 
 
$
124.33

 
0.8
 %
Rest of Asia Pacific
 
$
120.83

 
5.3
 %
 
76.0
%
 
2.5
%
pts. 
 
$
159.00

 
1.8
 %
Asia Pacific
 
$
104.50

 
7.9
 %
 
75.0
%
 
4.8
%
pts. 
 
$
139.29

 
1.0
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Caribbean & Latin America
 
$
90.89

 
1.9
 %
 
62.6
%
 
1.9
%
pts. 
 
$
145.10

 
-1.2
 %
Europe
 
$
153.25

 
8.7
 %
 
79.0
%
 
3.7
%
pts. 
 
$
194.03

 
3.7
 %
Middle East & Africa
 
$
82.23

 
-0.3
 %
 
62.9
%
 
1.1
%
pts. 
 
$
130.70

 
-2.1
 %
Other International 1
 
$
121.56

 
5.9
 %
 
71.3
%
 
2.6
%
pts.
 
$
170.42

 
2.0
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
International - All 2
 
$
114.12

 
6.7
 %
 
72.9
%
 
3.6
%
pts. 
 
$
156.46

 
1.5
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Worldwide 3
 
$
120.22

 
2.1
 %
 
76.6
%
 
1.1
%
pts. 
 
$
157.02

 
0.7
 %

* The 2016 statistics used to calculate change from the 2016 period to the 2017 period assume Marriott’s acquisition of Starwood and Starwood’s sale of its timeshare business had been completed on January 1, 2015.
1 
Includes Caribbean & Latin America, Europe, and Middle East & Africa.
2 
Includes Asia Pacific and Other International.
3 
Includes North American - All and International - All.











A-9



MARRIOTT INTERNATIONAL, INC.
COMBINED KEY LODGING STATISTICS
In Constant $

Comparable Company-Operated North American Properties
 
 
Nine Months Ended September 30, 2017 and September 30, 2016
 
 
REVPAR
 
Occupancy
 
Average Daily Rate
Brand
 
2017
 
vs. 2016*
 
2017
 
vs. 2016*
 
2017
 
vs. 2016*
JW Marriott
 
$
176.63

 
2.5
 %
 
77.6
%
 
1.0
 %
pts.
 
$
227.64

 
1.2
 %
The Ritz-Carlton
 
$
260.23

 
4.0
 %
 
74.6
%
 
1.4
 %
pts.
 
$
348.69

 
2.0
 %
W Hotels
 
$
241.42

 
-1.1
 %
 
82.5
%
 
0.0
 %
pts.
 
$
292.55

 
-1.0
 %
Composite North American Luxury 1
 
$
243.40

 
2.0
 %
 
78.3
%
 
0.9
 %
pts.
 
$
310.99

 
0.8
 %
Marriott Hotels
 
$
147.52

 
1.3
 %
 
77.4
%
 
0.7
 %
pts.
 
$
190.72

 
0.4
 %
Sheraton
 
$
150.62

 
2.1
 %
 
78.1
%
 
0.0
 %
pts.
 
$
192.81

 
2.1
 %
Westin
 
$
175.28

 
1.4
 %
 
78.2
%
 
-0.2
 %
pts.
 
$
224.07

 
1.8
 %
Composite North American Upper Upscale 2
 
$
150.48

 
1.7
 %
 
77.3
%
 
0.3
 %
pts.
 
$
194.79

 
1.3
 %
North American Full-Service 3
 
$
166.86

 
1.8
 %
 
77.4
%
 
0.4
 %
pts.
 
$
215.49

 
1.2
 %
Courtyard
 
$
104.04

 
0.0
 %
 
74.0
%
 
-0.3
 %
pts.
 
$
140.62

 
0.4
 %
Residence Inn
 
$
127.37

 
2.5
 %
 
81.0
%
 
1.0
 %
pts.
 
$
157.18

 
1.3
 %
Composite North American Limited-Service 4
 
$
109.32

 
0.9
 %
 
76.2
%
 
0.0
 %
pts.
 
$
143.55

 
0.9
 %
North American - All 5
 
$
148.99

 
1.6
 %
 
77.0
%
 
0.3
 %
pts.
 
$
193.40

 
1.2
 %

Comparable Systemwide North American Properties
 
 
Nine Months Ended September 30, 2017 and September 30, 2016
 
 
REVPAR
 
Occupancy
 
Average Daily Rate
Brand
 
2017
 
vs. 2016*
 
2017
 
vs. 2016*
 
2017
 
vs. 2016*
JW Marriott
 
$
177.45

 
2.8
 %
 
78.2
%
 
0.9
 %
pts.
 
$
227.03

 
1.6
 %
The Ritz-Carlton
 
$
260.23

 
4.0
 %
 
74.6
%
 
1.4
 %
pts.
 
$
348.69

 
2.0
 %
W Hotels
 
$
241.42

 
-1.1
 %
 
82.5
%
 
0.0
 %
pts.
 
$
292.55

 
-1.0
 %
Composite North American Luxury 1
 
$
231.91

 
2.3
 %
 
78.1
%
 
0.9
 %
pts.
 
$
297.12

 
1.0
 %
Marriott Hotels
 
$
128.64

 
0.9
 %
 
74.0
%
 
0.1
 %
pts.
 
$
173.79

 
0.7
 %
Sheraton
 
$
117.14

 
0.9
 %
 
74.4
%
 
-0.1
 %
pts.
 
$
157.40

 
1.1
 %
Westin
 
$
161.25

 
1.7
 %
 
78.0
%
 
-0.3
 %
pts.
 
$
206.73

 
2.1
 %
Composite North American Upper Upscale 2
 
$
133.53

 
1.4
 %
 
75.0
%
 
0.1
 %
pts.
 
$
178.02

 
1.3
 %
North American Full-Service 3
 
$
143.82

 
1.5
 %
 
75.3
%
 
0.2
 %
pts.
 
$
190.94

 
1.3
 %
Courtyard
 
$
104.03

 
0.7
 %
 
74.4
%
 
0.2
 %
pts.
 
$
139.85

 
0.4
 %
Residence Inn
 
$
118.64

 
1.4
 %
 
80.4
%
 
0.0
 %
pts.
 
$
147.62

 
1.4
 %
Fairfield Inn & Suites
 
$
82.86

 
2.8
 %
 
72.8
%
 
1.4
 %
pts.
 
$
113.84

 
0.8
 %
Composite North American Limited-Service 4
 
$
100.33

 
1.4
 %
 
75.8
%
 
0.4
 %
pts.
 
$
132.44

 
0.9
 %
North American - All 5
 
$
119.67

 
1.5
 %
 
75.6
%
 
0.3
 %
pts.
 
$
158.38

 
1.1
 %

* The 2016 statistics used to calculate change from the 2016 period to the 2017 period assume Marriott’s acquisition of Starwood and Starwood’s sale of its timeshare business had been completed on January 1, 2015.
1 
Includes JW Marriott, The Ritz-Carlton, W Hotels, The Luxury Collection, St. Regis, and EDITION.
2 
Includes Marriott Hotels, Sheraton, Westin, Renaissance Hotels, Autograph Collection Hotels, Delta Hotels, Gaylord Hotels, Le Meridien, and Tribute Portfolio.
3 
Includes Composite North American Luxury and Composite North American Upper Upscale.
4 
Includes Courtyard, Residence Inn, Fairfield Inn & Suites, SpringHill Suites, Four Points, TownePlace Suites, and AC Hotels. Systemwide also includes Aloft Hotels and Element Hotels.
5 
Includes North American Full-Service and North American Limited-Service.


A-10



MARRIOTT INTERNATIONAL, INC.
COMBINED KEY LODGING STATISTICS
In Constant $

Comparable Company-Operated International Properties
 
 
Nine Months Ended September 30, 2017 and September 30, 2016
 
 
REVPAR
 
Occupancy
 
Average Daily Rate
Region
 
2017
 
vs. 2016*
 
2017
 
vs. 2016*
 
2017
 
vs. 2016*
Greater China
 
$
87.22

 
8.2
%
 
70.5
%
 
6.7
%
pts.
 
$
123.64

 
-2.1
 %
Rest of Asia Pacific
 
$
116.18

 
6.2
%
 
75.0
%
 
3.5
%
pts.
 
$
155.00

 
1.2
 %
Asia Pacific
 
$
97.45

 
7.3
%
 
72.1
%
 
5.6
%
pts.
 
$
135.16

 
-1.0
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Caribbean & Latin America
 
$
127.04

 
3.0
%
 
65.7
%
 
2.3
%
pts.
 
$
193.34

 
-0.6
 %
Europe
 
$
141.85

 
7.3
%
 
74.1
%
 
2.2
%
pts.
 
$
191.47

 
4.0
 %
Middle East & Africa
 
$
100.74

 
0.2
%
 
64.4
%
 
1.3
%
pts.
 
$
156.44

 
-1.8
 %
Other International 1
 
$
125.08

 
4.5
%
 
69.3
%
 
2.0
%
pts.
 
$
180.52

 
1.5
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
International - All 2
 
$
111.22

 
5.7
%
 
70.7
%
 
3.8
%
pts.
 
$
157.32

 
0.1
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Worldwide 3
 
$
130.49

 
3.3
%
 
73.9
%
 
2.0
%
pts.
 
$
176.50

 
0.5
 %


Comparable Systemwide International Properties
 
 
Nine Months Ended September 30, 2017 and September 30, 2016
 
 
REVPAR
 
Occupancy
 
Average Daily Rate
Region
 
2017
 
vs. 2016*
 
2017
 
vs. 2016*
 
2017
 
vs. 2016*
Greater China
 
$
87.34

 
8.4
%
 
70.0
%
 
6.7
%
pts.
 
$
124.80

 
-2.1
 %
Rest of Asia Pacific
 
$
115.61

 
5.0
%
 
74.2
%
 
2.6
%
pts.
 
$
155.72

 
1.2
 %
Asia Pacific
 
$
99.39

 
6.7
%
 
71.8
%
 
5.0
%
pts.
 
$
138.42

 
-0.7
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Caribbean & Latin America
 
$
102.72

 
3.4
%
 
63.9
%
 
1.9
%
pts.
 
$
160.73

 
0.3
 %
Europe
 
$
124.53

 
7.9
%
 
72.0
%
 
3.1
%
pts.
 
$
173.07

 
3.3
 %
Middle East & Africa
 
$
96.97

 
0.5
%
 
64.3
%
 
1.5
%
pts.
 
$
150.86

 
-1.8
 %
Other International 1
 
$
112.71

 
5.3
%
 
68.2
%
 
2.4
%
pts.
 
$
165.18

 
1.6
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
International - All 2
 
$
106.90

 
5.9
%
 
69.8
%
 
3.5
%
pts.
 
$
153.17

 
0.5
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Worldwide 3
 
$
115.99

 
2.6
%
 
73.9
%
 
1.2
%
pts.
 
$
156.96

 
0.9
 %

* The 2016 statistics used to calculate change from the 2016 period to the 2017 period assume Marriott’s acquisition of Starwood and Starwood’s sale of its timeshare business had been completed on January 1, 2015.
1 
Includes Caribbean & Latin America, Europe, and Middle East & Africa.
2 
Includes Asia Pacific and Other International.
3 
Includes North American - All and International - All.


A-11


MARRIOTT INTERNATIONAL, INC.
NON-GAAP FINANCIAL MEASURES
ADJUSTED EBITDA/ COMBINED ADJUSTED EBITDA
($ in millions)
 
Fiscal Year 2017
 
First
Quarter
 
Second
Quarter
 
Third
Quarter
 
Total
Net income, as reported
$
365

 
$
414

 
$
392

 
$
1,171

Interest expense
70

 
73

 
73

 
216

Tax provision
120

 
178

 
188

 
486

Depreciation and amortization
65

 
85

 
68

 
218

Depreciation classified in reimbursed costs
32

 
33

 
28

 
93

Interest expense from unconsolidated joint ventures
1

 
3

 
2

 
6

Depreciation and amortization from unconsolidated joint ventures
11

 
10

 
10

 
31

EBITDA **
664

 
796

 
761

 
2,221

 
 
 
 
 
 
 
 
Gain on asset dispositions and impairments, net
—

 
(24
)
 
—

 
(24
)
Merger-related costs and charges
51

 
21

 
28

 
100

Share-based compensation (including share-based compensation reimbursed by third-party owners)
35

 
41

 
42

 
118

Adjusted EBITDA **
$
750

 
$
834

 
$
831

 
$
2,415

 
 
 
 
 
 
 
 
Increase over 2016 Adjusted EBITDA **
64
%
 
69
%
 
64
%
 
 66% 1
 
 
 
 
 
 
 
 
Increase over 2016 Combined Adjusted EBITDA **
10
%
 
8
%
 
7
%
 
8% 2
 
Fiscal Year 2016
 
First
Quarter
 
Second
Quarter
 
Third
Quarter
 
Fourth
Quarter
 
Total
Net income, as reported
$
219

 
$
247

 
$
70

 
$
244

 
$
780

Interest expense
47

 
57

 
55

 
75

 
234

Tax provision
107

 
97

 
61

 
139

 
404

Depreciation and amortization
31

 
30

 
36

 
71

 
168

Depreciation classified in reimbursed costs
14

 
14

 
15

 
33

 
76

Interest expense from unconsolidated joint ventures
1

 
1

 
1

 
4

 
7

Depreciation and amortization from unconsolidated joint ventures
3

 
3

 
4

 
10

 
20

EBITDA **
422


449


242


576


1,689

 
 
 
 
 
 
 
 
 
 
Merger-related costs and charges
8

 
14

 
228

 
136

 
386

Share-based compensation (including share-based compensation reimbursed by third-party owners)
28

 
31

 
36

 
44

 
139

Adjusted EBITDA **
$
458

 
$
494

 
$
506

 
$
756

 
$
2,214

 
 
 
 
 
 
 
 
 
 
Starwood pre-acquisition and other adjustments
225

 
279

 
269

 
—

 
773

Combined Adjusted EBITDA **
$
683

 
$
773

 
$
775

 
$
756

 
$
2,987


**
Denotes non-GAAP financial measures. Please see pages A-15 and A-16 for information about our reasons for providing these alternative financial measures and the limitations on their use.
1 
Represents the percentage increase of Adjusted EBITDA of $2,415 million for the first three quarters of 2017 over Adjusted EBITDA of $1,458 million for the first three quarters of 2016.
2 
Represents the percentage increase of Adjusted EBITDA of $2,415 million for the first three quarters of 2017 over Combined Adjusted EBITDA of $2,231 million for the first three quarters of 2016.


A-12

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

 
Range
 
 
 
Estimated
Fourth Quarter 2017
 
Adjusted
Fourth Quarter 2016 2**
Net income 1
$
358

 
$
367

 
 
Interest expense
74

 
74

 
 
Tax provision
178

 
184

 
 
Depreciation and amortization
70

 
70

 
 
Depreciation classified in reimbursed costs
32

 
32

 
 
Interest expense from unconsolidated joint ventures
4

 
4

 
 
Depreciation and amortization from unconsolidated joint ventures
9

 
9

 
 
EBITDA **
725

 
740

 
 
 
 
 
 
 
 
Share-based compensation (including share-based compensation reimbursed by third-party owners)
37

 
37

 
 
Adjusted EBITDA **
$
762

 
$
777

 
$
756

 
 
 
 
 
 
Increase over 2016 Adjusted EBITDA**
1
%
 
3
%
 
 

** Denotes non-GAAP financial measures. See pages A-15 and A-16 for information about our reasons for providing these alternative financial measures and the limitations on their use.
1 
Estimated 2017 net income excludes merger-related costs and charges, which the company cannot accurately forecast, but expects will be significant on a full-year basis.
2 
See page A-12 for a reconciliation of Adjusted EBITDA.



A-13


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

 
Range
 
 
 
Estimated
Fiscal Year 2017
 
Combined
Fiscal Year 2016 2 **
Net income 1
$
1,602

 
$
1,611

 
 
Interest expense
290

 
290

 
 
Tax provision
691

 
697

 
 
Depreciation and amortization
288

 
288

 
 
Depreciation classified in reimbursed costs
125

 
125

 
 
Interest expense from unconsolidated joint ventures
10

 
10

 
 
Depreciation and amortization from unconsolidated joint ventures
40

 
40

 
 
EBITDA **
3,046


3,061



 
 
 
 
 
 
Gain on asset dispositions and impairments, net
(24
)
 
(24
)
 
 
Share-based compensation (including share-based compensation reimbursed by third-party owners)
155

 
155

 
 
Adjusted EBITDA **
$
3,177


$
3,192


$
2,987

 
 
 
 
 
 
Increase over 2016 Combined Adjusted EBITDA **
6
%
 
7
%
 
 

** Denotes non-GAAP financial measures. See pages A-15 and A-16 for information about our reasons for providing these alternative financial measures and the limitations on their use.
1 
Estimated 2017 net income excludes merger-related costs and charges, which the company cannot accurately forecast, but expects will be significant on a full-year basis.
2 
See page A-12 for a reconciliation of Combined Adjusted EBITDA.













A-14


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.

Adjusted Measures That Exclude Merger-Related Adjustments. Management evaluates certain non-GAAP measures that exclude transaction and transition costs and purchase accounting adjustments associated with the Starwood merger because those non-GAAP measures allow for period-over period comparisons of our ongoing operations before the impact of these items. These non-GAAP measures, which are reconciled to the comparable GAAP measures on pages A-3 and A-4, include adjusted owned, leased, and other revenue, adjusted owned, leased, and other-direct expenses, adjusted depreciation, amortization, and other expenses, adjusted general, administrative, and other expenses, adjusted provision for income taxes, and as a result of the adjustments, adjusted total revenues, adjusted total expenses, adjusted operating income, adjusted income before taxes, adjusted net income, and adjusted EPS. Non-GAAP adjusted net income and its components and adjusted EPS are not, and should not be viewed as, substitutes for net income and EPS as reported under GAAP.

Combined Financial Information. The 2016 unaudited combined financial information presented on pages A-3, A-4, A-12, A-13, and A-14 gives effect to Marriott's acquisition of Starwood, and Starwood's sale of its timeshare business, as if these two transactions (the "Transactions") had occurred on January 1, 2015, and is 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 (the “Merger Date”), and makes the following assumptions: (1) removes merger-related costs and charges; (2) adjusts income taxes to reflect the Company's combined 2016 effective tax rate of 32.5%; (3) adjusts weighted-average shares outstanding to include shares issued to Starwood shareholders; and (4) adjusts debt to reflect borrowing on the Credit Facility and issuance of Series Q and R Notes on January 1, 2015.

Marriott presents the combined financial information for informational purposes only and the combined financial information is not necessarily indicative of what the combined company’s results of operations would actually have been had the Transactions been completed on the date indicated. In addition, the combined financial information does not purport to project the future operating results of the combined company.

Combined net income includes adjustments that are not prescribed by Article 11 of Regulation S-X. The following table presents a reconciliation of pro forma net income in accordance with Article 11 to combined net income presented on the previous pages.
 
2016
(in millions)
First Quarter
 
Second Quarter
 
Third Quarter
 
Year-to-Date Total
Pro forma net income under Article 11
$
291

 
$
209

 
$
179

 
$
679

Merger-related costs and charges
3

 
16

 
220

 
239

Income taxes 1
(4
)
 
17

 
(55
)
 
(42
)
Loss on cumulative translation adjustment
—

 
91

 
—

 
91

Combined net income
$
290

 
$
333

 
$
344

 
$
967


1 
Combined net income applies an effective income tax rate of 32.5%. For pro forma net income under Article 11, we applied the historical effective tax rates for Marriott and Starwood.
 
Earnings Before Interest Expense, Taxes, Depreciation and Amortization (“EBITDA”), Adjusted EBITDA, and Combined Adjusted EBITDA. EBITDA reflects net income, excluding the impact of interest expense, depreciation, amortization, and provision for income taxes. Our non-GAAP measure of Adjusted EBITDA further adjusts EBITDA to exclude the pre-tax transaction and transition costs associated with the Starwood merger, which we recorded in the “Merger-related costs and charges” caption of our Consolidated Statements of Income (our “Income Statements”), gains and losses on asset dispositions, and share-based compensation expense for all periods presented.

Our 2016 non-GAAP measure of Combined Adjusted EBITDA also includes Starwood pre-acquisition and other adjustments, which assume the Transactions had been completed on January 1, 2015. These adjustments reflect Starwood’s EBITDA, adjusted for merger-related costs and charges, net loss on asset dispositions, loss on cumulative translation adjustment, share-based compensation, and an assumed effective income tax rate for the combined company of 32.5% for the periods prior to the Merger Date.

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-15


and Combined Adjusted EBITDA also exclude depreciation and amortization expense which we report under “Depreciation, amortization, and other” as well as depreciation included under “Reimbursed costs” in our Income Statements, because companies utilize productive assets of different ages and use different methods of both acquiring and depreciating productive assets. These differences can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies. We also excluded share-based compensation expense in all periods presented in order to address considerable variability among companies in recording compensation expense because companies use share-based payment awards differently, both in the type and quantity of awards granted.

RevPAR. In addition to the foregoing non-GAAP financial measures, we present Revenue per 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 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-16