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Marriott International Reports Second Quarter 2018 Results

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Marriott International Reports Second Quarter 2018 Results

PR Newswire

BETHESDA, Md., Aug. 6, 2018 /PRNewswire/ -- 

Marriott International, Inc. logo (PRNewsfoto/Marriott International, Inc.)

HIGHLIGHTS

  • Second quarter reported diluted EPS totaled $1.71, a 34 percent increase from prior year results. Second quarter adjusted diluted EPS totaled $1.73, a 56 percent increase over second quarter 2017 adjusted results. Adjusted results exclude merger-related adjustments, cost reimbursement revenue, reimbursed expenses, and an adjustment to the Avendra gain;

  • During the 2018 second quarter, EPS included $0.26 from gains on asset sales ($119 million pretax reflected in Gains and other income, net and Equity in earnings). During the 2017 second quarter, EPS included $0.04 from the gain on an asset sale ($24 million pretax reflected in Gains and other income, net);

  • To date, the company has recycled nearly $1.8 billion of capital since the acquisition of Starwood Hotels & Resorts on September 23, 2016, including $423 million of capital recycling in the second quarter of 2018;

  • Second quarter 2018 comparable systemwide constant dollar RevPAR rose 3.8 percent worldwide, 5.7 percent outside North America and 3.1 percent in North America;

  • The company added a record 23,000 rooms during the second quarter, including roughly 2,900 rooms converted from competitor brands and approximately 10,900 rooms in international markets;

  • At quarter-end, Marriott's worldwide development pipeline increased to roughly 466,000 rooms, including approximately 41,500 rooms approved, but not yet subject to signed contracts;

  • Second quarter reported net income totaled $610 million, a 25 percent increase from prior year results. Second quarter adjusted net income totaled $619 million, a 46 percent increase over prior year adjusted results;

  • Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) totaled $939 million in the quarter, a 15 percent increase over second quarter 2017 adjusted EBITDA;

  • Marriott repurchased 6.2 million shares of the company's common stock for $850 million during the second quarter. Year-to-date through August 6, the company has repurchased 14.1 million shares for $1.9 billion.

Marriott International, Inc. (NASDAQ:MAR) today reported second quarter 2018 results.

Arne M. Sorenson, president and chief executive officer of Marriott International, said,
"We were pleased with our performance in the quarter across the board.  Worldwide constant dollar RevPAR grew nearly 4 percent in the second quarter, with particularly strong transient demand in many markets outside North America.  In North America, solid group business allowed us to drive higher room rates in the quarter.

"Our owners opened more than 82,000 rooms over the last 12 months, yielding net rooms growth of 5.7 percent.  Over 40 percent of these gross room additions are located outside North America and more than one-third are in upper-upscale and luxury tiers.  Our development pipeline increased to roughly 466,000 rooms at quarter-end.

"We are excited to introduce one set of unified benefits across our three loyalty programs on August 18, creating an incredibly rich program in which members, on average, will earn 20 percent more points for every dollar spent.  Members will find it easier to redeem points, achieve elite status, and book stays across the entire portfolio on each of our websites and apps or by calling our customer engagement centers.  Our credit card partners, JPMorgan Chase and American Express, are offering new and refreshed co-branded credit cards in the U.S., providing valuable perks and more ways to earn points when using the cards for stays worldwide.

"Since we acquired Starwood, we have recycled capital totaling nearly $1.8 billion, exceeding our goal of recycling $1.5 billion by year-end 2018.   For full year 2018, we expect to return more than $3.1 billion to shareholders through share repurchases and dividends.  To date this year, we have already returned $2.2 billion to shareholders."

Second 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's reported net income totaled $610 million in the 2018 second quarter, a 25 percent increase from 2017 second quarter reported net income of $489 million.  Reported diluted earnings per share (EPS) totaled $1.71 in the quarter, a 34 percent increase from reported diluted EPS of $1.28 in the year-ago quarter.

Second quarter 2018 adjusted net income totaled $619 million, a 46 percent increase over 2017 second quarter adjusted net income of $425 million.  Adjusted net income excludes merger-related adjustments, cost reimbursement revenue, reimbursed expenses, and an adjustment to the Avendra gain.  Adjusted diluted EPS in the second quarter totaled $1.73, a 56 percent increase from adjusted diluted EPS of $1.11 in the year-ago quarter.  See page A-3 for the calculation of adjusted results.

Base management and franchise fees totaled $775 million in the 2018 second quarter, a 12 percent increase over base management and franchise fees of $693 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.

Second quarter 2018 incentive management fees totaled $176 million, a 14 percent increase compared to incentive management fees of $155 million in the year-ago quarter.  The year-over-year increase was largely due to higher net house profit at properties in North America and the Asia Pacific region.

Owned, leased, and other revenue, net of direct expenses, totaled $89 million in the 2018 second quarter, compared to $98 million in the year-ago quarter.  The year-over-year decrease largely reflects the $21 million negative impact from hotels sold during or after the second quarter of 2017, including in the second quarter of 2018, partially offset by stronger results at a few owned and leased hotels in North America and Europe.  Results in the 2017 second quarter included $5 million of business interruption proceeds.

General, administrative, and other expenses for the 2018 second quarter totaled $217 million, compared to $234 million in the year-ago quarter.  The year-over-year $17 million decrease largely reflects integration-related general and administrative cost savings.

Gains and other income, net, totaled $114 million in the 2018 second quarter, reflecting $67 million of gains associated with the sale of two hotels in Fiji and two hotels in North America, as well as $42 million of gains associated with the sale of the company's equity interests in joint ventures in the Europe, Asia Pacific, and Caribbean & Latin America regions.  Gains and other income, net, totaled $25 million in the 2017 second quarter, reflecting a $24 million gain on the sale of the Charlotte Marriott City Center.

Equity in earnings for the second quarter totaled $21 million compared to $12 million in the year-ago quarter.  The 2018 second quarter included a $10 million gain on the sale of a hotel in a North American joint venture.

Interest expense, net, totaled $79 million in the second quarter compared to $65 million in the year-ago quarter.  The increase was largely due to higher interest rates and debt balances, and lower interest income.

The provision for income taxes totaled $186 million in the second quarter, a 23.3 percent effective tax rate, compared to $227 million in the year-ago quarter, a 31.7 percent effective tax rate.  The lower effective rate in the 2018 second quarter largely reflects the effects of the U.S. Tax Cuts and Jobs Act of 2017. 

For the second quarter, adjusted EBITDA totaled $939 million, a 15 percent increase over second quarter 2017 adjusted EBITDA of $820 million.  Compared to the prior year, adjusted EBITDA for the second quarter of 2018 reflects the $17 million negative impact from sold hotels.  See page A-11 for the adjusted EBITDA calculations.

Second Quarter 2018 Results Compared to May 8, 2018 Guidance
On May 8, 2018, the company estimated gross fee revenues for the second quarter would be $935 million to $945 million.  Actual gross fee revenues of $951 million in the quarter were higher than estimated, largely reflecting greater than expected incentive fees at properties in North America and Europe, and better than expected fees from franchised properties. 

Marriott estimated owned, leased, and other revenue, net of direct expenses, for the second quarter would total approximately $80 million.  Actual results of $89 million in the quarter were higher than estimated, largely due to higher than expected termination fees.

The company estimated general, administrative, and other expenses for the second quarter would total approximately $250 million.  Actual expenses of $217 million in the quarter were lower than expected largely due to lower than anticipated incremental profit-sharing contributions and, to a lesser extent, timing.

The company estimated gains and other income for the second quarter would total approximately $10 million.  Actual gains of $114 million in the quarter were higher than expected, due to asset sales.

The company estimated equity in earnings for the second quarter would total approximately $10 million.  Actual equity in earnings of $21 million in the quarter were higher than expected, reflecting a $10 million gain on the sale of a hotel in a North American joint venture.

The company estimated adjusted EBITDA for the second quarter would total $880 million to $890 million.  Actual adjusted EBITDA of $939 million was higher than expected due to strong fee revenue, better than expected owned, leased and other revenues, net of direct expenses, and lower than expected general, administrative, and other expenses.

Selected Performance Information
The company added 142 new properties (23,287 rooms) to its worldwide lodging portfolio during the 2018 second quarter, including the Bulgari Hotel Shanghai in China, The Bodrum EDITION in Turkey and the Sheraton Bamako Hotel, the company's first hotel in Mali.  Sixteen properties (3,117 rooms) exited the system during the quarter.  At quarter-end, Marriott's lodging system encompassed 6,717 properties and timeshare resorts with nearly 1,287,000 rooms.

At quarter-end, the company's worldwide development pipeline totaled 2,740 properties with roughly 466,000 rooms, including 1,148 properties with nearly 213,500 rooms under construction and 253 properties with approximately 41,500 rooms approved for development, but not yet subject to signed contracts.

In the 2018 second quarter, worldwide comparable systemwide constant dollar RevPAR increased 3.8 percent (a 5.1 percent increase using actual dollars).  North American comparable systemwide constant dollar RevPAR increased 3.1 percent (a 3.4 percent increase using actual dollars), and international comparable systemwide constant dollar RevPAR increased 5.7 percent (a 10.1 percent increase using actual dollars) for the same period.

Worldwide comparable company-operated house profit margins increased 60 basis points in the second quarter, largely due to solid cost controls and synergies from the Starwood acquisition.  House profit margins for comparable company-operated properties outside North America rose 50 basis points and North American comparable company-operated house profit margins increased 60 basis points in the second quarter. 

Balance Sheet
At quarter-end, Marriott's total debt was $8,991 million and cash balances totaled $366 million, compared to $8,238 million in debt and $383 million of cash at year-end 2017.

Marriott Common Stock
Weighted average fully diluted shares outstanding used to calculate both reported and adjusted diluted EPS totaled 357.3 million in the 2018 second quarter, compared to 383.0 million shares in the year-ago quarter.

The company repurchased 6.2 million shares of common stock in the 2018 second quarter for $850 million at an average price of $136.20 per share.  Year-to-date through August 6, the company has repurchased 14.1 million shares for $1.9 billion at an average price of $136.35 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 are not 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 furnished a Form 8-K on July 25, 2018, which presented the effect of adoption of the new revenue standard on Marriott's 2017 quarterly and full year unaudited results of operations and related financial measures.

Outlook
The following outlook for third quarter, fourth 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 also excludes the net tax charge and the increase in the Avendra gain, which were reported in the first half of 2018.

For the 2018 third quarter, Marriott expects comparable systemwide RevPAR on a constant dollar basis in North America will increase 1.5 to 2 percent, reflecting the unfavorable day of the week shift of Independence Day and tough comparisons to last year's hurricane relief efforts.  The company expects third quarter comparable systemwide RevPAR on a constant dollar basis will increase 5 to 6 percent outside North America and 2.5 to 3 percent worldwide.

The company assumes third quarter 2018 gross fee revenues will total $915 million to $935 million, an 11 to 13 percent increase over third quarter 2017 gross fee revenues of $826 million.

Marriott expects third quarter 2018 owned, leased, and other revenue, net of direct expenses, could total approximately $65 million.  Compared to the year-ago quarter, this estimate reflects the $23 million negative impact from sold hotels, but does not reflect additional asset sales that may occur.  This estimate also reflects an increase in year-over-year results at owned and leased hotels and higher termination fees.

The company assumes third quarter 2018 general, administrative, and other expenses could total $235 million to $240 million.  This estimate assumes a $10 million expense for incremental profit-sharing contributions, as well as professional fees, in part related to changes in accounting rules, and a year-over-year increase in compensation expense.

Marriott expects third quarter 2018 adjusted EBITDA could total $845 million to $870 million, a 5 to 8 percent increase over third quarter 2017 adjusted EBITDA of $806 million.  This estimate reflects the roughly $19 million negative impact from sold hotels, but does not reflect additional asset sales that may occur.  See page A-12 for the adjusted EBITDA calculation.

For the 2018 fourth quarter, Marriott expects comparable systemwide RevPAR on a constant dollar basis in North America will increase 1.5 to 2 percent, reflecting the tough comparisons to last year's hurricane relief efforts.  The company expects fourth quarter comparable systemwide RevPAR on a constant dollar basis will increase 5 to 6 percent outside North America and 2.5 to 3 percent worldwide.

The company assumes fourth quarter 2018 gross fee revenues will total $929 million to $944 million, an 8 to 10 percent increase over fourth quarter 2017 gross fee revenues of $862 million.

Marriott expects fourth quarter 2018 owned, leased, and other revenue, net of direct expenses, could total approximately $91 million.  Compared to the year-ago quarter, this estimate reflects the $13 million negative impact from sold hotels, but does not reflect additional asset sales that may occur.  This estimate also reflects an increase in year-over-year results at owned and leased hotels, higher termination fees and the purchase of the Sheraton Grand Phoenix.

The company assumes fourth quarter 2018 general, administrative, and other expenses could total $236 million to $241 million.  This estimate assumes an $8 million expense for incremental profit-sharing contributions.

Marriott expects fourth quarter 2018 adjusted EBITDA could total $896 million to $916 million, a 14 to 16 percent increase over fourth quarter 2017 adjusted EBITDA of $789 million.  This estimate reflects the roughly $10 million negative impact from sold hotels, but does not reflect additional asset sales that may occur.  See page A-13 for the adjusted EBITDA calculation.

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 gross room additions of 7 percent, or roughly 5 percent, net of deletions, for full year 2018.  Compared to the estimate of 2018 net room additions the company provided on May 8, this estimate reflects more room deletions, largely due to product quality issues, workout of Legacy-Starwood properties, and a few hotels removed from the system due to severe damage from last year's natural disasters.  

The company assumes full year 2018 gross fee revenues will total $3,640 million to $3,675 million, a 10 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 May 8, this estimate of gross fee revenues largely reflects unfavorable foreign exchange impact and higher than expected room deletions.  The company anticipates full year 2018 incentive management fees will increase roughly 10 percent over 2017 full year incentive management fees of $607 million.

Marriott expects full year 2018 owned, leased, and other revenue, net of direct expenses, could total approximately $315 million.  This estimate reflects the $80 million negative impact from sold hotels, stronger results at owned and leased hotels, and higher year-over-year termination fees, but does not reflect additional asset sales that may occur.  Compared to the owned, leased, and other revenue, net of direct expenses, estimate the company provided on May 8, this estimate reflects higher than expected termination fees, and the purchase of the Sheraton Grand Phoenix, partially offset by hotels sold in the 2018 second quarter.

The company assumes full year 2018 general, administrative, and other expenses could total $935 million to $945 million.  This estimate assumes a $55 million expense for the company's incremental profit-sharing contributions.  This expense will not recur in 2019.  Compared to the estimate the company provided on May 8, this general, administrative, and other expenses estimate reflects lower than anticipated incremental profit-sharing contributions, partially offset by increases in professional fees, in part related to changes in accounting rules, and higher compensation expense.

Marriott expects full year 2018 gains and other income could total approximately $172 million, reflecting assets sold to date.

Marriott expects full year 2018 adjusted EBITDA could total $3,450 million to $3,495 million, a 10 to 12 percent increase over 2017 adjusted EBITDA of $3,131 million.  This estimate reflects the roughly $67 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.  See page A-14 for the adjusted EBITDA calculation.

 


Third Quarter 20181

Fourth Quarter 20181

Full Year 20181

Gross fee revenues

$915 million to $935 million

$929 million to $944 million

$3,640 million to $3,675 million

Contract investment 
     amortization

Approx. $15 million

Approx. $14 million

Approx. $60 million

Owned, leased and other
     revenue, net of direct 
     expenses

Approx. $65 million

Approx. $91 million

Approx. $315 million

Depreciation, amortization, 
     and other expenses

Approx. $60 million

Approx. $53 million

Approx. $225 million

General, administrative, 
     and other expenses

$235 million to $240 million

$236 million to $241 million

$935 million to $945 million

Operating income

$665 million to $690 million

$712 million to $732 million

$2,725 million to $2,770 million

Gains and other income

Approx. $3 million

Approx. $2 million

Approx. $172 million

Net interest expense

Approx. $85 million

Approx. $76 million

Approx. $310 million

Equity in earnings (losses)

Approx. $7 million

Approx. $9 million

Approx. $50 million

Earnings per share

$1.27 to $1.32

$1.47 to $1.52

$5.81 to $5.91

Core tax rate2



23.9 percent


1The 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 first half of 2018.

2Guidance for Full Year 2018 reflects the impact of employee stock-based compensation excess tax benefits.  The company expects the effective tax rate will be 24.5 percent for Third Quarter 2018, 20.7 percent for Fourth Quarter 2018, and 21.7 percent for Full Year 2018.

 

The company expects investment spending in 2018 will total approximately $800 million to $900 million, including approximately $225 million for maintenance capital and $255 million for the purchase of the Sheraton Grand Phoenix.  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, more than $3.1 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 Tuesday, August 7, 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 August 7, 2019.

The telephone dial-in number for the conference call is 706-679-3455 and the conference ID is 6288233.  A telephone replay of the conference call will be available from 1:00 p.m. ET, Tuesday, August 7, 2018 until 8:00 p.m. ET, Tuesday, August 14, 2018.  To access the replay, call 404-537-3406.  The conference ID for the recording is 6288233.

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 accounting standards.  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 August 6, 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 6,700 properties in 130 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

 

MARRIOTT INTERNATIONAL, INC.

PRESS RELEASE SCHEDULES

TABLE OF CONTENTS

QUARTER 2, 2018

































































Consolidated Statements of Income - As Reported









A-1

















Non-GAAP Financial Measures












A-3

















Total Lodging Products














A-4

















Key Lodging Statistics














A-7

















Adjusted EBITDA














A-11

















Adjusted EBITDA Forecast - Third Quarter 2018










A-12

















Adjusted EBITDA Forecast - Fourth Quarter 2018









A-13

















Adjusted EBITDA Forecast - Full Year 2018










A-14

















Explanation of Non-GAAP Financial and Performance Measures






A-15

 

 


MARRIOTT INTERNATIONAL, INC.


CONSOLIDATED STATEMENTS OF INCOME - AS REPORTED


SECOND QUARTER 2018 AND 2017


(in millions except per share amounts, unaudited)






















As Reported


As Reported10


Percent





Three Months Ended


Three Months Ended


Better/(Worse)





June 30, 2018


June 30, 2017


Reported 2018 vs. 2017



REVENUES









Base management fees


$                                           300


$                                           285


5



Franchise fees 1


475


408


16



Incentive management fees


176


155


14



Gross Fee Revenues


951


848


12



Contract investment amortization 2


(13)


(12)


(8)



Net Fee Revenues


938


836


12



Owned, leased, and other revenue 3


423


448


(6)



Cost reimbursement revenue 4


3,985


3,927


1



  Total Revenues


5,346


5,211


3












OPERATING COSTS AND EXPENSES









Owned, leased, and other - direct 5


334


350


5



Depreciation, amortization, and other 6


58


71


18



Merger-related costs and charges


18


21


14



General, administrative, and other 7


217


234


7



Reimbursed expenses 4


3,979


3,791


(5)



  Total Expenses


4,606


4,467


(3)












OPERATING INCOME


740


744


(1)












Gains and other income, net 8


114


25


356



Interest expense


(85)


(73)


(16)



Interest income 


6


8


(25)



Equity in earnings 9


21


12


75












INCOME BEFORE INCOME TAXES


796


716


11












Provision for income taxes


(186)


(227)


18












NET INCOME


$                                           610


$                                           489


25












EARNINGS PER SHARE









  Earnings per share - basic


$                                          1.73


$                                          1.29


34



  Earnings per share - diluted


$                                          1.71


$                                          1.28


34












Basic Shares


353.4


378.5





Diluted Shares


357.3


383.0













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 capitalized costs 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 expensesinclude 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, netincludes 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.


CONSOLIDATED STATEMENTS OF INCOME - AS REPORTED


SECOND QUARTER YEAR-TO-DATE 2018 AND 2017


(in millions except per share amounts, unaudited)






















As Reported


As Reported10


Percent





Six Months Ended


Six Months Ended


Better/(Worse)





June 30, 2018


June 30, 2017


Reported 2018 vs. 2017



REVENUES









Base management fees


$                                           573


$                                           549


4



Franchise fees 1


892


763


17



Incentive management fees


331


295


12



Gross Fee Revenues


1,796


1,607


12



Contract investment amortization 2


(31)


(23)


(35)



Net Fee Revenues


1,765


1,584


11



Owned, leased, and other revenue 3


829


876


(5)



Cost reimbursement revenue 4


7,758


7,663


1



  Total Revenues


10,352


10,123


2












OPERATING COSTS AND EXPENSES









Owned, leased, and other - direct 5


670


706


5



Depreciation, amortization, and other 6


112


122


8



Merger-related costs and charges


52


72


28



General, administrative, and other 7


464


446


(4)



Reimbursed expenses 4


7,814


7,487


(4)



  Total Expenses


9,112


8,833


(3)












OPERATING INCOME


1,240


1,290


(4)












Gains and other income, net 8


173


25


592



Interest expense


(160)


(143)


(12)



Interest income 


11


15


(27)



Equity in earnings 9


34


23


48












INCOME BEFORE INCOME TAXES


1,298


1,210


7












Provision for income taxes


(290)


(350)


17












NET INCOME


$                                        1,008


$                                           860


17












EARNINGS PER SHARE









  Earnings per share - basic


$                                          2.83


$                                          2.25


26



  Earnings per share - diluted


$                                          2.80


$                                          2.23


26












Basic Shares


355.9


381.7





Diluted Shares


360.3


386.5













1

Franchise fees include fees from our franchise agreements, application and relicensing fees, licensing fees from our timeshare, credit card programs, and 



residential branding fees.








2

Contract investment amortization includes amortization of capitalized costs 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 expensesinclude 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, netincludes 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-2

 

 


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 


Six Months Ended







Percent






Percent



June 30,


June 30,


Better/


June 30,


June 30,


Better/



2018


20171


(Worse)


2018


2017 1


(Worse)


Total revenues, as reported

$           5,346


$           5,211




$         10,352


$         10,123




Less: Cost reimbursement revenue

(3,985)


(3,927)




(7,758)


(7,663)




Adjusted total revenues**

1,361


1,284




2,594


2,460

















Operating income, as reported

740


744




1,240


1,290




Less: Cost reimbursement revenue

(3,985)


(3,927)




(7,758)


(7,663)




Add: Reimbursed expenses

3,979


3,791




7,814


7,487




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

18


26




52


74




Adjusted operating income **

752


634


19%


1,348


1,188


13%















Operating income margin

14%


14%




12%


13%




Adjusted operating income margin **

55%


49%




52%


48%

















Net income, as reported

610


489




1,008


860




Less: Cost reimbursement revenue

(3,985)


(3,927)




(7,758)


(7,663)




Add: Reimbursed expenses

3,979


3,791




7,814


7,487




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

18


26




52


74




Less: Gain on sale of Avendra

(1)


-




(6)


-




Income tax effect of above adjustments

(2)


46




(26)


42




Add: U.S. Tax Cuts and Jobs Act of 2017

-


-




22


-




Adjusted net income **

$             619


$             425


46%


$           1,106


$             800


38%















Diluted EPS, as reported

$            1.71


$            1.28




$            2.80


$            2.23




Adjusted Diluted EPS**

$            1.73


$            1.11


56%


$            3.07


$            2.07


48%














**

Denotes non-GAAP financial measures. Please see pages A-15 and A-16 for information about our reasons for providing these alternative financial measures and


the limitations on their use.












1

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 otherincludes Starwood merger costs presented in the "Merger-related costs and charges" caption of our Income Statement and


purchase accounting revisions.

























A-3

 

 

MARRIOTT INTERNATIONAL, INC.

TOTAL LODGING PRODUCTS

As of June 30, 2018









North America

Total International

Total Worldwide


Units

Rooms

Units

Rooms

Units

Rooms

 Managed 

822

248,999

1,107

293,233

1,929

542,232

 Marriott Hotels 

127

68,092

168

48,801

295

116,893

 Sheraton 

28

23,595

184

63,096

212

86,691

 Sheraton Residences 

-

-

2

262

2

262

 Courtyard 

240

38,355

91

19,585

331

57,940

 Westin 

45

24,808

68

21,749

113

46,557

 Westin Residences 

1

65

1

264

2

329

 The Ritz-Carlton 

38

10,958

55

14,986

93

25,944

 The Ritz-Carlton Residences 

35

4,554

11

950

46

5,504

 The Ritz-Carlton Serviced Apartments 

-

-

5

697

5

697

 JW Marriott 

16

10,038

48

19,125

64

29,163

 Renaissance 

27

11,773

54

17,192

81

28,965

 Le Méridien 

4

720

73

20,068

77

20,788

 Residence Inn 

110

16,863

6

643

116

17,506

 Four Points 

1

134

67

16,287

68

16,421

 W Hotels 

25

7,254

25

6,007

50

13,261

 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

7,044

41

9,034

 St. Regis Residences 

7

585

7

593

14

1,178

 Aloft 

1

330

35

8,397

36

8,727

 Gaylord Hotels 

5

8,411

-

-

5

8,411

 Delta Hotels 

25

6,764

-

-

25

6,764

 Fairfield Inn & Suites 

6

1,432

26

4,175

32

5,607

 SpringHill Suites 

31

4,988

-

-

31

4,988

 Marriott Executive Apartments 

-

-

30

4,471

30

4,471

 Protea Hotels 

-

-

35

4,090

35

4,090

 Autograph Collection 

5

1,307

8

1,722

13

3,029

 TownePlace Suites 

16

1,839

-

-

16

1,839

 Element 

1

180

6

1,253

7

1,433

 EDITION 

2

567

3

801

5

1,368

 EDITION Residences 

1

25

-

-

1

25

 Moxy 

-

-

4

599

4

599

 Bulgari 

-

-

5

438

5

438

 Bulgari Residences 

-

-

2

123

2

123

 Tribute Portfolio 

-

-

3

559

3

559


A-4

 

 

MARRIOTT INTERNATIONAL, INC.

TOTAL LODGING PRODUCTS

As of June 30, 2018









North America

Total International

Total Worldwide


Units

Rooms

Units

Rooms

Units

Rooms

 Franchised 

4,017

582,480

479

103,435

4,496

685,915

 Courtyard 

753

100,354

65

12,161

818

112,515

 Fairfield Inn & Suites 

927

84,974

6

1,157

933

86,131

 Marriott Hotels 

214

66,639

51

14,390

265

81,029

 Residence Inn 

658

78,044

5

666

663

78,710

 Sheraton 

162

48,202

62

17,830

224

66,032

 SpringHill Suites 

370

42,434

-

-

370

42,434

 Westin 

82

26,863

23

7,237

105

34,100

 Westin Residences 

2

201

-

-

2

201

 TownePlace Suites 

338

34,035

-

-

338

34,035

 Four Points 

143

21,877

47

7,328

190

29,205

 Autograph Collection 

82

17,649

49

11,492

131

29,141

 Renaissance 

59

16,816

26

7,188

85

24,004

 Aloft 

102

14,942

13

2,094

115

17,036

 The Luxury Collection 

12

2,850

39

7,339

51

10,189

 The Luxury Collection Residences 

1

91

1

64

2

155

 Delta Hotels 

32

7,387

2

562

34

7,949

 Le Méridien 

16

3,417

15

4,012

31

7,429

 Tribute Portfolio 

17

5,350

9

972

26

6,322

 JW Marriott 

10

4,425

6

1,624

16

6,049

 Moxy 

7

1,503

18

4,048

25

5,551

 Element 

28

3,943

2

293

30

4,236

 Protea Hotels 

-

-

39

2,893

39

2,893

 The Ritz-Carlton 

1

429

-

-

1

429

 The Ritz-Carlton Residences 

1

55

-

-

1

55

 Bulgari 

-

-

1

85

1

85

 Owned/Leased 

29

8,281

33

8,565

62

16,846

 Sheraton 

2

1,474

4

1,830

6

3,304

 Courtyard 

19

2,814

3

645

22

3,459

 Marriott Hotels 

3

1,664

5

1,625

8

3,289

 Westin 

1

1,073

-

-

1

1,073

 W Hotels 

1

509

2

665

3

1,174

 Protea Hotels 

-

-

7

1,168

7

1,168

 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

 Autograph Collection 

-

-

2

247

2

247

 Unconsolidated Joint Ventures 

42

7,189

98

12,004

140

19,193

 AC Hotels by Marriott 

42

7,189

91

11,545

133

18,734

 Autograph Collection 

-

-

7

459

7

459

 Timeshare* 

70

18,297

20

4,242

90

22,539

 Marriott Vacations Worldwide 

51

11,249

15

2,406

66

13,655

 Vistana 

19

7,048

5

1,836

24

8,884

Grand Total

4,980

865,246

1,737

421,479

6,717

1,286,725








*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.

TOTAL LODGING PRODUCTS

As of June 30, 2018









North America

Total International

Total Worldwide

Total Systemwide

Units

Rooms

Units

Rooms

Units

Rooms

 Luxury 

176

47,940

301

71,293

477

119,233

 JW Marriott 

26

14,463

55

21,245

81

35,708

 The Ritz-Carlton  

39

11,387

57

15,539

96

26,926

 The Ritz-Carlton Residences 

36

4,609

11

950

47

5,559

 The Ritz-Carlton Serviced Apartments 

-

-

5

697

5

697

 The Luxury Collection  

18

5,144

91

16,411

109

21,555

 The Luxury Collection Residences 

1

91

1

64

2

155

 W Hotels  

26

7,763

27

6,672

53

14,435

 W Residences 

9

1,078

4

471

13

1,549

 St. Regis  

11

2,228

32

7,204

43

9,432

 St. Regis Residences 

7

585

7

593

14

1,178

 EDITION  

2

567

3

801

5

1,368

 EDITION Residences 

1

25

-

-

1

25

 Bulgari  

-

-

6

523

6

523

 Bulgari Residences 

-

-

2

123

2

123

 Full-Service 

940

342,587

849

246,777

1,789

589,364

 Marriott Hotels  

344

136,395

224

64,816

568

201,211

 Sheraton  

192

73,271

250

82,756

442

156,027

 Sheraton Residences 

-

-

2

262

2

262

 Westin  

128

52,744

91

28,986

219

81,730

 Westin Residences 

3

266

1

264

4

530

 Renaissance  

87

28,906

83

25,129

170

54,035

 Autograph Collection  

87

18,956

66

13,920

153

32,876

 Le Méridien 

20

4,137

88

24,080

108

28,217

 Delta Hotels  

57

14,151

2

562

59

14,713

 Gaylord Hotels  

5

8,411

-

-

5

8,411

 Tribute Portfolio  

17

5,350

12

1,531

29

6,881

 Marriott Executive Apartments  

-

-

30

4,471

30

4,471

 Limited-Service 

3,794

456,422

567

99,167

4,361

555,589

 Courtyard  

1,012

141,523

159

32,391

1,171

173,914

 Residence Inn  

769

95,099

12

1,449

781

96,548

 Fairfield Inn & Suites  

933

86,406

32

5,332

965

91,738

 SpringHill Suites  

401

47,422

-

-

401

47,422

 Four Points  

144

22,011

114

23,615

258

45,626

 TownePlace Suites  

354

35,874

-

-

354

35,874

 Aloft  

103

15,272

48

10,491

151

25,763

 AC Hotels by Marriott  

42

7,189

91

11,545

133

18,734

 Protea Hotels  

-

-

81

8,151

81

8,151

 Moxy  

7

1,503

22

4,647

29

6,150

 Element  

29

4,123

8

1,546

37

5,669

 Timeshare* 

70

18,297

20

4,242

90

22,539

 Marriott Vacations Worldwide  

51

11,249

15

2,406

66

13,655

 Vistana  

19

7,048

5

1,836

24

8,884

 Grand Total 

4,980

865,246

1,737

421,479

6,717

1,286,725








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


A-6

 

 

MARRIOTT INTERNATIONAL, INC.

KEY LODGING STATISTICS

In Constant $












Comparable Company-Operated North American Properties














Three Months Ended June 30, 2018 and June 30, 2017



REVPAR


Occupancy


Average Daily Rate

Brand


2018

vs. 2017


2018

vs. 2017


2018

vs. 2017

JW Marriott


$198.18

1.1%


81.4%

0.1%

pts.


$243.45

1.0%

The Ritz-Carlton


$281.05

4.9%


76.4%

0.7%

pts.


$367.77

3.9%

W Hotels


$261.02

0.9%


83.2%

-1.5%

pts.


$313.73

2.7%

Composite North American Luxury1


$263.58

3.4%


79.5%

0.3%

pts.


$331.50

3.0%

Marriott Hotels


$169.82

4.4%


81.4%

0.7%

pts.


$208.49

3.6%

Sheraton


$156.33

4.5%


80.6%

2.3%

pts.


$193.92

1.5%

Westin


$182.79

1.5%


80.6%

0.6%

pts.


$226.73

0.7%

Composite North American Upper Upscale2

$166.22

4.1%


80.6%

1.0%

pts.


$206.23

2.8%

North American Full-Service3 


$182.40

3.9%


80.4%

0.9%

pts.


$226.81

2.7%

Courtyard


$114.92

2.0%


78.2%

0.5%

pts.


$146.99

1.3%

Residence Inn


$135.45

0.5%


82.4%

-0.7%

pts.


$164.36

1.4%

Composite North American Limited-Service4

$120.35

1.4%


79.8%

0.2%

pts.


$150.83

1.2%

North American - All5


$162.86

3.3%


80.2%

0.7%

pts.


$203.01

2.5%























Comparable Systemwide North American Properties














Three Months Ended June 30, 2018 and June 30, 2017



REVPAR


Occupancy


Average Daily Rate

Brand


2018

vs. 2017


2018

vs. 2017


2018

vs. 2017

JW Marriott


$195.37

2.7%


81.6%

0.6%

pts.


$239.37

1.9%

The Ritz-Carlton


$281.05

4.9%


76.4%

0.7%

pts.


$367.77

3.9%

W Hotels


$261.02

0.9%


83.2%

-1.5%

pts.


$313.73

2.7%

Composite North American Luxury1


$251.71

3.9%


79.9%

0.7%

pts.


$315.16

3.0%

Marriott Hotels


$142.53

3.7%


77.6%

0.8%

pts.


$183.70

2.7%

Sheraton


$124.85

3.1%


77.3%

1.0%

pts.


$161.48

1.8%

Westin


$167.33

2.5%


80.2%

0.6%

pts.


$208.67

1.8%

Composite North American Upper Upscale2

$144.26

3.6%


78.1%

0.8%

pts.


$184.83

2.5%

North American Full-Service3 


$154.74

3.7%


78.2%

0.8%

pts.


$197.80

2.6%

Courtyard


$112.47

2.2%


78.0%

0.9%

pts.


$144.10

1.0%

Residence Inn


$125.45

1.7%


82.8%

0.7%

pts.


$151.47

0.8%

Fairfield Inn & Suites


$90.48

2.9%


76.9%

1.5%

pts.


$117.71

0.9%

Composite North American Limited-Service4

$108.11

2.5%


79.1%

1.0%

pts.


$136.64

1.2%

North American - All5


$128.38

3.1%


78.7%

0.9%

pts.


$163.05

1.9%












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-7

 

 

MARRIOTT INTERNATIONAL, INC.

KEY LODGING STATISTICS

In Constant $












Comparable Company-Operated International Properties














Three Months Ended June 30, 2018 and June 30, 2017



REVPAR


Occupancy


Average Daily Rate

Region


2018

vs. 2017


2018

vs. 2017


2018

vs. 2017

Greater China


$95.94

10.0%


72.7%

3.9%

pts.


$131.97

4.1%

Rest of Asia Pacific


$118.98

6.5%


72.2%

1.6%

pts.


$164.70

4.2%

Asia Pacific


$104.51

8.5%


72.5%

3.0%

pts.


$144.11

4.0%












Caribbean & Latin America


$127.25

8.8%


64.2%

0.5%

pts.


$198.35

7.9%

Europe


$168.59

4.2%


78.1%

0.8%

pts.


$215.95

3.2%

Middle East & Africa


$90.93

-4.2%


61.1%

1.0%

pts.


$148.75

-5.7%












International - All1


$118.79

5.2%


71.0%

1.9%

pts.


$167.20

2.4%












Worldwide2


$140.65

4.1%


75.6%

1.3%

pts.


$186.05

2.3%























Comparable Systemwide International Properties














Three Months Ended June 30, 2018 and June 30, 2017



REVPAR


Occupancy


Average Daily Rate

Region


2018

vs. 2017


2018

vs. 2017


2018

vs. 2017

Greater China


$95.72

9.8%


72.2%

3.9%

pts.


$132.54

3.9%

Rest of Asia Pacific


$121.47

7.7%


72.9%

2.2%

pts.


$166.55

4.4%

Asia Pacific


$107.16

8.7%


72.5%

3.2%

pts.


$147.73

4.0%












Caribbean & Latin America


$104.65

7.6%


63.8%

0.8%

pts.


$163.90

6.3%

Europe


$144.23

4.9%


75.9%

1.5%

pts.


$189.91

2.9%

Middle East & Africa


$88.77

-3.6%


61.4%

0.9%

pts.


$144.48

-5.1%












International - All1


$115.31

5.7%


70.9%

2.1%

pts.


$162.63

2.6%












Worldwide2


$124.53

3.8%


76.4%

1.3%

pts.


$162.94

2.1%












1 Includes Asia Pacific, Caribbean & Latin America, Europe, and Middle East & Africa.





2 Includes North American - All and International - All.










A-8

 

 

MARRIOTT INTERNATIONAL, INC.

KEY LODGING STATISTICS

In Constant $












Comparable Company-Operated North American Properties














Six Months Ended June 30, 2018 and June 30, 2017



REVPAR


Occupancy


Average Daily Rate

Brand


2018

vs. 2017


2018

vs. 2017


2018

vs. 2017

JW Marriott


$195.04

0.7%


79.6%

0.4%

pts.


$245.13

0.2%

The Ritz-Carlton


$292.65

4.8%


76.0%

1.0%

pts.


$384.87

3.4%

W Hotels


$251.39

3.0%


81.8%

-0.2%

pts.


$307.42

3.2%

Composite North American Luxury1


$270.87

3.9%


78.9%

0.6%

pts.


$343.16

3.1%

Marriott Hotels


$158.33

2.8%


77.6%

0.5%

pts.


$204.15

2.2%

Sheraton


$142.73

2.6%


76.6%

0.3%

pts.


$186.23

2.2%

Westin


$165.56

1.3%


76.1%

0.3%

pts.


$217.47

0.9%

Composite North American Upper Upscale2

$153.69

2.5%


76.7%

0.4%

pts.


$200.40

2.0%

North American Full-Service


$173.17

2.8%


77.1%

0.4%

pts.


$224.71

2.3%

Courtyard


$106.16

1.0%


73.6%

0.2%

pts.


$144.15

0.7%

Residence Inn


$128.27

0.1%


79.4%

-0.6%

pts.


$161.53

0.8%

Composite North American Limited-Service4

$112.06

1.0%


75.7%

0.2%

pts.


$148.05

0.7%

North American - All5


$153.91

2.4%


76.6%

0.4%

pts.


$200.85

1.9%























Comparable Systemwide North American Properties














Six Months Ended June 30, 2018 and June 30, 2017



REVPAR


Occupancy


Average Daily Rate

Brand


2018

vs. 2017


2018

vs. 2017


2018

vs. 2017

JW Marriott


$192.70

1.6%


79.5%

0.3%

pts.


$242.39

1.2%

The Ritz-Carlton


$292.65

4.8%


76.0%

1.0%

pts.


$384.87

3.4%

W Hotels


$251.39

3.0%


81.8%

-0.2%

pts.


$307.42

3.2%

Composite North American Luxury1


$255.36

4.1%


78.8%

0.8%

pts.


$324.02

3.0%

Marriott Hotels


$133.89

2.4%


73.7%

0.4%

pts.


$181.64

1.8%

Sheraton


$113.69

2.4%


72.6%

0.4%

pts.


$156.65

1.8%

Westin


$156.61

1.7%


76.1%

0.1%

pts.


$205.67

1.6%

Composite North American Upper Upscale2

$134.80

2.5%


74.1%

0.4%

pts.


$181.99

2.0%

North American Full-Service


$146.56

2.8%


74.5%

0.4%

pts.


$196.63

2.2%

Courtyard


$103.36

1.7%


73.5%

0.8%

pts.


$140.61

0.5%

Residence Inn


$117.77

1.9%


79.4%

0.9%

pts.


$148.27

0.7%

Fairfield Inn & Suites


$82.17

3.5%


71.8%

1.9%

pts.


$114.40

0.9%

Composite North American Limited-Service4

$99.93

2.5%


74.8%

1.2%

pts.


$133.53

0.9%

North American - All5


$120.19

2.7%


74.7%

0.8%

pts.


$160.89

1.5%












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.









Includes North American Full-Service and Composite North American Limited-Service.







A-9

 

 

MARRIOTT INTERNATIONAL, INC.

KEY LODGING STATISTICS

In Constant $












Comparable Company-Operated International Properties














Six Months Ended June 30, 2018 and June 30, 2017



REVPAR


Occupancy


Average Daily Rate

Region


2018

vs. 2017


2018

vs. 2017


2018

vs. 2017

Greater China


$94.35

11.0%


70.8%

4.6%

pts.


$133.34

3.8%

Rest of Asia Pacific


$127.98

7.2%


74.3%

1.7%

pts.


$172.15

4.8%

Asia Pacific


$106.89

9.3%


72.1%

3.5%

pts.


$148.26

4.0%












Caribbean & Latin America


$142.93

9.7%


66.1%

1.6%

pts.


$216.22

7.0%

Europe


$145.20

4.2%


72.1%

1.0%

pts.


$201.46

2.8%

Middle East & Africa


$104.87

-0.1%


65.5%

2.5%

pts.


$160.22

-3.9%












International - All1


$118.37

6.3%


70.4%

2.6%

pts.


$168.19

2.4%












Worldwide2


$136.02

4.1%


73.5%

1.5%

pts.


$185.10

2.0%























Comparable Systemwide International Properties














Six Months Ended June 30, 2018 and June 30, 2017



REVPAR


Occupancy


Average Daily Rate

Region


2018

vs. 2017


2018

vs. 2017


2018

vs. 2017

Greater China


$94.00

10.7%


70.2%

4.6%

pts.


$133.92

3.5%

Rest of Asia Pacific


$127.24

8.2%


74.3%

2.0%

pts.


$171.33

5.4%

Asia Pacific


$108.77

9.4%


72.0%

3.4%

pts.


$151.07

4.2%












Caribbean & Latin America


$113.93

8.2%


64.7%

1.6%

pts.


$176.02

5.6%

Europe


$124.57

5.4%


69.6%

2.0%

pts.


$179.04

2.3%

Middle East & Africa


$101.10

0.0%


65.2%

2.1%

pts.


$155.17

-3.2%












International - All1


$112.98

6.6%


69.4%

2.6%

pts.


$162.78

2.6%












Worldwide2


$118.07

3.7%


73.1%

1.3%

pts.


$161.42

1.8%












1Includes Asia Pacific, Caribbean & Latin America, Europe, and Middle East & Africa.





2Includes North American - All and International - All.










A-10

 

 


MARRIOTT INTERNATIONAL, INC.


NON-GAAP FINANCIAL MEASURES


ADJUSTED EBITDA


($ in millions)














Fiscal Year 2018







First
Quarter 


Second
Quarter


Total






Net income, as reported

$                 398


$             610


$           1,008






Cost reimbursement revenue

(3,773)


(3,985)


(7,758)






Reimbursed expenses

3,835


3,979


7,814






Interest expense

75


85


160






Interest expense from unconsolidated joint ventures

2


3


5






Tax provision

104


186


290






Depreciation and amortization

54


58


112






Contract investment amortization

18


13


31






Depreciation classified in reimbursed expenses

33


34


67






Depreciation and amortization from unconsolidated joint ventures

10


10


20






Share-based compensation

38


47


85






Gain on asset dispositions

(58)


(109)


(167)






Gain on investee's property sale

-


(10)


(10)






Merger-related costs and charges

34


18


52






Adjusted EBITDA **

$                 770


$             939


$           1,709

















Increase over 2017 Adjusted EBITDA **

8%


15%


11%

1

















Fiscal Year 2017 2



First
Quarter


Second
Quarter


Third
Quarter


Fourth
Quarter


Total


Net income, as reported

$                 371


$             489


$             485


$             114


$             1,459


Cost reimbursement revenue

(3,736)


(3,927)


(3,830)


(3,962)


(15,455)


Reimbursed expenses

3,696


3,791


3,650


4,091


15,228


Interest expense

70


73


73


72


288


Interest expense from unconsolidated joint ventures

1


3


2


4


10


Tax provision

123


227


253


920


1,523


Depreciation and amortization

51


71


54


53


229


Contract investment amortization

11


12


11


16


50


Depreciation classified in reimbursed expenses

32


33


28


33


126


Depreciation and amortization from unconsolidated joint ventures

11


10


10


11


42


Share-based compensation

35


41


42


37


155


Gain on asset dispositions

-


(24)


-


(659)


(683)


Merger-related costs and charges

51


21


28


59


159


Adjusted EBITDA **

$                 716


$             820


$             806


$             789


$             3,131
























** Denotes non-GAAP financial measures. Please see pages A-15 and A-16 for information about our reasons for providing these alternative financial measures and the






   limitations on their use.





















1

Represents the percentage increase of Adjusted EBITDA of $1,709 million for the first two quarters of 2018 over Adjusted EBITDA of $1,536 million for the first


two quarters of 2017.










2

On January 1, 2018, we adopted ASU 2014-09. The table above reflects our recast 2017 results under the new accounting standard.














A-11

 

 


MARRIOTT INTERNATIONAL, INC.


NON-GAAP FINANCIAL MEASURES


ADJUSTED EBITDA FORECAST


THIRD QUARTER 2018


($ in millions)



















Range






Estimated
Third Quarter 2018



Third Quarter 2017 2 **



Net income excluding certain items

$            445


$            464





Interest expense 

90


90





Interest expense from unconsolidated joint ventures 

-


-





Tax provision

145


151





Depreciation and amortization

60


60





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 **

$            845


$            870


$                                  806











Increase over 2017 Adjusted EBITDA **

5%


8%





















** Denotes non-GAAP financial measures. See pages A-15 and A-16 for information about our reasons for providing these alternative



   financial measures and the limitations on their use.















1

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

On January 1, 2018, we adopted ASU 2014-09. The table above reflects our recast 2017 results under the new accounting standard.



 For 2017 full year recast information, see the Form 8-K that we furnished on July 25, 2018.












A-12

 

 


MARRIOTT INTERNATIONAL, INC.


NON-GAAP FINANCIAL MEASURES


ADJUSTED EBITDA FORECAST


FOURTH QUARTER 2018


($ in millions)



















Range






Estimated
Fourth Quarter 2018



Fourth Quarter 2017 2 **



Net income excluding certain items

$            514


$            529





Interest expense 

85


85





Interest expense from unconsolidated joint ventures 

5


5





Tax provision

132


137





Depreciation and amortization

53


53





Contract investment amortization

14


14





Depreciation classified in reimbursed expenses

38


38





Depreciation and amortization from unconsolidated joint ventures

10


10





Share-based compensation

45


45





Adjusted EBITDA **

$            896


$            916


$                                  789











Increase over 2017 Adjusted EBITDA **

14%


16%





















** Denotes non-GAAP financial measures. See pages A-15 and A-16 for information about our reasons for providing these alternative



   financial measures and the limitations on their use.















1

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

On January 1, 2018, we adopted ASU 2014-09. The table above reflects our recast 2017 results under the new accounting standard.



 For 2017 full year recast information, see the Form 8-K that we furnished on July 25, 2018.