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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): May 8, 2018
 _______________________________________ 
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 March 31, 2018
Marriott International, Inc. (“Marriott”) today issued a press release reporting financial results for the quarter ended March 31, 2018.
A copy of Marriott’s press release and earnings conference call slides are attached as Exhibits 99.1 and 99.2, respectively, and incorporated by reference.

 
Item 9.01.
Financial Statements and Exhibits.

(d) Exhibits. The following exhibits are furnished with this report:
Exhibit 99.1
Exhibit 99.2

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: May 8, 2018
 
 
 
 
 
By: 
 
/s/ Bao Giang Val Bauduin
 
 
 
 
 
 
 
 
Bao Giang Val Bauduin
 
 
 
 
 
 
 
 
Controller and Chief Accounting Officer


3
Exhibit
Exhibit 99


https://cdn.kscope.io/da31b65fde43091d34d25487537fd5aa-marq42017pressrelease_image1.jpg    https://cdn.kscope.io/da31b65fde43091d34d25487537fd5aa-marq42017pressrelease_image2.jpg
 
NEWS

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

MARRIOTT INTERNATIONAL REPORTS FIRST QUARTER 2018 RESULTS

HIGHLIGHTS

•
First quarter reported diluted EPS totaled $1.09, a 15 percent increase from prior year results. First quarter adjusted diluted EPS totaled $1.34, a 40 percent increase over first quarter 2017 adjusted results. Adjusted results exclude merger-related adjustments, cost reimbursement revenue and reimbursed expenses. Adjusted results for the first quarter of 2018 also exclude adjustments to the provision for income taxes and the Avendra gain;

•
First quarter 2018 comparable systemwide constant dollar RevPAR rose 3.6 percent worldwide, 7.5 percent outside North America and 2.0 percent in North America;

•
The company added nearly 15,000 rooms during the first quarter, including roughly 1,600 rooms converted from competitor brands and approximately 5,800 rooms in international markets;

•
At quarter-end, Marriott’s worldwide development pipeline increased to more than 2,700 hotels and nearly 465,000 rooms, including roughly 34,000 rooms approved, but not yet subject to signed contracts;

•
First quarter reported net income totaled $398 million, a 7 percent increase from prior year results. First quarter adjusted net income totaled $487 million, a 30 percent increase over prior year adjusted results;

•
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) totaled $770 million in the quarter, an 8 percent increase over first quarter 2017 adjusted EBITDA;

•
Marriott repurchased 5.6 million shares of the company’s common stock for $782 million during the first quarter. Year-to-date through May 8, the company has repurchased 7.9 million shares for $1.1 billion.

BETHESDA, MD - May 8, 2018 - Marriott International, Inc. (NASDAQ: MAR) today reported first quarter 2018 results.



1

Arne M. Sorenson, president and chief executive officer of Marriott International, said,
“Worldwide constant dollar RevPAR increased 3.6 percent, exceeding the high end of our expectations for the first quarter and reflecting solid economic growth around the world. Given improving demand fundamentals, we have increased our expectations for full year 2018 worldwide constant dollar RevPAR growth to 3 to 4 percent, a 1.5 percentage point increase over the mid-point of our prior guidance.

“Our development pipeline reached a new record of nearly 465,000 rooms and we remain on track to achieve worldwide room additions of 5.5 to 6 percent, net of deletions, for full year 2018. In the first quarter, we signed contracts for nearly 20,000 rooms, with nearly half of those rooms in the luxury and upper upscale tiers. In fact, according to STR, the number of luxury and upper-upscale rooms in our pipeline at the end of the first quarter exceeded that of our next three global competitors combined.

“The integration of Starwood is going well. Last month, we announced that our loyalty programs will be unified in August 2018, with all of our properties appearing on both Marriott and Starwood websites and apps at that time. Our members are excited about the enhanced benefits that will be offered under the unified loyalty programs.

“We remain focused on delivering outstanding profit growth, while maximizing shareholder returns. Year-to-date through May 8, we have already returned $1.2 billion to shareholders through dividends and share repurchases and believe we could return at least $3.0 billion in 2018.”

First Quarter 2018 Results
In the 2018 first quarter, the company adopted Accounting Standards Update 2014-09. Please see the “Accounting Standards Update” section of this release for more information.

Marriott reported net income totaled $398 million in the 2018 first quarter, a 7 percent increase from 2017 first quarter net income of $371 million. Reported diluted earnings per share (EPS) was $1.09 in the quarter, a 15 percent increase from diluted EPS of $0.95 in the year-ago quarter.

First quarter 2018 adjusted net income totaled $487 million, a 30 percent increase over 2017 first quarter adjusted net income of $375 million.  Adjusted net income excludes merger-related adjustments, cost reimbursement revenue, and reimbursed expenses.  Adjusted net income for the first quarter of 2018 also excludes a net tax charge resulting from the U.S. Tax Cuts and Jobs Act of 2017 (Tax Act), which the company first recorded in the fourth quarter of 2017, and an increase to the gain on the sale of Avendra,

2

which the company also recognized in the fourth quarter of 2017.  Adjusted diluted EPS in the first quarter totaled $1.34, a 40 percent increase from adjusted diluted EPS of $0.96 in the year-ago quarter.  See page A-2 for the calculation of adjusted results.

Base management and franchise fees totaled $690 million in the 2018 first quarter, an 11 percent increase over base management and franchise fees of $619 million in the year-ago quarter. The year-over-year increase in these fees is primarily attributable to higher RevPAR, unit growth, and higher credit card branding fees.

First quarter 2018 worldwide incentive management fees increased to $155 million, an 11 percent increase compared to incentive management fees of $140 million in the year-ago quarter. The year-over-year increase was largely due to unit growth, higher net house profit at properties in the Asia Pacific region and favorable foreign exchange impact.

Contract investment amortization totaled $18 million in the 2018 first quarter, compared to $11 million in the year-ago quarter. The year-over-year increase largely reflects contract write-offs related to two terminated contracts.
 
Owned, leased, and other revenue, net of direct expenses, totaled $70 million in the 2018 first quarter, compared to $72 million in the year-ago quarter. The year-over-year decrease largely reflects the negative impact from hotels sold during or after the first quarter of 2017, including in the first quarter of 2018, partially offset by higher termination fees.

General, administrative, and other expenses for the 2018 first quarter totaled $247 million, compared to $212 million in the year-ago quarter. The year-over-year $35 million increase reflects the company’s incremental retirement contribution of up to $1,000 for each eligible participating associate in the U.S.

Gains and other income, net, totaled $59 million in the 2018 first quarter, largely reflecting the $53 million gain associated with the sale of two hotels in Buenos Aires.

Interest expense, net, totaled $70 million in the first quarter compared to $63 million in the year-ago quarter. The increase was largely due to higher interest rates and debt balances, partially offset by the maturity of Series I Senior Notes.


3

The provision for income taxes totaled $104 million in the first quarter, a 20.7 percent effective tax rate, compared to $123 million in the year-ago quarter, a 24.9 percent effective tax rate.

For the first quarter, adjusted EBITDA totaled $770 million, an 8 percent increase over first quarter 2017 adjusted EBITDA of $716 million. Compared to the prior year, adjusted EBITDA for the first quarter of 2018 reflects a $20 million negative impact from sold hotels. See page A-8 for the adjusted EBITDA calculations.

Selected Performance Information
The company added 100 new properties (14,905 rooms) to its worldwide lodging portfolio during the 2018 first quarter, including the Marriott Hotel Mena House in Cairo, the Moxy Tbilisi, and the Renaissance Bali Uluwatu Resort & Spa. Twenty-nine properties (6,351 rooms) exited the system during the quarter. At quarter-end, Marriott’s lodging system encompassed 6,591 properties and timeshare resorts with more than 1,266,000 rooms.

At quarter-end, the company’s worldwide development pipeline totaled 2,722 properties with nearly 465,000 rooms, including 1,148 properties with approximately 209,000 rooms under construction and 174 properties with roughly 34,000 rooms approved for development, but not yet subject to signed contracts.

In the 2018 first quarter, worldwide comparable systemwide constant dollar RevPAR increased 3.6 percent (a 5.5 percent increase using actual dollars). North American comparable systemwide constant dollar RevPAR increased 2.0 percent (a 2.3 percent increase using actual dollars), and international comparable systemwide constant dollar RevPAR increased 7.5 percent (a 14.1 percent increase using actual dollars) for the same period.

Worldwide comparable company-operated house profit margins increased 70 basis points in the first 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 160 basis points, while North American comparable company-operated house profit margins declined 10 basis points in the first quarter.

Balance Sheet
At quarter-end, Marriott’s total debt was $8,846 million and cash balances totaled $701 million, compared to $8,238 million in debt and $383 million of cash at year-end 2017.

4


In April 2018, the company issued $450 million of Series X Senior Notes due in 2028 with a 4.0 percent interest rate coupon. The company expects to use the net proceeds for general corporate purposes.

Marriott Common Stock
Weighted average fully diluted shares outstanding used to calculate both reported and adjusted diluted EPS totaled 363.3 million in the 2018 first quarter, compared to 390.0 million shares in the year-ago quarter.

The company repurchased 5.6 million shares of common stock in the 2018 first quarter for $782 million at an average price of $139.20 per share. Year-to-date through May 8, the company has repurchased 7.9 million shares for $1.1 billion at an average price of $137.95 per share.

Accounting Standards Update
In the 2018 first quarter, the company adopted Accounting Standards Update 2014-09 (the new revenue standard), which changes the GAAP reporting for revenue and expense recognition for franchise application and relicensing fees, contract investment costs, the quarterly timing of incentive fee recognition, and centralized programs and services, among other items. While the new revenue standard results in changes to the reporting of certain revenue and expense items, Marriott’s cash flow and business fundamentals will not be impacted. A discussion of revenue recognition changes can be found in the 2017 Form 10-K the company filed on February 15, 2018, which is available on Marriott’s Investor Relations website at http://www.marriott.com/investor.

The company has elected to use the full retrospective method in the adoption of the new revenue standard. As such, the company’s financial statements in SEC filings will show prior year quarterly and full year results as if the new revenue standard had been adopted on January 1, 2016. The company anticipates providing 2017 quarterly and full year retrospective consolidated statements of income on a Form 8-K, which the company expects to file with the SEC in the second quarter of 2018.

OUTLOOK
The following outlook for second quarter and full year 2018 does not include cost reimbursement revenue, reimbursed expenses, or merger-related costs and charges, which the company cannot precisely forecast. Full year 2018 outlook excludes the net tax charge and the increase in the Avendra gain, which were reported in the 2018 first quarter.

5


To assist investors in evaluating the revenue and adjusted EBITDA guidance for second quarter and full year 2018 in this section, the following table shows estimates for the components of, and total, gross fee revenues and adjusted EBITDA for second quarter and full year 2017 recast to reflect the full retrospective application of the new revenue standard, as if adopted as of January 1, 2016.
 
Second Quarter 2017
Full Year 2017
Base management fees
$285 million
$1,102 million
Franchise fees
$408 million
$1,586 million
Incentive management fees
$155 million
$607 million
Gross Fee Revenues
$848 million
$3,295 million
Adjusted EBITDA
$820 million
$3,131 million

For the 2018 second quarter, Marriott expects comparable systemwide RevPAR on a constant dollar basis in North America will increase 3 to 4 percent. The company’s guidance for second quarter RevPAR growth in North America reflects the favorable shift of the Easter holiday. The company expects second quarter comparable systemwide RevPAR on a constant dollar basis will increase 5 to 6 percent outside North America and 3 to 4 percent worldwide.

The company assumes second quarter 2018 gross fee revenues will total $935 million to $945 million, a 10 to 11 percent increase over second quarter 2017 gross fee revenues of $848 million.
   
Marriott expects second quarter 2018 owned, leased, and other revenue, net of direct expenses, could total approximately $80 million. Compared to the year-ago quarter, this estimate reflects the $14 million negative impact from hotels sold during or after the first quarter of 2017, including in the first quarter of 2018, but does not reflect additional asset sales that may occur in the quarter.

The company assumes second quarter 2018 general, administrative, and other expenses could total approximately $250 million. This estimate assumes a $25 million expense for the company’s incremental retirement contribution of up to $1,000 for each eligible participating associate in the U.S.

Marriott expects second quarter 2018 adjusted EBITDA could total $880 million to $890 million, a 7 to 9 percent increase over second quarter 2017 adjusted EBITDA of $820 million. This estimate reflects the roughly $11 million negative impact of hotels sold in 2017 and to date in 2018, but does not reflect additional asset sales that may occur in the second quarter of 2018. See page A-9 for the adjusted EBITDA calculation.

6


For the full year 2018, Marriott expects comparable systemwide RevPAR on a constant dollar basis will increase 2 to 3 percent in North America, 5 to 6 percent outside North America, and 3 to 4 percent worldwide.
  
Marriott anticipates room additions, net of deletions, of 5.5 to 6 percent for full year 2018.

The company assumes full year 2018 gross fee revenues will total $3,650 million to $3,690 million, an 11 to 12 percent increase over 2017 gross fee revenues of $3,295 million. Full year 2018 estimated gross fee revenues include $360 million to $380 million of credit card branding fees, compared to $242 million for full year 2017. Compared to the estimate the company provided on February 14, this estimate of gross fee revenues reflects stronger expected RevPAR growth, particularly in the Asia Pacific region, as well as additional favorable foreign exchange impact. The company anticipates full year 2018 incentive management fees will increase roughly 10 percent over 2017 full year incentive fees of $607 million.

Marriott expects full year 2018 owned, leased, and other revenue, net of direct expenses, could total approximately $300 million. Compared to 2017 results previously reported, this estimate reflects the $55 million negative impact from hotels sold in 2017 and to date in 2018, but does not reflect additional asset sales that may occur in 2018. Compared to the owned, leased, and other revenue, net of direct expenses, estimate the company provided on February 14, this estimate reflects the higher than expected termination fees in the first quarter.

The company assumes full year 2018 general, administrative, and other expenses could total $940 million to $950 million. This estimate assumes a $70 million expense for the company’s incremental retirement contribution of up to $1,000 for each eligible participating associate in the U.S. This expense will not recur in 2019. Compared to the estimate the company provided on February 14, this general, administrative, and other expenses estimate reflects additional unfavorable foreign exchange impact.

Marriott expects full year 2018 gains and other income could total $65 million to $70 million. Compared to the estimate the company provided on February 14, this estimate largely reflects a higher than expected gain on the sale of the two hotels in Buenos Aires and a gain from the sale of an interest in a joint venture.

Marriott expects full year 2018 adjusted EBITDA could total $3,445 million to $3,500 million, a 10 to 12 percent increase over 2017 adjusted EBITDA of $3,131 million. This estimate reflects the roughly $45

7

million negative impact of hotels sold in 2017 and to date in 2018, but does not reflect additional asset sales that may occur in 2018. See page A-10 for the adjusted EBITDA calculation.

 
Second Quarter 2018 1
Full Year 2018 1
Gross fee revenues
$935 million to $945 million
$3,650 million to $3,690 million
Contract investment amortization
Approx. $15 million
Approx. $60 million
Owned, leased, and other revenue, net of direct expenses
Approx. $80 million
Approx. $300 million
Depreciation, amortization, and other expenses
Approx. $55 million
Approx. $225 million
General, administrative, and other expenses
Approx. $250 million
$940 million to $950 million
Operating income
$695 million to $705 million
$2,715 million to $2,765 million
Gains and other income
Approx. $10 million
$65 million to $70 million
Net interest expense
Approx. $80 million
Approx. $305 million
Equity in earnings (losses)
Approx. $10 million
Approx. $40 million
Earnings per share2
$1.34 to $1.36
$5.43 to $5.55
Tax rate2
 
23 percent
1 
The outlook provided in this table does not include merger-related costs and charges, cost reimbursement revenue or reimbursed expenses. Full year 2018 outlook excludes the net tax charge resulting from the Tax Act and the increase in the Avendra gain, which were reported in the 2018 first quarter.
2 
Guidance for Full Year 2018 reflects the impact of employee stock-based compensation excess tax benefits. 2018 estimated EPS assumes a $0.12 favorable impact and the company’s tax rate assumes a $41 million favorable impact from these benefits.

The company expects investment spending in 2018 will total approximately $600 million to $700 million, including approximately $225 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, at least $3.0 billion could be returned to shareholders through share repurchases and dividends in 2018.

Marriott International, Inc. (NASDAQ: MAR) will conduct its quarterly earnings review for the investment community and news media on Wednesday, May 9, 2018 at 10:00 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 on “Events & Presentations” and click on the quarterly conference call link. Slides that will be discussed on the call will be available in pdf format on the Events & Presentations page. A replay will be available at that same website until May 9, 2019.


8

The telephone dial-in number for the conference call is 706-679-3455 and the conference ID is 1786718. A telephone replay of the conference call will be available from 1:00 p.m. ET, Wednesday, May 9, 2018 until 8:00 p.m. ET, Wednesday, May 16, 2018. To access the replay, call 404-537-3406. The conference ID for the recording is 1786718.
Note on forward-looking statements: This press release and accompanying schedules contain “forward-looking statements” within the meaning of federal securities laws, including our RevPAR, profit margin and earnings outlook and assumptions; the number of lodging properties we expect to add to or remove from our system in the future; the timeline for the unification and combination of our loyalty programs; our expectations regarding the estimates of the impact of new accounting standards and the new tax law; our expectations about investment spending and tax rate; 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; the extent to which we can continue to successfully integrate Starwood and realize the anticipated benefits of combining Starwood and Marriott; changes to our provisional estimates of the impact of the U.S. Tax Cuts and Jobs Acts of 2017; and changes to our estimates of the impact of the new revenue recognition accounting standard. 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 May 8, 2018. 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 6,500 properties in 127 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


9

MARRIOTT INTERNATIONAL, INC.
PRESS RELEASE SCHEDULES
TABLE OF CONTENTS
QUARTER 1, 2018
 
 
Consolidated Statements of Income - As Reported
Non-GAAP Financial Measures
Total Lodging Products
Key Lodging Statistics
Adjusted EBITDA
Adjusted EBITDA Forecast - Second Quarter 2018
Adjusted EBITDA Forecast - Full Year 2018
Explanation of Non-GAAP Financial and Performance Measures



MARRIOTT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME - AS REPORTED
FIRST QUARTER 2018 AND 2017
(in millions except per share amounts, unaudited)
 
 
 
 
 
 
 
As Reported
 
As Reported 10
 
Percent
 
Three Months Ended
 
Three Months Ended
 
Better/(Worse)
 
March 31, 2018
 
March 31, 2017
 
Reported 2018 vs. 2017
REVENUES
 
 
 
 
 
Base management fees
$
273

 
$
264

 
3

Franchise fees 1
417

 
355

 
17

Incentive management fees
155

 
140

 
11

   Gross Fee Revenues
845

 
759

 
11

Contract investment amortization 2
(18
)
 
(11
)
 
(64
)
   Net Fee Revenues
827

 
748

 
11

Owned, leased, and other revenue 3
406

 
428

 
(5
)
Cost reimbursement revenue 4
3,773

 
3,736

 
1

   Total Revenues
5,006

 
4,912

 
2

 
 
 
 
 
 
OPERATING COSTS AND EXPENSES
 
 
 
 
 
Owned, leased, and other - direct 5
336

 
356

 
6

Reimbursed expenses 4
3,835

 
3,696

 
(4
)
Depreciation, amortization, and other 6
54

 
51

 
(6
)
Merger-related costs and charges
34

 
51

 
33

General, administrative, and other 7
247

 
212

 
(17
)
   Total Expenses
4,506

 
4,366

 
(3
)
 
 
 
 
 
 
OPERATING INCOME
500

 
546

 
(8
)
 
 
 
 
 
 
Gains and other income, net 8
59

 
—

 
*

Interest expense
(75
)
 
(70
)
 
(7
)
Interest income
5

 
7

 
(29
)
Equity in earnings 9
13

 
11

 
18

INCOME BEFORE INCOME TAXES
502

 
494

 
2

Provision for income taxes
(104
)
 
(123
)
 
15

NET INCOME
$
398

 
$
371

 
7

 
 
 
 
 
 
EARNINGS PER SHARE
 
 
 
 
 
   Earnings per share - basic
$
1.11

 
$
0.96

 
16

   Earnings per share - diluted
$
1.09

 
$
0.95

 
15

 
 
 
 
 
 
Basic Shares
358.4

 
384.9

 
 
Diluted Shares
363.3

 
390.0

 
 
* Calculated percentage is not meaningful.

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.
2 
Contract investment amortization includes amortization of payments made to obtain contracts with our owner and franchisee customers, and any related impairments, accelerations, or write-offs.
3 
Owned, leased, and other revenue includes revenue from the properties we own or lease, termination fees, and other revenue.
4 
Cost reimbursement revenue includes reimbursements from properties for property-level and centralized programs and services that we operate for the benefit of our hotel owners. Reimbursed expenses include costs incurred by Marriott for certain property-level operating expenses and centralized programs and services.
5 
Owned, leased, and other - direct expenses include operating expenses related to our owned or leased hotels, including lease payments and pre-opening expenses.
6 
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.
7 
General, administrative, and other expenses include our corporate and business segments overhead costs and general expenses.
8 
Gains and other income, net includes gains and losses on the sale of real estate, the sale or impairment of joint ventures and investments, and results from other equity investments.
9 
Equity in earnings include our equity in earnings or losses of unconsolidated equity method investments.
10 
On January 1, 2018, we adopted ASU 2014-09. This column reflects our recast 2017 results under the new accounting standard.

A-1

MARRIOTT INTERNATIONAL, INC.
NON-GAAP FINANCIAL MEASURES
($ in millions except per share amounts)


The following table presents our reconciliations of Adjusted operating income, Adjusted operating income margin, Adjusted net income, and Adjusted diluted EPS, to the most directly comparable GAAP measure. Adjusted total revenues is used in the determination of Adjusted operating income margin.

 
Three Months Ended
 
March 31, 2018
 
March 31, 2017 1
 
Percent Better/(Worse)
Total revenues, as reported
$
5,006

 
$
4,912

 
 
Less: Cost reimbursement revenue
(3,773
)
 
(3,736
)
 
 
Adjusted total revenues**
1,233

 
1,176

 
 
 
 
 
 
 
 
Operating income, as reported
500

 
546

 
 
Less: Cost reimbursement revenue
(3,773
)
 
(3,736
)
 
 
Add: Reimbursed expenses
3,835

 
3,696

 
 
Add: Merger-related costs, charges, and other 2
34

 
48

 
 
Adjusted operating income **
596

 
554

 
8
%
 
 
 
 
 
 
Operating income margin
10
%
 
11
%
 
 
Adjusted operating income margin **
48
%
 
47
%
 

 
 
 
 
 
 
Net income, as reported
398

 
371

 
 
Less: Cost reimbursement revenue
(3,773
)
 
(3,736
)
 
 
Add: Reimbursed expenses
3,835

 
3,696

 
 
Add: Merger-related costs, charges, and other 2
34

 
48

 
 
Less: Gain on sale of Avendra
(5
)
 
—

 
 
Income tax effect of above adjustments
(24
)
 
(4
)
 
 
Add:  U.S. Tax Cuts and Jobs Act of 2017
22

 
—

 
 
Adjusted net income **
$
487

 
$
375

 
30
%
 
 
 
 
 
 
Diluted EPS, as reported
$
1.09

 
$
0.95

 
 
Adjusted Diluted EPS**
$
1.34

 
$
0.96

 
40
%

**
Denotes non-GAAP financial measures. Please see pages A-11 and A-12 for information about our reasons for providing these alternative financial measures and the limitations on their use.
1 
On January 1, 2018, we adopted ASU 2014-09. This column reflects our recast 2017 results under the new accounting standard.  
2 
Merger-related costs, charges, and other includes Starwood merger costs presented in the “Merger-related costs and charges” caption of our Income Statement and purchase accounting revisions.  

A-2


MARRIOTT INTERNATIONAL, INC.
TOTAL LODGING PRODUCTS
As of March 31, 2018

 
North America
Total International
Total Worldwide
 
Units
Rooms
Units
Rooms
Units
Rooms
Managed
820

249,049

1,076

286,868

1,896

535,917

Marriott Hotels
127

67,939

166

48,287

293

116,226

Sheraton
28

23,646

182

62,663

210

86,309

Sheraton Residences
—

—

2

262

2

262

Courtyard
240

38,354

89

19,044

329

57,398

Westin
46

25,127

67

21,508

113

46,635

Westin Residences
1

65

1

264

2

329

The Ritz-Carlton
38

10,958

56

15,166

94

26,124

The Ritz-Carlton Residences
35

4,554

10

925

45

5,479

The Ritz-Carlton Serviced Apartments
—

—

5

697

5

697

JW Marriott
16

10,059

48

19,125

64

29,184

Renaissance
27

11,773

52

16,653

79

28,426

Le Méridien
4

720

73

20,102

77

20,822

Residence Inn
108

16,519

6

643

114

17,162

Four Points
1

134

62

15,201

63

15,335

W Hotels
26

7,950

23

5,571

49

13,521

W Residences
9

1,078

4

471

13

1,549

The Luxury Collection
6

2,294

50

8,785

56

11,079

St. Regis
10

1,990

31

7,043

41

9,033

St. Regis Residences
7

585

6

516

13

1,101

Aloft
1

330

33

7,842

34

8,172

Gaylord Hotels
5

8,108

—

—

5

8,108

Delta Hotels
25

6,764

—

—

25

6,764

SpringHill Suites
30

4,854

—

—

30

4,854

Protea Hotels
—

—

37

4,356

37

4,356

Marriott Executive Apartments
—

—

29

4,270

29

4,270

Fairfield Inn & Suites
6

1,432

19

2,715

25

4,147

Autograph Collection
4

1,204

6

1,456

10

2,660

TownePlace Suites
16

1,840

—

—

16

1,840

EDITION
2

567

2

699

4

1,266

EDITION Residences
1

25

—

—

1

25

Element
1

180

5

1,085

6

1,265

Moxy
—

—

4

599

4

599

Tribute Portfolio
—

—

3

559

3

559

Bulgari
—

—

4

356

4

356

Bulgari Residences
—

—

1

5

1

5




A-3

MARRIOTT INTERNATIONAL, INC.
TOTAL LODGING PRODUCTS
As of March 31, 2018

 
North America
Total International
Total Worldwide
 
Units
Rooms
Units
Rooms
Units
Rooms
Franchised
3,942

572,417

466

100,217

4,408

672,634

Courtyard
743

99,006

62

11,600

805

110,606

Fairfield Inn & Suites
904

82,628

6

1,157

910

83,785

Marriott Hotels
215

66,927

50

13,838

265

80,765

Residence Inn
647

76,728

4

347

651

77,075

Sheraton
163

48,313

62

17,768

225

66,081

SpringHill Suites
363

41,589

—

—

363

41,589

Westin
81

26,544

24

7,616

105

34,160

Westin Residences
2

201

—

—

2

201

TownePlace Suites
329

33,128

—

—

329

33,128

Four Points
143

21,877

47

7,320

190

29,197

Autograph Collection
80

17,358

45

10,837

125

28,195

Renaissance
58

16,594

25

6,963

83

23,557

Aloft
98

14,496

13

2,037

111

16,533

The Luxury Collection
11

2,683

37

6,953

48

9,636

The Luxury Collection Residences
1

91

1

64

2

155

Le Méridien
16

3,417

15

4,022

31

7,439

Delta Hotels
26

5,984

1

339

27

6,323

JW Marriott
10

4,425

6

1,624

16

6,049

Tribute Portfolio
16

4,654

9

975

25

5,629

Moxy
6

1,347

16

3,411

22

4,758

Element
28

3,943

2

293

30

4,236

Protea Hotels
—

—

40

2,968

40

2,968

The Ritz-Carlton
1

429

—

—

1

429

The Ritz-Carlton Residences
1

55

—

—

1

55

Bulgari
—

—

1

85

1

85

Owned/Leased
30

8,241

35

9,107

65

17,348

Courtyard
19

2,814

3

645

22

3,459

Sheraton
2

1,299

5

2,126

7

3,425

Marriott Hotels
3

1,664

5

1,625

8

3,289

Protea Hotels
—

—

9

1,415

9

1,415

Westin
1

1,073

1

246

2

1,319

W Hotels
1

509

2

665

3

1,174

Renaissance
1

317

3

749

4

1,066

The Ritz-Carlton
—

—

2

553

2

553

JW Marriott
—

—

1

496

1

496

St. Regis
1

238

1

160

2

398

Residence Inn
1

192

1

140

2

332

The Luxury Collection
—

—

2

287

2

287

Tribute Portfolio
1

135

—

—

1

135

Unconsolidated Joint Ventures
37

6,271

96

11,772

133

18,043

AC Hotels by Marriott
37

6,271

90

11,353

127

17,624

Autograph Collection
—

—

6

419

6

419

Timeshare*
70

18,313

19

3,873

89

22,186

Marriott Vacations Worldwide
51

11,249

15

2,406

66

13,655

Vistana
19

7,064

4

1,467

23

8,531

Grand Total
4,899

854,291

1,692

411,837

6,591

1,266,128


* 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-4

MARRIOTT INTERNATIONAL, INC.
TOTAL LODGING PRODUCTS
As of March 31, 2018
 
North America
Total International
Total Worldwide
Total Systemwide
Units
Rooms
Units
Rooms
Units
Rooms
Luxury
176

48,490

293

70,246

469

118,736

JW Marriott
26

14,484

55

21,245

81

35,729

The Ritz-Carlton
39

11,387

58

15,719

97

27,106

The Ritz-Carlton Residences
36

4,609

10

925

46

5,534

The Ritz-Carlton Serviced Apartments
—

—

5

697

5

697

The Luxury Collection
17

4,977

89

16,025

106

21,002

The Luxury Collection Residences
1

91

1

64

2

155

W Hotels
27

8,459

25

6,236

52

14,695

W Residences
9

1,078

4

471

13

1,549

St. Regis
11

2,228

32

7,203

43

9,431

St. Regis Residences
7

585

6

516

13

1,101

EDITION
2

567

2

699

4

1,266

EDITION Residences
1

25

—

—

1

25

Bulgari
—

—

5

441

5

441

Bulgari Residences
—

—

1

5

1

5

Full Service
932

339,826

832

243,547

1,764

583,373

Marriott Hotels
345

136,530

221

63,750

566

200,280

Sheraton
193

73,258

249

82,557

442

155,815

Sheraton Residences
—

—

2

262

2

262

Westin
128

52,744

92

29,370

220

82,114

Westin Residences
3

266

1

264

4

530

Renaissance
86

28,684

80

24,365

166

53,049

Autograph Collection
84

18,562

57

12,712

141

31,274

Le Méridien
20

4,137

88

24,124

108

28,261

Delta Hotels
51

12,748

1

339

52

13,087

Gaylord Hotels
5

8,108

—

—

5

8,108

Marriott Executive Apartments
—

—

29

4,270

29

4,270

Tribute Portfolio
17

4,789

12

1,534

29

6,323

Limited Service
3,721

447,662

548

94,171

4,269

541,833

Courtyard
1,002

140,174

154

31,289

1,156

171,463

Residence Inn
756

93,439

11

1,130

767

94,569

Fairfield Inn & Suites
910

84,060

25

3,872

935

87,932

SpringHill Suites
393

46,443

—

—

393

46,443

Four Points
144

22,011

109

22,521

253

44,532

TownePlace Suites
345

34,968

—

—

345

34,968

Aloft
99

14,826

46

9,879

145

24,705

AC Hotels by Marriott
37

6,271

90

11,353

127

17,624

Protea Hotels
—

—

86

8,739

86

8,739

Element
29

4,123

7

1,378

36

5,501

Moxy
6

1,347

20

4,010

26

5,357

Timeshare*
70

18,313

19

3,873

89

22,186

Marriott Vacations Worldwide
51

11,249

15

2,406

66

13,655

Vistana
19

7,064

4

1,467

23

8,531

Grand Total
4,899

854,291

1,692

411,837

6,591

1,266,128

* 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-5

MARRIOTT INTERNATIONAL, INC.
KEY LODGING STATISTICS
In Constant $

Comparable Company-Operated North American Properties
 
 
Three Months Ended March 31, 2018 and March 31, 2017
 
 
REVPAR
 
Occupancy
 
Average Daily Rate
Brand
 
2018
 
vs. 2017
 
2018
 
vs. 2017
 
2018
 
vs. 2017
JW Marriott
 
$
191.86

 
0.3
 %
 
77.7
%
 
0.8
 %
pts.
 
$
246.91

 
-0.7
 %
The Ritz-Carlton
 
$
304.39

 
4.8
 %
 
75.7
%
 
1.3
 %
pts.
 
$
402.34

 
3.0
 %
W Hotels
 
$
236.66

 
5.3
 %
 
80.1
%
 
1.0
 %
pts.
 
$
295.61

 
3.9
 %
Composite North American Luxury 1
 
$
276.65

 
4.5
 %
 
78.3
%
 
1.0
 %
pts.
 
$
353.27

 
3.2
 %
Marriott Hotels
 
$
146.99

 
0.8
 %
 
73.6
%
 
0.3
 %
pts.
 
$
199.85

 
0.5
 %
Sheraton
 
$
128.97

 
0.3
 %
 
72.6
%
 
-1.7
 %
pts.
 
$
177.59

 
2.7
 %
Westin
 
$
147.42

 
0.8
 %
 
71.4
%
 
-0.1
 %
pts.
 
$
206.52

 
1.0
 %
Composite North American Upper Upscale 2
 
$
141.21

 
0.6
 %
 
72.7
%
 
-0.2
 %
pts.
 
$
194.29

 
0.9
 %
North American Full-Service 3
 
$
164.01

 
1.7
 %
 
73.6
%
 
0.0
 %
pts.
 
$
222.76

 
1.7
 %
Courtyard
 
$
97.29

 
-0.1
 %
 
69.1
%
 
0.0
 %
pts.
 
$
140.90

 
0.0
 %
Residence Inn
 
$
121.02

 
-0.4
 %
 
76.4
%
 
-0.4
 %
pts.
 
$
158.45

 
0.1
 %
Composite North American Limited-Service 4
 
$
103.68

 
0.5
 %
 
71.5
%
 
0.2
 %
pts.
 
$
144.91

 
0.2
 %
North American - All 5
 
$
145.00

 
1.4
 %
 
73.0
%
 
0.1
 %
pts.
 
$
198.70

 
1.3
 %

Comparable Systemwide North American Properties
 
 
Three Months Ended March 31, 2018 and March 31, 2017
 
 
REVPAR
 
Occupancy
 
Average Daily Rate
Brand
 
2018
 
vs. 2017
 
2018
 
vs. 2017
 
2018
 
vs. 2017
JW Marriott
 
$
190.01

 
0.6
%
 
77.4
%
 
0.0
 %
pts.
 
$
245.60

 
0.6
 %
The Ritz-Carlton
 
$
304.39

 
4.8
%
 
75.7
%
 
1.3
 %
pts.
 
$
402.34

 
3.0
 %
W Hotels
 
$
236.66

 
5.3
%
 
80.1
%
 
1.0
 %
pts.
 
$
295.61

 
3.9
 %
Composite North American Luxury 1
 
$
257.96

 
4.3
%
 
77.7
%
 
1.0
 %
pts.
 
$
331.95

 
3.0
 %
Marriott Hotels
 
$
125.14

 
0.6
%
 
69.6
%
 
-0.2
 %
pts.
 
$
179.69

 
0.9
 %
Sheraton
 
$
102.37

 
1.5
%
 
67.8
%
 
-0.3
 %
pts.
 
$
150.91

 
1.9
 %
Westin
 
$
146.22

 
0.6
%
 
72.0
%
 
-0.5
 %
pts.
 
$
203.06

 
1.4
 %
Composite North American Upper Upscale 2
 
$
125.37

 
1.0
%
 
70.0
%
 
-0.3
 %
pts.
 
$
179.11

 
1.4
 %
North American Full-Service 3
 
$
138.35

 
1.6
%
 
70.8
%
 
-0.1
 %
pts.
 
$
195.55

 
1.8
 %
Courtyard
 
$
94.12

 
0.9
%
 
68.9
%
 
0.7
 %
pts.
 
$
136.68

 
-0.1
 %
Residence Inn
 
$
109.92

 
2.0
%
 
76.0
%
 
1.1
 %
pts.
 
$
144.72

 
0.5
 %
Fairfield Inn & Suites
 
$
73.10

 
4.2
%
 
66.3
%
 
2.1
 %
pts.
 
$
110.19

 
0.9
 %
Composite North American Limited-Service 4
 
$
91.42

 
2.5
%
 
70.4
%
 
1.3
 %
pts.
 
$
129.90

 
0.6
 %
North American - All 5
 
$
111.82

 
2.0
%
 
70.5
%
 
0.7
 %
pts.
 
$
158.52

 
1.1
 %
1 
Includes JW Marriott, The Ritz-Carlton, W Hotels, The Luxury Collection, St. Regis, and EDITION.
2 
Includes Marriott Hotels, Sheraton, Westin, Renaissance, Autograph Collection, Delta Hotels, Gaylord Hotels, and Le Méridien. Systemwide also includes 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, Four Points, Aloft, Element and AC Hotels by Marriott. Systemwide also includes Moxy.
5 
Includes North American Full-Service and Composite North American Limited-Service.


A-6

MARRIOTT INTERNATIONAL, INC.
KEY LODGING STATISTICS
In Constant $

Comparable Company-Operated International Properties
 
 
Three Months Ended March 31, 2018 and March 31, 2017
 
 
REVPAR
 
Occupancy
 
Average Daily Rate
Region
 
2018
 
vs. 2017
 
2018
 
vs. 2017
 
2018
 
vs. 2017
Greater China
 
$
92.66

 
11.9
%
 
68.7
%
 
5.2
%
pts. 
 
$
134.82

 
3.4
 %
Rest of Asia Pacific
 
$
137.07

 
7.8
%
 
76.5
%
 
1.8
%
pts. 
 
$
179.25

 
5.4
 %
Asia Pacific
 
$
109.20

 
10.0
%
 
71.6
%
 
3.9
%
pts. 
 
$
152.49

 
3.9
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Caribbean & Latin America
 
$
160.09

 
10.6
%
 
68.4
%
 
2.9
%
pts. 
 
$
233.91

 
6.0
 %
Europe
 
$
121.72

 
4.1
%
 
65.8
%
 
1.2
%
pts. 
 
$
185.03

 
2.3
 %
Middle East & Africa
 
$
119.38

 
3.4
%
 
69.8
%
 
4.5
%
pts. 
 
$
170.91

 
-3.3
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
International - All 1
 
$
118.21

 
7.3
%
 
69.7
%
 
3.3
%
pts. 
 
$
169.69

 
2.2
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Worldwide 2
 
$
131.37

 
4.0
%
 
71.3
%
 
1.7
%
pts. 
 
$
184.28

 
1.5
 %

Comparable Systemwide International Properties
 
 
Three Months Ended March 31, 2018 and March 31, 2017
 
 
REVPAR
 
Occupancy
 
Average Daily Rate
Region
 
2018
 
vs. 2017
 
2018
 
vs. 2017
 
2018
 
vs. 2017
Greater China
 
$
92.17

 
11.5
%
 
68.1
%
 
5.2
%
pts. 
 
$
135.40

 
3.1
 %
Rest of Asia Pacific
 
$
133.07

 
8.8
%
 
75.6
%
 
1.7
%
pts. 
 
$
175.99

 
6.3
 %
Asia Pacific
 
$
110.34

 
10.0
%
 
71.4
%
 
3.6
%
pts. 
 
$
154.49

 
4.4
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Caribbean & Latin America
 
$
123.80

 
8.9
%
 
65.8
%
 
2.5
%
pts. 
 
$
188.15

 
4.8
 %
Europe
 
$
104.94

 
5.9
%
 
63.0
%
 
2.4
%
pts. 
 
$
166.60

 
1.8
 %
Middle East & Africa
 
$
114.24

 
3.2
%
 
69.0
%
 
3.8
%
pts. 
 
$
165.57

 
-2.4
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
International - All 1
 
$
110.90

 
7.5
%
 
67.9
%
 
3.2
%
pts. 
 
$
163.39

 
2.5
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Worldwide 2
 
$
111.55

 
3.6
%
 
69.8
%
 
1.4
%
pts. 
 
$
159.92

 
1.5
 %

1 
Includes Asia Pacific, Caribbean & Latin America, Europe, and Middle East & Africa.
2 
Includes North American - All and International - All.



A-7

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

 
Fiscal Year 2018
 
Fiscal Year
2017
 
First
Quarter
 
First
Quarter
Net income, as reported
$
398

 
$
371

Cost reimbursement revenue
(3,773
)
 
(3,736
)
Reimbursed expenses
3,835

 
3,696

Interest expense
75

 
70

Interest expense from unconsolidated joint ventures
2

 
1

Tax provision
104

 
123

Depreciation and amortization
54

 
51

Contract investment amortization
18

 
11

Depreciation classified in reimbursed expenses
33

 
32

Depreciation and amortization from unconsolidated joint ventures
10

 
11

Share-based compensation
38

 
35

Gain on asset dispositions
(58
)
 
—

Merger-related costs and charges
34

 
51

Adjusted EBITDA **
$
770

 
$
716

 
 
 
 
Increase over 2017 Adjusted EBITDA **
8
%
 
 

**
Denotes non-GAAP financial measures. Please see pages A-11 and A-12 for information about our reasons for providing these alternative financial measures and the limitations on their use.

A-8

MARRIOTT INTERNATIONAL, INC.
NON-GAAP FINANCIAL MEASURES
ADJUSTED EBITDA FORECAST
SECOND QUARTER 2018
($ in millions)

 
Range
 
 
 
Estimated
Second Quarter 2018
 
Second Quarter 2017 2**
Net income, excluding certain items 1
$
480

 
$
487

 
 
Interest expense
85

 
85

 
 
Interest expense from unconsolidated joint ventures
—

 
—

 
 
Tax provision
155

 
158

 
 
Depreciation and amortization
55

 
55

 
 
Contract investment amortization
15

 
15

 
 
Depreciation classified in reimbursed expenses
35

 
35

 
 
Depreciation and amortization from unconsolidated joint ventures
10

 
10

 
 
Share-based compensation
45

 
45

 
 
Adjusted EBITDA **
$
880

 
$
890

 
$
820

 
 
 
 
 
 
Increase over 2017 Adjusted EBITDA**
7
%
 
9
%
 
 

** Denotes non-GAAP financial measures. See pages A-11 and A-12 for information about our reasons for providing these alternative financial measures and the limitations on their use.

1 
Guidance excludes cost reimbursement revenue, reimbursed expenses, and merger-related costs and charges, which the company cannot accurately forecast and which may be significant, except for depreciation classified in reimbursed expenses, which is included in the caption “Depreciation classified in reimbursed expenses” above.
2 
We have not completed our recast of 2017 second quarter results under ASU 2014-09, but we estimate that the application of ASU 2014-09 will lower previously reported 2017 second quarter Adjusted EBITDA of $834 million by $14 million, resulting in estimated 2017 second quarter Adjusted EBITDA of $820 million.

A-9

MARRIOTT INTERNATIONAL, INC.
NON-GAAP FINANCIAL MEASURES
ADJUSTED EBITDA FORECAST
FULL YEAR 2018
($ in millions)

 
Range
 
 
 
Estimated
Full Year 2018
 
Full Year 2017 2**
Net income, excluding certain items 1
$
1,923

 
$
1,965

 
 
Interest expense
335

 
335

 
 
Interest expense from unconsolidated joint ventures
10

 
10

 
 
Tax provision
595

 
608

 
 
Depreciation and amortization
225

 
225

 
 
Contract investment amortization
60

 
60

 
 
Depreciation classified in reimbursed expenses
145

 
145

 
 
Depreciation and amortization from unconsolidated joint ventures
40

 
40

 
 
Share-based compensation
170

 
170

 
 
Gain on asset dispositions
(58
)
 
(58
)
 
 
Adjusted EBITDA **
$
3,445

 
$
3,500

 
$
3,131

 
 
 
 
 
 
Increase over 2017 Adjusted EBITDA**
10
%
 
12
%
 
 

** Denotes non-GAAP financial measures. See pages A-11 and A-12 for information about our reasons for providing these alternative financial measures and the limitations on their use.

1 
Guidance excludes cost reimbursement revenue, reimbursed expenses, and merger-related costs and charges, which the company cannot accurately forecast and which may be significant, except for depreciation classified in reimbursed expenses, which is included in the caption “Depreciation classified in reimbursed expenses” above.
2 
We have not completed our recast of 2017 full year results under ASU 2014-09, but we estimate that the application of ASU 2014-09 will lower previously reported 2017 full year Adjusted EBITDA of $3,223 million by $92 million, resulting in estimated 2017 full year Adjusted EBITDA of $3,131 million.






A-10

MARRIOTT INTERNATIONAL, INC.
EXPLANATION OF 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 Operating Income and Adjusted Operating Income Margin.  Adjusted operating income reflects revenues, excluding cost reimbursement revenue, and operating expenses, excluding reimbursed expenses and merger-related costs, charges, and other merger-related adjustments due to purchase accounting. Adjusted operating income margin reflects adjusted operating income divided by adjusted total revenues. We believe that these are meaningful metrics because they allow for period-over-period comparisons of our ongoing operations before these items and for the reasons further described below.

Adjusted Net Income and Adjusted Diluted EPS. Adjusted net income and Adjusted diluted EPS reflect our net income and diluted earnings per share excluding the impact of cost reimbursement revenue, reimbursed expenses, merger-related costs, charges, and other merger-related adjustments due to purchase accounting, the gain on the sale of our ownership interest in Avendra, and the income tax effect of these adjustments, as well as a state tax expense relating to our plan to remit a portion of the accumulated earnings of non-U.S. subsidiaries in the future and an adjustment to our provisional estimated federal and state Deemed Repatriation Transition Tax under the U.S. Tax Cuts and Jobs Act of 2017. We calculate the income tax effect of the adjustments using an estimated tax rate applicable to each adjustment. We believe that these measures are meaningful indicators of our performance because they allow for period-over-period comparisons of our ongoing operations before these items and for the reasons further described below.
 
Adjusted Earnings Before Interest Expense, Taxes, Depreciation and Amortization (“Adjusted EBITDA”). Adjusted EBITDA reflects net income excluding the impact of the following items: cost reimbursement revenue and reimbursed expenses, interest expense, depreciation (including depreciation classified in “Reimbursed expenses,” as discussed below), amortization, and provision for income taxes, pre-tax transaction and transition costs associated with the Starwood merger, gains and losses on asset dispositions, and share-based compensation expense for all periods presented.

In our presentations of Adjusted operating income and operating income margin, Adjusted net income, and Adjusted diluted EPS, we exclude transaction and transition costs associated with the Starwood merger, which we record in the “Merger-related costs and charges” caption of our Income Statements, and other merger-related adjustments due to purchase accounting, to allow for period-over period comparisons of our ongoing operations before the impact of these items. We exclude cost reimbursement revenue and reimbursed expenses, which relate to property-level and centralized programs and services that we operate for the benefit of our hotel owners. We do not operate these programs and services to generate a profit over the contract term, and accordingly, when we recover the costs that we incur for these programs and services from our hotel owners, we do not seek a mark-up. For property-level services, our owners typically reimburse us at the same time that we incur expenses. However, for centralized programs and services, our owners may reimburse us before or after we incur expenses, causing temporary timing differences between the costs we incur and the related reimbursement from hotel owners in our operating and net income. Over the long term, these programs and services are not designed to impact our economics, either positively or negatively. Because we do not retain any such profits or losses over time, we exclude the net impact when evaluating period-over-period changes in our operating results.

We believe that Adjusted EBITDA is a meaningful indicator of our operating performance because it permits period-over-period comparisons of our ongoing operations before these items and facilitates our comparison of results before these items with results from other lodging companies. We use Adjusted EBITDA to evaluate companies because it excludes 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 also excludes depreciation and amortization expense which we report under “Depreciation, amortization, and other” as well as depreciation classified in “Reimbursed expenses” and “Contract investment amortization” in our Consolidated Statements of Income (our “Income Statements”), because companies utilize productive assets of different ages and use different methods of both acquiring and depreciating productive assets. Depreciation

A-11

MARRIOTT INTERNATIONAL, INC.
EXPLANATION OF NON-GAAP FINANCIAL AND PERFORMANCE MEASURES


classified in “Reimbursed expenses” reflects depreciation of Marriott-owned assets, for which we receive cash from owners to reimburse the company for its investments made for the benefit of the system. These differences can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies. We exclude share-based compensation expense in all periods presented to address the 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-12
marq12018slideshighres
MARRIOTT INTERNATIONAL FIRST QUARTER 2018 EARNINGS CONFERENCE CALL

 
FORWARD-LOOKING STATEMENTS NOTE ON FORWARD-LOOKING STATEMENTS: This document contains “forward-looking statements” within the meaning of federal securities laws, including our RevPAR, profit margin and earnings outlook and assumptions; the number of lodging properties we expect to add to or remove from our system in the future; the timeline for the unification and combination of our loyalty programs; our expectations regarding the estimates of the impact of new accounting standards and the new tax law; our expectations about investment spending and tax rate; 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 document 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; the extent to which we can continue to successfully integrate Starwood and realize the anticipated benefits of combining Starwood and Marriott; changes to our provisional estimates of the impact of the U.S. Tax Cuts and Jobs Acts of 2017; and changes to our estimates of the impact of the new revenue recognition accounting standard. 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 May 8, 2018. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. 2

 
REVPAR RESULTS COMPARABLE SYSTEMWIDE PROPERTIES 2018 First Quarter First Quarter Outlook Results as of February 14, 2018 Greater China 11.5% Rest of Asia Pacific 8.8% Asia Pacific 10.0% Mid-single digit rate Caribbean & Latin America 8.9% Mid-single digit rate Europe 5.9% Mid-single digit rate Middle East & Africa 3.2% Flat International 7.5% 3% to 5% North America 2.0% Flat to up 2% Worldwide 3.6% 1% to 3% 3

 
NORTH AMERICA REVPAR RESULTS COMPARABLE SYSTEMWIDE PROPERTIES NORTH AMERICA 2018 First Quarter North America up 2.7% after adjusting for Easter timing, 2017 Luxury 4.3% Inauguration, and hurricane impact. Upper Upscale 1.0% Group constrained by Easter timing and 2017 Inauguration. Q1 exceeded expectations due to Limited-Service 2.5% stronger group attendance and stronger limited-service hotel Total North America 2.0% demand. Upper upscale and luxury group revenue pace up roughly 4% for second quarter and 1 to 2% for second half of 2018. Segmentation1: Transient growth reflects improved Group ~ flat special corporate pricing, reduced Legacy-Starwood discounting, Transient ~ 2.5% higher international arrivals, and improved corporate and leisure demand. 1Based on reservations data 4

 
INTEGRATION 2018 Integration To Date • Combined financial reporting systems • Integrated North American sales organization • Recycled $170 million of capital Integration Coming Soon • All inventory available through Marriott and Starwood websites and apps • Unified loyalty programs • Co-branded credit cards launching • Phased roll-out of all properties to one reservation system • Continued integration cost savings 5

 
INNOVATING WHILE INTEGRATING • Expanding Marriott Moments • Launched new Alibaba storefront • Management agreement for Ritz-Carlton luxury yacht • Piloting Tribute Portfolio Homes • Launched new Customer Recognition Platform • Reduced group intermediary commission rates 6

 
SUBSTANTIAL ROOMS GROWTH SpringHill Suites By Marriott, New Orleans Aloft Celaya, Mexico The St. Regis Bahia Beach Resort, Puerto Rico Sheraton Grand Danang  Resort, Vietnam Marriott, Mena House, Cairo The Ritz‐Carlton Ras Al Khaimah, Al Hamra Beach 7

 
DEVELOPMENT PIPELINE NEARLY 465,000 ROOMS 18% Upper 49% North Midscale 45% Signed America New Build 41% Upscale 45% Under Construction 30% Asia Pacific 11% Luxury 30% Upper Upscale 8% 9% MEA Europe 4% CALA 3% Signed 7% Approved, Conversions not signed 8

 
FIRST QUARTER 2018 Q1 2017 B/(W) ($ millions, except EPS) Q1 2018 Unit, RevPAR and IMF growth, higher credit card fees, Gross fee revenues $845 $759 11% and favorable FX Contract investment amortization (18) (11) (64)% Impact of sale of Owned, leased, and other, net 70 72 (3)% four properties Depreciation, amortization, and other (54) (51) (6)% offset by higher termination fees General, administrative, and other (247) (212) (17)% Gains and other income, net 59 -- NM $35M additional profit-sharing match Reported Operating Income $500 $546 (8)% $53M gain on sale Adjusted Operating Income $596 $554 8% of two Buenos Aires hotels Reported Net Income $398 $371 7% Adjusted Net Income $487 $375 30% Reported Fully Diluted EPS $1.09 $0.95 15% Adjusted Fully Diluted EPS $1.34 $0.96 40% Adjusted results exclude merger‐related costs and charges, cost reimbursement revenue and reimbursed expenses.  Q1 2018 adjusted results also exclude a net adjustment to  9 the tax charge related to the U.S. Tax Cuts and Jobs Act of 2017, and Avendra gain.

 
REVPAR RESULTS & OUTLOOK 2018 2018E 2018E Systemwide Comparable First Quarter Second Quarter Full Year Asia Pacific 10.0% High-single digit rate High-single digit rate Caribbean & Latin 8.9% Mid-single digit rate Mid-single digit rate America Europe 5.9% Mid-single digit rate Mid-single digit rate Down Mid-single Middle East & Africa 3.2% Flat digit rate International 7.5% 5% to 6% 5% to 6% North America 2.0% 3% to 4% 2% to 3% Worldwide 3.6% 3% to 4% 3% to 4% 10

 
SECOND QUARTER 2018 OUTLOOK ($ millions, except EPS) Second Quarter Second Quarter 2018 Outlook Estimated 2017 Gross fee revenues $935 to $945 $848 Contract investment amortization Approx. $15 Owned, leased and other revenue, net Approx. $80 Depreciation, amortization, and other Approx. $55 General, administrative, and other Approx. $250 Operating income $695 to $705 Gains and other income Approx. $10 Net interest expense Approx. $80 Equity in earnings (losses) Approx. $10 Earnings per share $1.34 to $1.36 Adjusted EBITDA $880 to $890 $820 Second Quarter Estimated 2017 has been recast to reflect the full retrospective application of the new revenue standard, as if adopted on January 1, 2016.  Second Quarter  2018 Outlook does not include the impact of merger‐related costs and charges, cost reimbursement revenue or reimbursed expenses. 11

 
2018 FULL YEAR OUTLOOK ($ millions, except EPS) Feb 14, 2018 Full Year 2018 Full Year Full Year Outlook Estimated 2017 2018 Outlook Gross fee revenues $3,650 to $3,690 $3,295 $3,535 to $3,620 Contract investment amortization Approx. $60 Approx. $55 Owned, leased and other revenue, net Approx. $300 $285 to $295 Depreciation, amortization, and other Approx. $225 Approx. $230 General, administrative, and other $940 to $950 $935 to $945 Operating income $2,715 to $2,765 $2,590 to $2,695 Gains and other income $65 to $70 Approx. $45 Net interest expense Approx. $305 Approx. $305 Equity in earnings (losses) Approx. $40 Approx. $40 Earnings per share $5.43 to $5.55 $5.11 to $5.34 Tax rate 23% 22% Adjusted EBITDA $3,445 to $3,500 $3,131 $3,315 to $3,420 Full Year Estimated 2017 has been recast to reflect the full retrospective application of the new revenue standard, as if adopted on January 1, 2016.  Full Year 2018 Outlook  does not include the impact of merger‐related costs and charges, cost reimbursement revenue, reimbursed expenses, the net tax charge and the increase in the Avendra gain.   12

 
2018 OUTLOOK • Does not include merger-related costs and charges, cost reimbursement revenue or reimbursed expenses • Excludes the net tax charge and the increase in the Avendra gain, which were reported in the 2018 first quarter • $600 million to $700 million investment spending, including $225 million for maintenance capital • Assumes no further asset sales • At least $3 billion return to shareholders 13

 
QUESTIONS & ANSWERS 14

 
Non-GAAP Reconciliations

 
MARRIOTT INTERNATIONAL, INC. PRESS RELEASE SCHEDULES TABLE OF CONTENTS QUARTER 1, 2018 Consolidated Statements of Income - As Reported A-1 Non-GAAP Financial Measures A-2 Total Lodging Products A-3 Key Lodging Statistics A-6 Adjusted EBITDA A-8 Adjusted EBITDA Forecast - Second Quarter 2018 A-9 Adjusted EBITDA Forecast - Full Year 2018 A-10 Explanation of Non-GAAP Financial and Performance Measures A-11

 
MARRIOTT INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF INCOME - AS REPORTED FIRST QUARTER 2018 AND 2017 (in millions except per share amounts, unaudited) As Reported As Reported 10 Percent Three Months Ended Three Months Ended Better/(Worse) March 31, 2018 March 31, 2017 Reported 2018 vs. 2017 REVENUES Base management fees$ 273 $ 264 3 Franchise fees 1 417 355 17 Incentive management fees 155 140 11 Gross Fee Revenues 845 759 11 Contract investment amortization 2 (18) (11) (64) Net Fee Revenues 827 748 11 Owned, leased, and other revenue 3 406 428 (5) Cost reimbursement revenue 4 3,773 3,736 1 Total Revenues 5,006 4,912 2 OPERATING COSTS AND EXPENSES Owned, leased, and other - direct 5 336 356 6 Reimbursed expenses 4 3,835 3,696 (4) Depreciation, amortization, and other 6 54 51 (6) Merger-related costs and charges 34 51 33 General, administrative, and other 7 247 212 (17) Total Expenses 4,506 4,366 (3) OPERATING INCOME 500 546 (8) Gains and other income, net 8 59 - * Interest expense (75) (70) (7) Interest income 5 7 (29) Equity in earnings 9 13 11 18 INCOME BEFORE INCOME TAXES 502 494 2 Provision for income taxes (104) (123) 15 NET INCOME $ 398 $ 371 7 EARNINGS PER SHARE Earnings per share - basic$ 1.11 $ 0.96 16 Earnings per share - diluted$ 1.09 $ 0.95 15 Basic Shares 358.4 384.9 Diluted Shares 363.3 390.0 * Calculated percentage is not meaningful. 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. 2 Contract investment amortization includes amortization of payments made to obtain contracts with our owner and franchisee customers, and any related impairments, accelerations, or write-offs. 3 Owned, leased, and other revenue includes revenue from the properties we own or lease, termination fees, and other revenue. 4 Cost reimbursement revenue includes reimbursements from properties for property-level and centralized programs and services that we operate for the benefit of our hotel owners. Reimbursed expenses include costs incurred by Marriott for certain property-level operating expenses and centralized programs and services. 5 Owned, leased, and other - direct expenses include operating expenses related to our owned or leased hotels, including lease payments and pre-opening expenses. 6 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. 7 General, administrative, and other expenses include our corporate and business segments overhead costs and general expenses. 8 Gains and other income, net includes gains and losses on the sale of real estate, the sale or impairment of joint ventures and investments, and results from other equity investments. 9 Equity in earnings include our equity in earnings or losses of unconsolidated equity method investments. 10 On January 1, 2018, we adopted ASU 2014-09. This column reflects our recast 2017 results under the new accounting standard. A-1

 
MARRIOTT INTERNATIONAL, INC. NON-GAAP FINANCIAL MEASURES ($ in millions except per share amounts) The following table presents our reconciliations of Adjusted operating income, Adjusted operating income margin, Adjusted net income, and Adjusted diluted EPS, to the most directly comparable GAAP measure. Adjusted total revenues is used in the determination of Adjusted operating income margin. Three Months Ended Percent March 31, March 31, Better/ 2018 2017 1 (Worse) Total revenues, as reported$ 5,006 $ 4,912 Less: Cost reimbursement revenue (3,773) (3,736) Adjusted total revenues** 1,233 1,176 Operating income, as reported 500 546 Less: Cost reimbursement revenue (3,773) (3,736) Add: Reimbursed expenses 3,835 3,696 Add: Merger-related costs, charges, and other 2 34 48 Adjusted operating income ** 596 554 8% Operating income margin 10% 11% Adjusted operating income margin ** 48% 47% Net income, as reported 398 371 Less: Cost reimbursement revenue (3,773) (3,736) Add: Reimbursed expenses 3,835 3,696 Add: Merger-related costs, charges, and other 2 34 48 Less: Gain on sale of Avendra (5) - Income tax effect of above adjustments (24) (4) Add: U.S. Tax Cuts and Jobs Act of 2017 22 - Adjusted net income **$ 487 $ 375 30% Diluted EPS, as reported$ 1.09 $ 0.95 Adjusted Diluted EPS**$ 1.34 $ 0.96 40% ** Denotes non-GAAP financial measures. Please see pages A-11 and A-12 for information about our reasons for providing these alternative financial measures and the limitations on their use. 1 On January 1, 2018, we adopted ASU 2014-09. This column reflects our recast 2017 results under the new accounting standard. 2 Merger-related costs, charges, and other includes Starwood merger costs presented in the “Merger-related costs and charges” caption of our Income Statement and purchase accounting revisions. A-2

 
MARRIOTT INTERNATIONAL, INC. TOTAL LODGING PRODUCTS As of March 31, 2018 North America Total International Total Worldwide Units Rooms Units Rooms Units Rooms Managed 820 249,049 1,076 286,868 1,896 535,917 Marriott Hotels 127 67,939 166 48,287 293 116,226 Sheraton 28 23,646 182 62,663 210 86,309 Sheraton Residences - - 2 262 2 262 Courtyard 240 38,354 89 19,044 329 57,398 Westin 46 25,127 67 21,508 113 46,635 Westin Residences 1 65 1 264 2 329 The Ritz-Carlton 38 10,958 56 15,166 94 26,124 The Ritz-Carlton Residences 35 4,554 10 925 45 5,479 The Ritz-Carlton Serviced Apartments - - 5 697 5 697 JW Marriott 16 10,059 48 19,125 64 29,184 Renaissance 27 11,773 52 16,653 79 28,426 Le Méridien 4 720 73 20,102 77 20,822 Residence Inn 108 16,519 6 643 114 17,162 Four Points 1 134 62 15,201 63 15,335 W Hotels 26 7,950 23 5,571 49 13,521 W Residences 9 1,078 4 471 13 1,549 The Luxury Collection 6 2,294 50 8,785 56 11,079 St. Regis 10 1,990 31 7,043 41 9,033 St. Regis Residences 7 585 6 516 13 1,101 Aloft 1 330 33 7,842 34 8,172 Gaylord Hotels 5 8,108 - - 5 8,108 Delta Hotels 25 6,764 - - 25 6,764 SpringHill Suites 30 4,854 - - 30 4,854 Protea Hotels - - 37 4,356 37 4,356 Marriott Executive Apartments - - 29 4,270 29 4,270 Fairfield Inn & Suites 6 1,432 19 2,715 25 4,147 Autograph Collection 4 1,204 6 1,456 10 2,660 TownePlace Suites 16 1,840 - - 16 1,840 EDITION 2 567 2 699 4 1,266 EDITION Residences 1 25 - - 1 25 Element 1 180 5 1,085 6 1,265 Moxy - - 4 599 4 599 Tribute Portfolio - - 3 559 3 559 Bulgari - - 4 356 4 356 Bulgari Residences - - 1 5 1 5 A-3

 
MARRIOTT INTERNATIONAL, INC. TOTAL LODGING PRODUCTS As of March 31, 2018 North America Total International Total Worldwide Units Rooms Units Rooms Units Rooms Franchised 3,942 572,417 466 100,217 4,408 672,634 Courtyard 743 99,006 62 11,600 805 110,606 Fairfield Inn & Suites 904 82,628 6 1,157 910 83,785 Marriott Hotels 215 66,927 50 13,838 265 80,765 Residence Inn 647 76,728 4 347 651 77,075 Sheraton 163 48,313 62 17,768 225 66,081 SpringHill Suites 363 41,589 - - 363 41,589 Westin 81 26,544 24 7,616 105 34,160 Westin Residences 2 201 - - 2 201 TownePlace Suites 329 33,128 - - 329 33,128 Four Points 143 21,877 47 7,320 190 29,197 Autograph Collection 80 17,358 45 10,837 125 28,195 Renaissance 58 16,594 25 6,963 83 23,557 Aloft 98 14,496 13 2,037 111 16,533 The Luxury Collection 11 2,683 37 6,953 48 9,636 The Luxury Collection Residences 1 91 1 64 2 155 Le Méridien 16 3,417 15 4,022 31 7,439 Delta Hotels 26 5,984 1 339 27 6,323 JW Marriott 10 4,425 6 1,624 16 6,049 Tribute Portfolio 16 4,654 9 975 25 5,629 Moxy 6 1,347 16 3,411 22 4,758 Element 28 3,943 2 293 30 4,236 Protea Hotels - - 40 2,968 40 2,968 The Ritz-Carlton 1 429 - - 1 429 The Ritz-Carlton Residences 1 55 - - 1 55 Bulgari - - 1 85 1 85 Owned/Leased 30 8,241 35 9,107 65 17,348 Courtyard 19 2,814 3 645 22 3,459 Sheraton 2 1,299 5 2,126 7 3,425 Marriott Hotels 3 1,664 5 1,625 8 3,289 Protea Hotels - - 9 1,415 9 1,415 Westin 1 1,073 1 246 2 1,319 W Hotels 1 509 2 665 3 1,174 Renaissance 1 317 3 749 4 1,066 The Ritz-Carlton - - 2 553 2 553 JW Marriott - - 1 496 1 496 St. Regis 1 238 1 160 2 398 Residence Inn 1 192 1 140 2 332 The Luxury Collection - - 2 287 2 287 Tribute Portfolio 1 135 - - 1 135 Unconsolidated Joint Ventures 37 6,271 96 11,772 133 18,043 AC Hotels by Marriott 37 6,271 90 11,353 127 17,624 Autograph Collection - - 6 419 6 419 Timeshare* 70 18,313 19 3,873 89 22,186 Marriott Vacations Worldwide 51 11,249 15 2,406 66 13,655 Vistana 19 7,064 4 1,467 23 8,531 Grand Total 4,899 854,291 1,692 411,837 6,591 1,266,128 *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-4

 
MARRIOTT INTERNATIONAL, INC. TOTAL LODGING PRODUCTS As of March 31, 2018 North America Total International Total Worldwide Total Systemwide Units Rooms Units Rooms Units Rooms Luxury 176 48,490 293 70,246 469 118,736 JW Marriott 26 14,484 55 21,245 81 35,729 The Ritz-Carlton 39 11,387 58 15,719 97 27,106 The Ritz-Carlton Residences 36 4,609 10 925 46 5,534 The Ritz-Carlton Serviced Apartments - - 5 697 5 697 The Luxury Collection 17 4,977 89 16,025 106 21,002 The Luxury Collection Residences 1 91 1 64 2 155 W Hotels 27 8,459 25 6,236 52 14,695 W Residences 9 1,078 4 471 13 1,549 St. Regis 11 2,228 32 7,203 43 9,431 St. Regis Residences 7 585 6 516 13 1,101 EDITION 2 567 2 699 4 1,266 EDITION Residences 1 25 - - 1 25 Bulgari - - 5 441 5 441 Bulgari Residences - - 1 5 1 5 Full Service 932 339,826 832 243,547 1,764 583,373 Marriott Hotels 345 136,530 221 63,750 566 200,280 Sheraton 193 73,258 249 82,557 442 155,815 Sheraton Residences - - 2 262 2 262 Westin 128 52,744 92 29,370 220 82,114 Westin Residences 3 266 1 264 4 530 Renaissance 86 28,684 80 24,365 166 53,049 Autograph Collection 84 18,562 57 12,712 141 31,274 Le Méridien 20 4,137 88 24,124 108 28,261 Delta Hotels 51 12,748 1 339 52 13,087 Gaylord Hotels 5 8,108 - - 5 8,108 Marriott Executive Apartments - - 29 4,270 29 4,270 Tribute Portfolio 17 4,789 12 1,534 29 6,323 Limited Service 3,721 447,662 548 94,171 4,269 541,833 Courtyard 1,002 140,174 154 31,289 1,156 171,463 Residence Inn 756 93,439 11 1,130 767 94,569 Fairfield Inn & Suites 910 84,060 25 3,872 935 87,932 SpringHill Suites 393 46,443 - - 393 46,443 Four Points 144 22,011 109 22,521 253 44,532 TownePlace Suites 345 34,968 - - 345 34,968 Aloft 99 14,826 46 9,879 145 24,705 AC Hotels by Marriott 37 6,271 90 11,353 127 17,624 Protea Hotels - - 86 8,739 86 8,739 Element 29 4,123 7 1,378 36 5,501 Moxy 6 1,347 20 4,010 26 5,357 Timeshare* 70 18,313 19 3,873 89 22,186 Marriott Vacations Worldwide 51 11,249 15 2,406 66 13,655 Vistana 19 7,064 4 1,467 23 8,531 Grand Total 4,899 854,291 1,692 411,837 6,591 1,266,128 *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-5

 
MARRIOTT INTERNATIONAL, INC. KEY LODGING STATISTICS In Constant $ Comparable Company-Operated North American Properties Three Months Ended March 31, 2018 and March 31, 2017 REVPAR Occupancy Average Daily Rate Brand 2018 vs. 2017 2018 vs. 2017 2018 vs. 2017 JW Marriott $191.86 0.3% 77.7% 0.8% pts. $246.91 -0.7% The Ritz-Carlton $304.39 4.8% 75.7% 1.3% pts. $402.34 3.0% W Hotels $236.66 5.3% 80.1% 1.0% pts. $295.61 3.9% Composite North American Luxury1 $276.65 4.5% 78.3% 1.0% pts. $353.27 3.2% Marriott Hotels $146.99 0.8% 73.6% 0.3% pts. $199.85 0.5% Sheraton $128.97 0.3% 72.6% -1.7% pts. $177.59 2.7% Westin $147.42 0.8% 71.4% -0.1% pts. $206.52 1.0% Composite North American Upper Upscale2 $141.21 0.6% 72.7% -0.2% pts. $194.29 0.9% North American Full-Service3 $164.01 1.7% 73.6% 0.0% pts. $222.76 1.7% Courtyard $97.29 -0.1% 69.1% 0.0% pts. $140.90 0.0% Residence Inn $121.02 -0.4% 76.4% -0.4% pts. $158.45 0.1% Composite North American Limited-Service4 $103.68 0.5% 71.5% 0.2% pts. $144.91 0.2% North American - All5 $145.00 1.4% 73.0% 0.1% pts. $198.70 1.3% Comparable Systemwide North American Properties Three Months Ended March 31, 2018 and March 31, 2017 REVPAR Occupancy Average Daily Rate Brand 2018 vs. 2017 2018 vs. 2017 2018 vs. 2017 JW Marriott $190.01 0.6% 77.4% 0.0% pts. $245.60 0.6% The Ritz-Carlton $304.39 4.8% 75.7% 1.3% pts. $402.34 3.0% W Hotels $236.66 5.3% 80.1% 1.0% pts. $295.61 3.9% Composite North American Luxury1 $257.96 4.3% 77.7% 1.0% pts. $331.95 3.0% Marriott Hotels $125.14 0.6% 69.6% -0.2% pts. $179.69 0.9% Sheraton $102.37 1.5% 67.8% -0.3% pts. $150.91 1.9% Westin $146.22 0.6% 72.0% -0.5% pts. $203.06 1.4% Composite North American Upper Upscale2 $125.37 1.0% 70.0% -0.3% pts. $179.11 1.4% North American Full-Service3 $138.35 1.6% 70.8% -0.1% pts. $195.55 1.8% Courtyard $94.12 0.9% 68.9% 0.7% pts. $136.68 -0.1% Residence Inn $109.92 2.0% 76.0% 1.1% pts. $144.72 0.5% Fairfield Inn & Suites $73.10 4.2% 66.3% 2.1% pts. $110.19 0.9% Composite North American Limited-Service4 $91.42 2.5% 70.4% 1.3% pts. $129.90 0.6% North American - All5 $111.82 2.0% 70.5% 0.7% pts. $158.52 1.1% 1 Includes JW Marriott, The Ritz-Carlton, W Hotels, The Luxury Collection, St. Regis, and EDITION. 2 Includes Marriott Hotels, Sheraton, Westin, Renaissance, Autograph Collection, Delta Hotels, Gaylord Hotels, and Le Méridien. Systemwide also includes Tribute Portfolio. 3 Includes Composite North American Luxury and Composite North American Upper Upscale. 4 Includes Courtyard, Residence Inn, Fairfield Inn & Suites, SpringHill Suites, TownePlace Suites, Four Points, Aloft, Element, and AC Hotels by Marriott. Systemwide also includes Moxy. 5 Includes North American Full-Service and Composite North American Limited-Service. A-6

 
MARRIOTT INTERNATIONAL, INC. KEY LODGING STATISTICS In Constant $ Comparable Company-Operated International Properties Three Months Ended March 31, 2018 and March 31, 2017 REVPAR Occupancy Average Daily Rate Region 2018 vs. 2017 2018 vs. 2017 2018 vs. 2017 Greater China $92.66 11.9% 68.7% 5.2% pts. $134.82 3.4% Rest of Asia Pacific $137.07 7.8% 76.5% 1.8% pts. $179.25 5.4% Asia Pacific $109.20 10.0% 71.6% 3.9% pts. $152.49 3.9% Caribbean & Latin America $160.09 10.6% 68.4% 2.9% pts. $233.91 6.0% Europe $121.72 4.1% 65.8% 1.2% pts. $185.03 2.3% Middle East & Africa $119.38 3.4% 69.8% 4.5% pts. $170.91 -3.3% International - All1 $118.21 7.3% 69.7% 3.3% pts. $169.69 2.2% Worldwide2 $131.37 4.0% 71.3% 1.7% pts. $184.28 1.5% Comparable Systemwide International Properties Three Months Ended March 31, 2018 and March 31, 2017 REVPAR Occupancy Average Daily Rate Region 2018 vs. 2017 2018 vs. 2017 2018 vs. 2017 Greater China $92.17 11.5% 68.1% 5.2% pts. $135.40 3.1% Rest of Asia Pacific $133.07 8.8% 75.6% 1.7% pts. $175.99 6.3% Asia Pacific $110.34 10.0% 71.4% 3.6% pts. $154.49 4.4% Caribbean & Latin America $123.80 8.9% 65.8% 2.5% pts. $188.15 4.8% Europe $104.94 5.9% 63.0% 2.4% pts. $166.60 1.8% Middle East & Africa $114.24 3.2% 69.0% 3.8% pts. $165.57 -2.4% International - All1 $110.90 7.5% 67.9% 3.2% pts. $163.39 2.5% Worldwide2 $111.55 3.6% 69.8% 1.4% pts. $159.92 1.5% 1 Includes Asia Pacific, Caribbean & Latin America, Europe, and Middle East & Africa. 2 Includes North American - All and International - All. A-7

 
MARRIOTT INTERNATIONAL, INC. NON-GAAP FINANCIAL MEASURES ADJUSTED EBITDA ($ in millions) Fiscal Year Fiscal Year 2018 2017 First First Quarter Quarter Net income, as reported $ 398 $ 371 Cost reimbursement revenue (3,773) (3,736) Reimbursed expenses 3,835 3,696 Interest expense 75 70 Interest expense from unconsolidated joint ventures 21 Tax provision 104 123 Depreciation and amortization 54 51 Contract investment amortization 18 11 Depreciation classified in reimbursed expenses 33 32 Depreciation and amortization from unconsolidated joint ventures10 11 Share-based compensation 38 35 Gain on asset dispositions (58) - Merger-related costs and charges 34 51 Adjusted EBITDA ** $ 770 $ 716 Increase over 2017 Adjusted EBITDA ** 8% ** Denotes non-GAAP financial measures. Please see pages A-11 and A-12 for information about our reasons for providing these alternative financial measures and the limitations on their use. A-8

 
MARRIOTT INTERNATIONAL, INC. NON-GAAP FINANCIAL MEASURES ADJUSTED EBITDA FORECAST SECOND QUARTER 2018 ($ in millions) Range Estimated Second Quarter 2018 Second Quarter 2017 2 ** Net income, excluding certain items 1 $ 480 $ 487 Interest expense 85 85 Interest expense from unconsolidated joint ventures - - Tax provision 155 158 Depreciation and amortization 55 55 Contract investment amortization 15 15 Depreciation classified in reimbursed expenses 35 35 Depreciation and amortization from unconsolidated joint ventures10 10 Share-based compensation 45 45 Adjusted EBITDA ** $ 880 $ 890 $ 820 Increase over 2017 Adjusted EBITDA ** 7% 9% ** Denotes non-GAAP financial measures. See pages A-11 and A-12 for information about our reasons for providing these alternative financial measures and the limitations on their use. 1 Guidance excludes cost reimbursement revenue, reimbursed expenses, and merger-related costs and charges, which the company cannot accurately forecast and which may be significant, except for depreciation classified in reimbursed expenses, which is included in the caption "Depreciation classified in reimbursed expenses" above. 2 We have not completed our recast of 2017 second quarter results under ASU 2014-09, but we estimate that the application of ASU 2014-09 will lower previously reported 2017 second quarter Adjusted EBITDA of $834 million by $14 million, resulting in estimated 2017 second quarter Adjusted EBITDA of $820 million. A-9

 
MARRIOTT INTERNATIONAL, INC. NON-GAAP FINANCIAL MEASURES ADJUSTED EBITDA FORECAST FULL YEAR 2018 ($ in millions) Range Estimated Full Year 2018 Full Year 2017 2 ** Net income, excluding certain items 1 $ 1,923 $ 1,965 Interest expense 335 335 Interest expense from unconsolidated joint ventures 10 10 Tax provision 595 608 Depreciation and amortization 225 225 Contract investment amortization 60 60 Depreciation classified in reimbursed expenses 145 145 Depreciation and amortization from unconsolidated joint ventures40 40 Share-based compensation 170 170 Gain on asset dispositions (58) (58) Adjusted EBITDA ** $ 3,445 $ 3,500 $ 3,131 Increase over 2017 Adjusted EBITDA ** 10% 12% ** Denotes non-GAAP financial measures. See pages A-11 and A-12 for information about our reasons for providing these alternative financial measures and the limitations on their use. 1 Guidance excludes cost reimbursement revenue, reimbursed expenses, and merger-related costs and charges, which the company cannot accurately forecast and which may be significant, except for depreciation classified in reimbursed expenses, which is included in the caption "Depreciation classified in reimbursed expenses" above. 2 We have not completed our recast of 2017 full year results under ASU 2014-09, but we estimate that the application of ASU 2014-09 will lower previously reported 2017 full year Adjusted EBITDA of $3,223 million by $92 million, resulting in estimated 2017 full year Adjusted EBITDA of $3,131 million. A-10

 
MARRIOTT INTERNATIONAL, INC. EXPLANATION OF 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 Operating Income and Adjusted Operating Income Margin. Adjusted operating income reflects revenues, excluding cost reimbursement revenue, and operating expenses, excluding reimbursed expenses and merger-related costs, charges, and other merger-related adjustments due to purchase accounting. Adjusted operating income margin reflects adjusted operating income divided by adjusted total revenues. We believe that these are meaningful metrics because they allow for period-over-period comparisons of our ongoing operations before these items and for the reasons further described below. Adjusted Net Income and Adjusted Diluted EPS. Adjusted net income and Adjusted diluted EPS reflect our net income and diluted earnings per share excluding the impact of cost reimbursement revenue, reimbursed expenses, merger-related costs, charges, and other merger-related adjustments due to purchase accounting, the gain on the sale of our ownership interest in Avendra, and the income tax effect of these adjustments, as well as a state tax expense relating to our plan to remit a portion of the accumulated earnings of non-U.S. subsidiaries in the future and an adjustment to our provisional estimated federal and state Deemed Repatriation Transition Tax under the U.S. Tax Cuts and Jobs Act of 2017. We calculate the income tax effect of the adjustments using an estimated tax rate applicable to each adjustment. We believe that these measures are meaningful indicators of our performance because they allow for period-over-period comparisons of our ongoing operations before these items and for the reasons further described below. Adjusted Earnings Before Interest Expense, Taxes, Depreciation and Amortization (“Adjusted EBITDA”). Adjusted EBITDA reflects net income excluding the impact of the following items: cost reimbursement revenue and reimbursed expenses, interest expense, depreciation (including depreciation classified in “Reimbursed expenses,” as discussed below), amortization, and provision for income taxes, pre- tax transaction and transition costs associated with the Starwood merger, gains and losses on asset dispositions, and share-based compensation expense for all periods presented. In our presentations of Adjusted operating income and operating income margin, Adjusted net income, and Adjusted diluted EPS, we exclude transaction and transition costs associated with the Starwood merger, which we record in the “Merger-related costs and charges” caption of our Income Statements, and other merger-related adjustments due to purchase accounting, to allow for period-over period comparisons of our ongoing operations before the impact of these items. We exclude cost reimbursement revenue and reimbursed expenses, which relate to property-level and centralized programs and services that we operate for the benefit of our hotel owners. We do not operate these programs and services to generate a profit over the contract term, and accordingly, when we recover the costs that we incur for these programs and services from our hotel owners, we do not seek a mark-up. For property-level services, our owners typically reimburse us at the same time that we incur expenses. However, for centralized programs and services, our owners may reimburse us before or after we incur expenses, causing temporary timing differences between the costs we incur and the related reimbursement from hotel owners in our operating and net income. Over the long term, these programs and services are not designed to impact our economics, either positively or negatively. Because we do not retain any such profits or losses over time, we exclude the net impact when evaluating period-over-period changes in our operating results. A-11

 
MARRIOTT INTERNATIONAL, INC. EXPLANATION OF NON-GAAP FINANCIAL AND PERFORMANCE MEASURES We believe that Adjusted EBITDA is a meaningful indicator of our operating performance because it permits period-over-period comparisons of our ongoing operations before these items and facilitates our comparison of results before these items with results from other lodging companies. We use Adjusted EBITDA to evaluate companies because it excludes 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 also excludes depreciation and amortization expense which we report under “Depreciation, amortization, and other” as well as depreciation classified in “Reimbursed expenses” and “Contract investment amortization” in our Consolidated Statements of Income (our “Income Statements”), because companies utilize productive assets of different ages and use different methods of both acquiring and depreciating productive assets. Depreciation classified in “Reimbursed expenses” reflects depreciation of Marriott-owned assets, for which we receive cash from owners to reimburse the company for its investments made for the benefit of the system. These differences can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies. We exclude share-based compensation expense in all periods presented to address the 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-12