Marriott International Third Quarter Worldwide Comparable Systemwide REVPAR Up 6.0 Percent

THIRD QUARTER HIGHLIGHTS

• Diluted earnings per share (EPS) totaled $0.44, a 52 percent increase over prior year adjusted results;
• During the third quarter, the company completed the sale of its equity interest in the Courtyard joint venture resulting in cash proceeds of $96 million and a $41 million pre-tax gain;
• North America comparable company-operated REVPAR rose 7.0 percent in the third quarter.  On a constant dollar basis, worldwide comparable systemwide REVPAR rose 6.0 percent and average daily rate rose 4.7 percent using constant dollars;
• At the end of the third quarter, the company's worldwide pipeline of hotels under construction, awaiting conversion or approved for development totaled over 120,000 rooms, not including the 8,100 rooms from the acquisition of the Gaylord brand and hotel management business;
• Nearly 5,000 rooms opened during the quarter, including over 1,400 rooms converted from competitor brands and over 1,600 rooms in international markets.  The company signed nearly 13,000 rooms in the third quarter;
• Marriott repurchased 9.6 million shares of the company's common stock for $353 million during the quarter.  Year-to-date through the third quarter, the company repurchased 24.3 million shares for $903 million;
• For comparable Marriott Hotels & Resorts properties in North America, group room revenue increased 8 percent in the third quarter compared to the year ago quarter.

Marriott International, Inc. (NYSE: MAR) today reported third quarter 2012 results.

(Logo: http://photos./prnh/20090217/MARRIOTTINTLLOGO)

THIRD QUARTER 2012 RESULTS

Third quarter 2012 net income totaled $143 million, a 40 percent increase compared to third quarter 2011 adjusted net income.  Diluted EPS totaled $0.44, a 52 percent increase from adjusted diluted EPS in the year-ago quarter.  On July 11, 2012, the company forecasted third quarter diluted EPS of $0.39 to $0.41.

For the third quarter of 2011, the company reported a net loss of $179 million and reported diluted losses per share of $0.52.  Adjusted net income and adjusted diluted EPS for the year-ago quarter excluded $349 million pretax ($281 million after-tax and $0.81 per diluted share) of timeshare spin-off adjustments totaling $321 million pretax and other charges totaling $28 million pretax.  Timeshare spin-off adjustments included items such as the removal of timeshare business operating results and spin-off transaction costs, as well as the addition of license fees and other related items as if the spin-off had occurred on the first day of fiscal 2011.  Other charges included an $18 million pretax impairment charge on an investment in equity securities and a $10 million pretax write-off related to one property whose owner filed for bankruptcy. See page A-1 for third quarter 2011 reported results, the timeshare spin-off adjustments, other charges and adjusted results.

Arne M. Sorenson, president and chief executive officer of Marriott International, said, "We were pleased with our third quarter performance.  Pricing power continued to improve in the quarter as hotel occupancy levels approached prior peaks.  Group revenue at comparable Marriott Hotels and Resorts in North America rose 8 percent in the third quarter with room rates up 3 percent.  Transient REVPAR rose 6 percent with strong last-minute retail demand and reduced discounting.

"Looking ahead, we expect 2013 worldwide constant dollar REVPAR to increase at a mid single-digit rate despite moderate economic growth in many markets around the world.  We are particularly bullish about our prospects in North America and expect North American systemwide REVPAR to increase 5 to 7 percent in 2013.  In that market, negotiations for special corporate business are already underway and we are targeting room rates to increase at a high single-digit rate.  Group revenue on the books for 2013 for the Marriott brand in North America is up over 7 percent with rates up nearly 4 percent.

"Worldwide we opened nearly 5,000 rooms during the quarter and signed 13,000 rooms.  We are delighted to welcome the Gaylord brand and its five hotels located in Orlando, Nashville, Dallas and Washington, DC to our system in the fourth quarter.  Across 14 lodging brands worldwide, our pipeline of hotels under development, under construction or pending conversion increased to over 120,000 rooms during the quarter.  Around the world, we expect to add 28,000 rooms in 2012, 30,000 to 35,000 rooms in 2013 and 90,000 to 105,000 for the three-year period from 2012 to 2014.  Our market share of hotels continues to grow around the world."

For the 2012 third quarter, REVPAR for worldwide comparable systemwide properties increased 6.0 percent (a 4.6 percent increase using actual dollars).

In North America, comparable systemwide REVPAR increased 6.3 percent in the third quarter of 2012, including a 4.9 percent increase in average daily rate.  REVPAR for comparable systemwide North American full-service and luxury hotels (including Marriott Hotels & Resorts, The Ritz-Carlton, Renaissance Hotels and Autograph Collection Hotels) increased 6.8 percent with a 4.6 percent increase in average daily rate.  REVPAR for comparable systemwide North American limited-service hotels (including Courtyard, Residence Inn, SpringHill Suites, TownePlace Suites and Fairfield Inn & Suites) increased 5.9 percent in the third quarter with a 5.0 percent increase in average daily rate.

International comparable systemwide REVPAR rose 5.0 percent (a 1.5 percent decline using actual dollars), including a 3.8 percent increase in average daily rate (a 2.6 percent decline using actual dollars) in the third quarter of 2012.

Marriott added 35 new properties (4,874 rooms) to its worldwide lodging portfolio in the 2012 third quarter, including the Renaissance Shanghai Caohejing, the Renaissance Istanbul Bosphorus and The Ritz-Carlton, Vienna.  Thirteen properties (3,103 rooms) exited the system during the quarter.  At quarter-end, the company's lodging group encompassed 3,770 properties and timeshare resorts for a total of nearly 648,000 rooms.

The company's worldwide pipeline of hotels under construction, awaiting conversion or approved for development totaled approximately 730 properties with over 120,000 rooms at quarter-end, not including the 8,100 Gaylord rooms joining the system in the fourth quarter.

MARRIOTT REVENUES totaled over $2.7 billion in the 2012 third quarter compared to adjusted revenues of $2.5 billion for the third quarter of 2011.  Base management and franchise fees rose 9 percent over prior year adjusted levels to $283 million, reflecting higher REVPAR at existing hotels and fees from new hotels, as well as $7 million of deferred base management fees recognized in the quarter related to the sale of the Courtyard joint venture.  Third quarter worldwide incentive management fees increased 24 percent to $36 million.  In the third quarter, 28 percent of worldwide company-managed hotels earned incentive management fees compared to 24 percent in the year-ago quarter.

Worldwide comparable company-operated house profit margins increased 180 basis points in the third quarter.  House profit margins for comparable company-operated properties outside North America increased 160 basis points and North American comparable company-operated house profit margins increased 200 basis points from the year-ago quarter.

Owned, leased, corporate housing and other revenue, net of direct expenses, totaled $26 million, compared to $35 million in the year-ago quarter.  The $9 million decline reflected a $7 million decline in termination fees and a $2 million decrease in residential branding fees.

GENERAL, ADMINISTRATIVE and OTHER expenses for the 2012 third quarter declined 8 percent in the 2012 third quarter, to $132 million compared to adjusted expenses of $143 million in the 2011 third quarter.  Third quarter 2012 expenses reflected a favorable litigation settlement, partially offset by higher legal expenses, netting to a favorable $5 million.  In the prior year, expenses reflected the $5 million combined impact of the guarantee reserve for one hotel and the write-off of deferred contract acquisition costs.

GAINS AND OTHER INCOME totaled $36 million in the quarter, primarily reflecting the $41 million gain related to the sale of the Courtyard joint venture offset by a $7 million impairment charge on an investment.

INTEREST EXPENSE totaled $29 million in the third quarter, compared to adjusted interest expense of $32 million in the year-ago quarter.  Capitalized interest totaled $7 million in the quarter, compared to $5 million in the year-ago quarter.

EBITDA totaled $284 million in the 2012 third quarter, a 27 percent increase over 2011 third quarter adjusted EBITDA of $223 million.  See page A-9 for the EBITDA and adjusted EBITDA calculations.

BALANCE SHEET

At the end of the third quarter 2012, total debt was $2,509 million and cash balances totaled $105 million, compared to $2,171 million in debt and $102 million of cash at year-end 2011.

At the beginning of the fourth quarter, the company issued $350 million of Series L bonds due in 2022 with a 3.25 percent interest rate coupon.  The company expects to use the net proceeds for general corporate purposes.

COMMON STOCK

Weighted average fully diluted shares outstanding used to calculate diluted EPS totaled 329.3 million in the 2012 third quarter, compared to 356.8 million in the year-ago quarter.

The company repurchased 9.6 million shares of common stock in the third quarter at a cost of $353 million.  Year-to-date through the third quarter, Marriott repurchased 24.3 million shares of its stock for $903 million.  The remaining share repurchase authorization, as of September 7, 2012, totaled 16.2 million shares.

FOURTH QUARTER 2012 OUTLOOK

For the fourth quarter, the company expects comparable systemwide REVPAR on a constant dollar basis will increase 5 to 7 percent in North America, increase roughly 3 percent outside North America and improve 4 to 6 percent worldwide.

The company expects to add approximately 28,000 rooms worldwide for the full year 2012.  The company also expects approximately 10,000 rooms will leave the system during the year.

 

	Fourth Quarter 2012	Full Year 2012
Total fee revenue	$445 million to $455 million	$1,406 million to $1,416 million
Owned, leased, corporate housing and other revenue, net of direct expenses	Approx $55 million	Approx $164 million
General, administrative and other expenses	$200 million to $210 million	$639 million to $649 million
Operating income	$290 million to $310 million	$921 million to $941 million
Gains and other income	Approx $1 million	Approx $44 million
Net interest expense1	Approx $30 million	Approx $116 million
Equity in earnings (losses)	Approx $(5) million	Approx $(15) million
Earnings per share	$0.52 to $0.56	$1.68 to $1.72
Tax rate		33.0 percent

 ¹ Net of interest income

 

The company expects investment spending in 2012 will total approximately $850 million to $950 million, including approximately $100 million for maintenance capital spending.  Investment spending also includes other capital expenditures (including property acquisitions), new mezzanine financing and mortgage notes, contract acquisition costs (including the $210 million payment associated with the Gaylord transaction), and equity and other investments.  Assuming this level of investment spending, approximately $1.1 billion could be returned to shareholders through share repurchases and dividends.

Based upon the assumptions above, the company expects full year 2012 EBITDA will total $1,129 million to $1,149 million, a 14 to 16 percent increase over the prior year's adjusted EBITDA.  Adjusted EBITDA for full year 2011 totaled $992 million and is shown on page A-10.

The company will report its 2013 results on a calendar basis, with fiscal quarters ending on March 31, June 30, September 30 and December 31.  Prior year periods will not be restated or reported on a pro forma basis for the change in calendar.

Marriott International, Inc. (NYSE: MAR) is a leading lodging company based in Bethesda, Maryland, USA with more than 3,700 properties in 74 countries and territories and reported revenues of over $12 billion in fiscal year 2011.  The company operates and franchises hotels and licenses vacation ownership resorts under 18 brands, including Marriott Hotels & Resorts, The Ritz-Carlton, JW Marriott, Bulgari, EDITION, Renaissance, Gaylord Hotels, Autograph Collection, AC Hotels by Marriott, Courtyard, Fairfield Inn & Suites, SpringHill Suites, Residence Inn, TownePlace Suites, Marriott Executive Apartments, Marriott Vacation Club, Grand Residences by Marriott, and The Ritz-Carlton Destination Club.  There are approximately 300,000 employees at headquarters, managed and franchised properties.  Marriott is consistently recognized as a top employer and for its superior business operations, which it conducts based on five core values: put people first, pursue excellence, embrace change, act with integrity, and serve our world. 

 

                                                                       IRPR#1

ables follow

 

MARRIOTT INTERNATIONAL, INC
PRESS RELEASE SCHEDULES
QUARTER 3, 2012
TABLE OF CONTENTS
Consolidated Statements of Income										A-1
Total Lodging Products										A-4
Key Lodging Statistics										A-5
EBITDA and Adjusted EBITDA										A-9
EBITDA and Adjusted EBITDA Full Year Forecast										A-10
Adjusted Operating Income Margin and EBITDA Margin Excluding Adjusted Reimbursed Costs										A-11
Non-GAAP Financial Measures										A-12

 

 

MARRIOTT INTERNATIONAL, INC.
NON-GAAP FINANCIAL MEASURES
ADJUSTED CONSOLIDATED STATEMENTS OF INCOME
THIRD QUARTER 2012 AND 2011
(in millions, except per share amounts)
	As Reported 12 Weeks Ended September 7, 2012		As Reported 12 Weeks Ended September 9, 2011	Timeshare  Spin-off Adjustments 11	Other  Charges	As Adjusted 12 Weeks Ended September 9, 2011**		Percent Better (Worse) 2012 vs. Adjusted 2011
REVENUES
Base management fees	$                    134		$                       136	$                     (16)	$                     -	$                          120		12
Franchise fees	149		124	15	-	139		7
Incentive management fees	36		29	-	-	29		24
Owned, leased, corporate housing and other revenue 1	200		254	-	-	254		(21)
Timeshare sales and services 2	-		286	(286)	-	-		-
Cost reimbursements 3	2,210		2,045	(68)	-	1,977		12
Total Revenues	2,729		2,874	(355)	-	2,519		8
OPERATING COSTS AND EXPENSES
Owned, leased and corporate housing - direct 4	174		219	-	-	219		21
Timeshare - direct	-		250	(250)	-	-		-
Timeshare strategy - impairment charges 5	-		324	(324)	-	-		-
Reimbursed costs	2,210		2,045	(68)	-	1,977		(12)
General, administrative and other6	132		180	(27)	(10)	143		8
Total Expenses	2,516		3,018	(669)	(10)	2,339		(8)
OPERATING INCOME (LOSS)	213		(144)	314	10	180		18
Gains (losses) and other income 7	36		(16)	1	18	3		1,100
Interest expense	(29)		(39)	7	-	(32)		9
Interest income	3		2	3	-	5		(40)
Equity in losses 8	(1)		(2)	(4)	-	(6)		83
INCOME (LOSS) BEFORE INCOME TAXES	222		(199)	321	28	150		48
(Provision) benefit for income taxes	(79)		20	(57)	(11)	(48)		(65)
NET INCOME (LOSS)	$                    143		$                      (179)	$                    264	$                    17	$                          102		40
EARNINGS (LOSSES) PER SHARE - Basic
Earnings (losses) per share 9	$                   0.45		$                     (0.52)	$                   0.76	$                 0.05	$                         0.30		50
EARNINGS (LOSSES) PER SHARE - Diluted
Earnings (losses) per share 9	$                   0.44		$                     (0.52)	$                   0.76	$                 0.05	$                         0.29		52
Basic Shares	319.4		345.4	345.4	345.4	345.4
Diluted Shares 10	329.3		345.4	345.4	345.4	356.8
See page A-3 for footnote references.
A-1

 

 

MARRIOTT INTERNATIONAL, INC.
NON-GAAP FINANCIAL MEASURES
ADJUSTED CONSOLIDATED STATEMENTS OF INCOME
THIRD QUARTER YEAR-TO-DATE 2012 AND 2011
(in millions, except per share amounts)
	As Reported 36 Weeks Ended September 7, 2012		As Reported 36 Weeks Ended September 9, 2011	Timeshare  Spin-off Adjustments 11	Other  Charges	As Adjusted 36 Weeks Ended September 9, 2011**		Percent Better (Worse) 2012 vs. Adjusted 2011
REVENUES
Base management fees	$                    399		$                      419	$                   (44)	$                     -	$                         375		6
Franchise fees	420		347	44	-	391		7
Incentive management fees	142		121	-	-	121		17
Owned, leased, corporate housing and other revenue 1	681		727	-	-	727		(6)
Timeshare sales and services 2	-		850	(850)	-	-		-
Cost reimbursements 3	6,415		6,160	(210)	-	5,950		8
Total Revenues	8,057		8,624	(1,060)	-	7,564		7
OPERATING COSTS AND EXPENSES
Owned, leased and corporate housing - direct 4	572		643	-	-	643		11
Timeshare - direct	-		720	(720)	-	-		-
Timeshare strategy - impairment charges 5	-		324	(324)	-	-		-
Reimbursed costs	6,415		6,160	(210)	-	5,950		(8)
General, administrative and other6	439		498	(64)	(10)	424		(4)
Total Expenses	7,426		8,345	(1,318)	(10)	7,017		(6)
OPERATING INCOME	631		279	258	10	547		15
Gains (losses) and other income 7	43		(11)	-	18	7		514
Interest expense	(96)		(117)	24	-	(93)		(3)
Interest income	10		9	8	-	17		(41)
Equity in losses 8	(10)		(6)	(4)	-	(10)		-
INCOME BEFORE INCOME TAXES	578		154	286	28	468		24
Provision for income taxes	(188)		(97)	(44)	(11)	(152)		(24)
NET INCOME	$                    390		$                       57	$                  242	$                     17	$                         316		23
EARNINGS PER SHARE - Basic
Earnings per share 9	$                   1.19		$                     0.16	$                 0.68	$                  0.05	$                        0.89		34
EARNINGS PER SHARE - Diluted
Earnings per share 9	$                   1.16		$                     0.15	$                 0.65	$                  0.05	$                        0.85		36
Basic Shares	327.0		356.5	356.5	356.5	356.5
Diluted Shares	337.5		369.8	369.8	369.8	369.8
See page A-3 for footnote references.
A-2

 

 

MARRIOTT INTERNATIONAL, INC.
NON-GAAP FINANCIAL MEASURES
ADJUSTED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share amounts)
**	Denotes non-GAAP financial measures. Please see pages A-12 and A-13 for additional information about our reasons for providing these alternative financial measures and limitations on their use.
1 –	Owned, leased, corporate housing and other revenue includes revenue from the properties we own or lease, termination fees, branding fees, other revenue and  revenue from our former corporate housing business through the sale date of April 30, 2012.
2 –	Timeshare sales and services includes total timeshare revenue except for base management fees and cost reimbursements.
3  –	Cost reimbursements include reimbursements from properties for Marriott-funded operating expenses.
4  –	Owned, leased and corporate housing - direct expenses include operating expenses related to our owned or leased hotels, including lease payments, pre-opening expenses and depreciation, plus expenses related to our former corporate housing business through the sale date of April 30, 2012.
5  –	Reflects the following 2011 third quarter impairments: inventory $256 million, land $62 million, and other impairments $6 million, all of which are allocated to the Timeshare segment.
6  –	General, administrative and other expenses include the overhead costs allocated to our segments, and our corporate overhead costs and general expenses.
7  –	Gains (losses) and other income includes gains and losses on the sale of real estate, note sales or repayments (except timeshare note securitizations), the sale or other-than-temporary impairment of joint ventures and investments, debt extinguishments, and income from cost method joint ventures.
8  –	Equity in losses includes our equity in earnings or losses of unconsolidated equity method joint ventures.
9  –	Earnings per share plus adjustment items may not equal earnings per share as adjusted due to rounding.
10 –	Basic and fully diluted weighted average shares outstanding used to calculate earnings per share for the period in which we had a loss are the same because inclusion of additional equivalents would be anti-dilutive.
11 –	We present our adjusted consolidated statements of income as if the Timeshare spin-off had occurred on January 1, 2011.
A-3

 

 

MARRIOTT INTERNATIONAL, INC.
TOTAL LODGING PRODUCTS 1
		Number of Properties				Number of Rooms/Suites
Brand		September 7,  2012	September 9,  2011	vs. September 9,  2011		September 7,  2012	September 9, 2011	vs. September 9, 2011
Domestic Full-Service
Marriott Hotels & Resorts		350	355	(5)		141,178	143,579	(2,401)
Renaissance Hotels		79	78	1		28,597	28,446	151
Autograph Collection		22	16	6		6,298	4,860	1,438
Domestic Limited-Service
Courtyard		812	802	10		114,173	112,578	1,595
Fairfield Inn & Suites		677	663	14		61,326	60,010	1,316
SpringHill Suites		296	283	13		34,671	33,234	1,437
Residence Inn		601	597	4		72,514	72,067	447
TownePlace Suites		205	197	8		20,499	19,770	729
International
Marriott Hotels & Resorts		202	202	-		62,133	62,404	(271)
Renaissance Hotels		76	74	2		24,596	23,740	856
Autograph Collection		6	4	2		676	496	180
Courtyard		109	104	5		21,318	20,496	822
Fairfield Inn & Suites		13	11	2		1,568	1,361	207
SpringHill Suites		2	2	-		299	299	-
Residence Inn		23	18	5		3,229	2,559	670
TownePlace Suites		2	1	1		278	105	173
Marriott Executive Apartments		24	22	2		3,846	3,562	284
Luxury
The Ritz-Carlton - Domestic		39	39	-		11,587	11,587	-
The Ritz-Carlton - International		41	38	3		12,295	11,503	792
Bulgari Hotels & Resorts		3	2	1		202	117	85
Edition		1	1	-		78	78	-
The Ritz-Carlton Residential		35	31	4		3,927	3,780	147
The Ritz-Carlton Serviced Apartments		4	4	-		579	579	-
Unconsolidated Joint Ventures
AC Hotels by Marriott		79	75	4		8,736	7,944	792
Autograph Collection		5	4	1		348	277	71
Timeshare 2		64	71	(7)		12,932	13,018	(86)
Total		3,770	3,694	76		647,883	638,449	9,434

1	Total Lodging Products as of September 9, 2011 does not include 2,165 ExecuStay corporate housing rental units.  We had no ExecuStay corporate housing rental units as of September 7, 2012 because we completed the sale of our corporate housing business during the second quarter of 2012.
2	Reported 2012 Timeshare properties and rooms/suites are not comparable to 2011 data due to a change in reporting methodology as a result of the Timeshare spin-off.
A-4

 

 

MARRIOTT INTERNATIONAL, INC. KEY LODGING STATISTICS Constant $
Comparable Company-Operated International Properties1
		Three Months Ended August 31, 2012 and August 31, 2011
		REVPAR			Occupancy				Average Daily Rate
Region		2012	vs. 2011		2012		vs. 2011		2012	vs. 2011
Caribbean & Latin America		$126.98	6.7%		72.8%	0.9%	pts.		$174.36	5.4%
Europe		$131.22	4.9%		77.4%	-0.6%	pts.		$169.46	5.8%
Middle East & Africa		$71.30	12.2%		58.8%	3.8%	pts.		$121.19	5.0%
Asia Pacific		$90.61	7.8%		71.8%	1.8%	pts.		$126.19	5.1%
Regional Composite2		$110.95	6.4%		73.3%	0.8%	pts.		$151.44	5.2%
International Luxury3		$195.74	5.5%		63.2%	1.8%	pts.		$309.85	2.5%

Logos, product and company names mentioned are the property of their respective owners.

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