Company Results

Marriott International First Quarter $300 Million to $320 Million

North American comparable systemwide RevPAR rose 6.3 percent in the first quarter with average daily rates up 3.3 percent; On a constant dollar basis, worldwide comparable systemwide RevPAR rose 6.2 percent in the first quarter, including a 3.2 percent increase in average daily rate.

Marriott

HIGHLIGHTS

  • First quarter diluted EPS totaled $0.57, a 33 percent increase over prior year results;
  • North American comparable systemwide RevPAR rose 6.3 percent in the first quarter with average daily rates up 3.3 percent;
  • On a constant dollar basis, worldwide comparable systemwide RevPAR rose 6.2 percent in the first quarter, including a 3.2 percent increase in average daily rate;
  • Marriott repurchased 7.0 million shares of the company's common stock for $356 million during the first quarter.  Year-to-date, the company repurchased 9.0 million shares for $467 million;
  • Comparable company-operated house profit margins increased 160 basis points in North America and 130 basis points worldwide in the first quarter;
  • Adjusted for cost reimbursements, the company's operating income margin increased to 41 percent compared to 38 percent in the year-ago quarter;
  • At the end of the first quarter, the company's worldwide development pipeline increased to over 200,000 rooms, including nearly 30,000 rooms approved, but not yet subject to signed contracts.  The pipeline does not include the more than 10,000 rooms associated with the Protea transaction, which was completed on April 1st;
  • Nearly 6,000 rooms were added during the first quarter, including over 1,000 rooms converted from competitor brands and 3,300 rooms in international markets;
  • Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) totaled $339 million in the quarter, a 12 percent increase over first quarter 2013 adjusted EBITDA.

Marriott International, Inc. (NASDAQ: MAR) today reported first quarter 2014 results.  Due to the company's change in the fiscal calendar beginning in 2013, the first quarter of 2014 reflects the period from January 1, 2014 through March 31, 2014 (90 days) compared to the 2013 first quarter, which reflects the period from December 29, 2012 through March 31, 2013 (93 days).  Prior year results have not been restated for the change in fiscal calendar, although revenue per available room (RevPAR), occupancy and average daily rate statistics are reported for calendar quarters for purposes of comparability.

First quarter 2014 net income totaled $172 million, a 26 percent increase compared to first quarter 2013 net income.  Diluted earnings per share (EPS) totaled $0.57, a 33 percent increase from diluted EPS in the year-ago quarter.  First quarter 2014 results reflect a $10 million impairment charge and a net $16 million tax benefit.  On February 19, 2014, the company forecasted first quarter diluted EPS of $0.47 to $0.52.

Arne M. Sorenson, president and chief executive officer of Marriott International, said, "We are delighted to report solid results in the first quarter of 2014.  We continue to enjoy strong preference for our brands, sustained economic growth and favorable industry supply trends in many markets around the world. 

"North American group and transient demand exceeded our expectations during the quarter, driving RevPAR and house profit margins higher.  We were particularly pleased to see higher food and beverage spending by both groups and transient guests.

"While hotel industry supply in North America is growing only modestly, particularly in the full-service segment, we are taking a greater share of new hotels being developed around the world, reflecting owners' and franchisees' confidence in our brands and operational strength.  At quarter-end, we had over 200,000 rooms in our development pipeline, a 35 percent increase from a year ago.

"On April 1, we became the largest hotel company in Africa after completing our acquisition of the Protea Hospitality Group.  We look forward to new opportunities for growth in Africa.

"Looking ahead, we expect demand to remain strong, with North American comparable company-operated RevPAR increasing 4 ½  to 6 ½ percent in 2014 and property-level house profit margins improving 100 to 150 basis points.  We expect 5 percent net rooms growth worldwide and another year of record signings from our development team.

"We remain committed to increasing RevPAR, growing our distribution globally and controlling costs in order to drive earnings and shareholder value.  Over the past 4 years, we have repurchased 103.1 million shares for approximately $3.8 billion and 21.6 million shares for $973 million in the last four quarters alone."

For the 2014 first quarter, RevPAR for worldwide comparable systemwide properties increased 6.2 percent (a 5.9 percent increase using actual dollars).

In North America, comparable systemwide RevPAR increased 6.3 percent in the first quarter of 2014, including a 3.3 percent increase in average daily rate.  RevPAR for comparable systemwide North American full-service hotels (including Marriott Hotels, The Ritz-Carlton, Renaissance Hotels, Gaylord Hotels and Autograph Collection Hotels) increased 6.5 percent with a 3.6 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 6.2 percent in the first quarter with a 3.1 percent increase in average daily rate.

International comparable systemwide RevPAR rose 5.7 percent (a 4.4 percent increase using actual dollars) in the first quarter.

Marriott added 32 new properties (5,855 rooms) to its worldwide lodging portfolio in the 2014 first quarter, including The Ritz-Carlton Kyoto, the JW Marriott Dongdaenum Square Seoul and the Pier One Sydney Harbour, an Autograph Collection hotel.  Fourteen properties (2,154 rooms) exited the system during the quarter.  At quarter-end, the company's lodging group encompassed 3,934 properties and timeshare resorts for a total of nearly 680,000 rooms.

The company's worldwide development pipeline increased to more than 1,200 properties with over 200,000 rooms at quarter-end, including 186 properties with nearly 30,000 rooms approved for development, but not yet subject to signed contracts.  The company's pipeline at quarter-end does not include the 10,148 rooms associated with the Protea transaction.

MARRIOTT REVENUES totaled nearly $3.3 billion in the 2014 first quarter compared to revenues of over $3.1 billion for the first quarter of 2013.  Base management and franchise fees totaled $318 million compared to $304 million in the year-ago quarter.  The year-over-year increase largely reflects higher RevPAR and non-room revenue partially offset by $5 million of lower fees due to the three additional days in the year-ago quarter as a result of the change in the fiscal calendar.

First quarter worldwide incentive management fees increased $5 million to $71 million.   Incentive fee growth in the first quarter was somewhat constrained by tough comparisons to last year's Hurricane Sandy recovery in New York, the inauguration in Washington, DC and the Super Bowl in New Orleans.  In the first quarter, 36 percent of worldwide company-managed hotels earned incentive management fees compared to 33 percent in the year-ago quarter. 

On February 19, the company estimated total fee revenue for the first quarter would total $380 million to $395 million.  Actual total fee revenue in the quarter was within the expected range.  

Worldwide comparable company-operated house profit margins increased 130 basis points in the first quarter.  House profit margins for comparable company-operated properties outside North America increased 70 basis points and North American comparable company-operated house profit margins increased 160 basis points from the year-ago quarter.

Owned, leased and other revenue, net of direct expenses, totaled $49 million, compared to $45 million in the year-ago quarter.  Improved results at several leased hotels and results from a property the company acquired in the fourth quarter of 2013 were partially offset by lower termination and residential branding fees. 

On February 19, the company estimated first quarter owned, leased and other revenue, net of direct expenses would total approximately $45 million for the first quarter.  Actual results in the quarter exceeded those expectations by $4 million largely due to better than expected performance at several international hotels.

DEPRECIATION and AMORTIZATION expense totaled $36 million in the 2014 first quarter compared to $25 million in the year-ago quarter.  The increase in expense largely reflects a $10 million impairment charge for the company's owned EDITION hotels due to higher estimated construction costs.  These hotels are contracted for sale at a fixed price.

GENERAL, ADMINISTRATIVE and OTHER expenses for the 2014 first quarter totaled $148 million, a 10 percent decline compared to the year-ago quarter.

On February 19, the company estimated general and administrative expenses for the first quarter would total $155 million to $160 million.  Actual expenses in the quarter were lower than expected largely due to favorable timing.   

Provision for Income Taxes

The provision for income taxes in the first quarter was lower than anticipated due to a net $16 million non-cash tax benefit largely related to a settlement with the IRS.

Adjusted Earnings before Interest Expense, Taxes, Depreciation and Amortization (EBITDA)

Adjusted EBITDA totaled $339 million in the 2014 first quarter, a 12 percent increase over 2013 first quarter adjusted EBITDA of $303 million.  See page A-6 for the EBITDA calculation.

BALANCE SHEET

At the end of the first quarter, total debt was $3,302 million and cash balances totaled $184 million, compared to $3,199 million in debt and $126 million of cash at year-end 2013.

COMMON STOCK

Weighted average fully diluted shares outstanding used to calculate diluted EPS totaled 303.3 million in the 2014 first quarter, compared to 320.0 million in the year-ago quarter.

The company repurchased 7.0 million shares of common stock in the first quarter at a cost of $356 million.  Year-to-date, Marriott repurchased 9.0 million shares of its stock for $467 million.  The remaining share authorization as of April 29, 2014, totaled 30.3 million shares.

OUTLOOK 

For the 2014 second quarter, the company expects comparable systemwide calendar RevPAR on a constant dollar basis will increase 4 to 6 percent in North America, outside North America and worldwide.

The company expects full year 2014 comparable systemwide RevPAR on a constant dollar basis will increase 4.5 to 6.5 percent inNorth America, 4 to 6 percent outside North America and 4.5 to 6.5 percent worldwide.

The company anticipates gross room additions of 6 percent worldwide for the full year 2014 including the 10,148 rooms associated with the Protea acquisition.  Net of deletions, the company expects its portfolio of rooms will increase by approximately 5 percent by year-end 2014. 

The company assumes full year fee revenue could total $1,665 million to $1,705 million, growth of 8 to 11 percent over 2013 fee revenue of $1,543 million. 

For 2014, the company anticipates general, administrative and other expenses will total $640 million to $650 million, flat to down 1 percent compared to 2013 expenses of $649 million.

Given these assumptions, 2014 diluted EPS could total $2.39 to $2.53, a 20 to 27 percent increase year-over-year. 

 

Second Quarter 2014

Full Year 2014

Total fee revenue

$440 million to $450 million

$1,665 million to $1,705 million

Owned, leased and other revenue,

       net of direct expenses

$60 million to $65 million

$220 million to $230 million

Depreciation and amortization

Approx. $30 million

Approx. $130 million

General, administrative and other expenses

$165 million to $170 million

$640 million to $650 million

Operating income

$300 million to $320 million

$1,105 million to $1,165 million

Gains and other income

Approx. $0 million

Approx. $5 million

Net interest expense1

Approx. $25 million

Approx. $100 million

Equity in earnings (losses)

Approx. $0 million

Approx. $0 million

Earnings per share

$0.63 to $0.68

$2.39 to $2.53

Tax rate

32.0 percent

 1 Net of interest income

 

The company expects investment spending in 2014 will total approximately $800 million to $1.0 billion, including approximately$150 million for maintenance capital spending and $193 million associated with the Protea transaction.  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, approximately $1.25 billion to $1.5 billion could be returned to shareholders through share repurchases and dividends.

Based upon the assumptions above, the company expects full year 2014 adjusted EBITDA will total $1,440 million to $1,500 million, a 9 to 13 percent increase over the 2013 full year adjusted EBITDA of $1,325 million.  See page A-7 for the adjusted EBITDA calculation.

 

Marriott International, Inc. (NASDAQ: MAR) is a leading lodging company based in Bethesda, Maryland, USA, with more than 3,900 properties in 71 countries and territories as of quarter end and reported revenues of nearly $13 billion in fiscal year 2013.  The company operates and franchises hotels under 16 brands, including Marriott Hotels, The Ritz-Carlton, JW Marriott, Bulgari, EDITION, Renaissance, Gaylord Hotels, Protea Hotels, Autograph Collection, AC Hotels by Marriott, Courtyard, Fairfield Inn & Suites, SpringHill Suites, Residence Inn, TownePlace Suites, Marriott Executive Apartments; licenses vacation ownership resorts under the Marriott Vacation Club, Grand Residences by Marriott and Ritz-Carlton Club brands; and licenses and manages residential properties under several of its brands.  There are approximately 330,000 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.

MARRIOTT INTERNATIONAL, INC.

PRESS RELEASE SCHEDULES

QUARTER 1, 2014

TABLE OF CONTENTS

Condensed Consolidated Statements of Income __________________________________________

A-1

Fiscal Year 2013 Operating Income ____________________________________________________

A-2

Total Lodging Products ______________________________________________________________

A-3

Key Lodging Statistics ______________________________________________________________

A-4

EBITDA and Adjusted EBITDA ________________________________________________________

A-6

EBITDA and Adjusted EBITDA Full Year Forecast _________________________________________

A-7

Adjusted Operating Income Margin Excluding Cost Reimbursements __________________________

A-8

Non-GAAP Financial Measures _______________________________________________________

A-9

 

MARRIOTT INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

FIRST QUARTER 2014 AND 2013

(in millions except per share amounts, unaudited)

Three Months

Ended

Three Months

Ended

Percent

 Better/ 

March 31, 2014

March 31, 2013 1

 (Worse) 

REVENUES

Base management fees

$                        155

$                        153

1

Franchise fees

163

151

8

Incentive management fees

71

66

8

Owned, leased and other revenue 2

234

224

4

Cost reimbursements 3

2,670

2,548

5

   Total Revenues

3,293

3,142

5

OPERATING COSTS AND EXPENSES

Owned and leased - direct 4

185

179

(3)

Reimbursed costs

2,670

2,548

(5)

Depreciation and amortization 5

36

25

(44)

General, administrative and other 6

148

164

10

   Total Expenses

3,039

2,916

(4)

OPERATING INCOME

254

226

12

Gains and other income 7

-

3

(100)

Interest expense

(30)

(31)

3

Interest income 

5

3

67

Equity in earnings 8

2

-

 * 

INCOME BEFORE INCOME TAXES

231

201

15

Provision for income taxes

(59)

(65)

9

NET INCOME

$                        172

$                        136

26

EARNINGS PER SHARE - Basic

   Earnings per share

$                       0.58

$                       0.44

32

EARNINGS PER SHARE - Diluted

   Earnings per share

$                       0.57

$                       0.43

33

Basic Shares

296.1

311.8

Diluted Shares 

303.3

320.0

*  Percent cannot be calculated.

1  – Prior year results reflect 93 days of activity from December 29, 2012 through March 31, 2013.

2  – Owned, leased, and other revenue includes revenue from the properties we own or lease, termination fees, branding fees, and other revenue.

3  – Cost reimbursements include reimbursements from properties for Marriott-funded operating expenses.

4  – Owned and leased - direct expenses include operating expenses related to our owned or leased hotels, including lease payments and pre-opening expenses.

5  – Depreciation and amortization expense includes depreciation and amortization previously classified in owned, leased, and other expenses and general administrative, and other expenses.

6  – General, administrative and other expenses include the overhead costs allocated to our segments, and our corporate overhead costs and and general expenses.

7  – Gains and other income includes gains and losses on: the sale of real estate, note sales or repayments, the sale or other-than-temporary impairment of joint ventures and investments, debt extinguishments, and income from cost method joint ventures.

 – Equity in earnings includes our equity in earnings or losses of unconsolidated equity method joint ventures.

A-1

MARRIOTT INTERNATIONAL, INC.

FISCAL YEAR 2013 OPERATING INCOME

($ in millions, unaudited)

Fiscal Year 2013

First

Quarter

Second

Quarter

Third

Quarter

Fourth

Quarter

Full

Year

REVENUES

Base management fees

$      153

$        166

$       150

$         152

$       621

Franchise fees

151

177

175

163

666

Incentive management fees

66

64

53

73

256

Owned, leased, and other revenue 1

224

246

220

260

950

Cost reimbursements 2

2,548

2,610

2,562

2,571

10,291

   Total Revenues

3,142

3,263

3,160

3,219

12,784

OPERATING COSTS AND EXPENSES

Owned and leased - direct 3

179

181

172

197

729

Reimbursed costs

2,548

2,610

2,562

2,571

10,291

Depreciation and amortization 4

25

33

34

35

127

General, administrative and other 5

164

160

147

178

649

   Total Expenses

2,916

2,984

2,915

2,981

11,796

OPERATING INCOME

$      226

$        279

$       245

$         238

$       988

1  – Owned, leased, and other revenue includes revenue from the properties we own or lease, termination fees, branding fees, and other revenue.

2  – Cost reimbursements include reimbursements from properties for Marriott-funded operating expenses.

3  – Owned and leased - direct expenses include operating expenses related to our owned or leased hotels, including lease payments and pre-opening expenses.

4  – Depreciation and amortization expense includes depreciation and amortization previously classified in owned, leased, and other expenses and general, administrative, and other expenses.

5  – General, administrative and other expenses include the overhead costs allocated to our segments, and our corporate overhead costs and general expenses.

A-2

MARRIOTT INTERNATIONAL, INC.

TOTAL LODGING PRODUCTS 

Number of Properties

Number of Rooms/Suites

Brand

March 31,

2014

March 31,

2013

vs.

March 31,

2013

March 31,

2014

March 31,

2013

vs.

March 31,

2013

Domestic Full-Service

    Marriott Hotels

344

348

(4)

138,857

140,629

(1,772)

    Renaissance

76

78

(2)

27,189

28,209

(1,020)

    Autograph Collection

34

26

8

8,842

6,910

1,932

    Gaylord Hotels 

5

5

-

8,098

8,098

-

    The Ritz-Carlton

37

38

(1)

11,040

11,357

(317)

    The Ritz-Carlton Residential

30

30

-

3,598

3,598

-

Domestic Limited-Service

    Courtyard

837

820

17

118,118

115,095

3,023

    Fairfield Inn & Suites

695

679

16

63,219

61,666

1,553

    SpringHill Suites

310

297

13

36,434

34,844

1,590

    Residence Inn

626

607

19

75,634

73,249

2,385

    TownePlace Suites

222

212

10

22,087

21,118

969

International

    Marriott Hotels 

220

210

10

67,613

64,392

3,221

    Renaissance

78

75

3

24,809

24,400

409

    Autograph Collection 1

26

15

11

3,475

1,571

1,904

    Courtyard

119

114

5

23,198

22,244

954

    Fairfield Inn & Suites

17

13

4

2,092

1,568

524

    SpringHill Suites

2

2

-

299

299

-

    Residence Inn

24

23

1

3,349

3,229

120

    TownePlace Suites

2

2

-

278

278

-

    Marriott Executive Apartments

28

26

2

4,423

4,140

283

    The Ritz-Carlton 

47

43

4

13,777

13,120

657

    The Ritz-Carlton Residential

10

7

3

630

469

161

    The Ritz-Carlton Serviced Apartments

4

4

-

579

579

-

    Bulgari Hotels & Resorts

3

3

-

202

202

-

    EDITION

2

1

1

251

78

173

    AC Hotels by Marriott 1

74

79

(5)

8,329

8,819

(490)

Timeshare 2

62

65

(3)

12,901

13,002

(101)

Total

3,934

3,822

112

679,321

663,163

16,158

1  All AC Hotels by Marriott properties and five Autograph Collection properties included in this table are operated by unconsolidated joint ventures that hold management agreements and also provide services to franchised properties.

2  Timeshare unit and room counts are as of March 28, 2014 and March 22, 2013, the end of Marriott Vacation Worldwide's first quarter for 2014 and 2013, respectively.

A-3

MARRIOTT INTERNATIONAL, INC.

KEY LODGING STATISTICS

Constant $

Comparable Company-Operated International Properties1

Three Months Ended March 31, 2014 and March 31, 2013

REVPAR

Occupancy

Average

Daily Rate

Region

2014

vs.

2013

2014

vs.

2013

2014

vs.

 2013

Caribbean & Latin America

$230.36

11.0%

77.7%

2.5%

pts.

$296.31

7.5%

Europe

$115.08

2.6%

63.4%

1.4%

pts.

$181.47

0.3%

Middle East & Africa

$120.44

-0.6%

59.6%

0.0%

pts.

$202.06

-0.6%

Asia Pacific

$128.90

6.3%

70.8%

2.2%

pts.

$182.05

2.9%

Total International2

$136.07

5.3%

67.7%

1.7%

pts.

$200.98

2.7%

Worldwide3

$126.61

5.8%

70.1%

2.0%

pts.

$180.57

2.7%

Comparable Systemwide International Properties1

Three Months Ended March 31, 2014 and March 31, 2013

REVPAR

Occupancy

Average

Daily Rate

Region

2014

vs.

 2013

2014

vs.

 2013

2014

vs.

2013

Caribbean & Latin America

$181.37

9.9%

73.1%

2.5%

pts.

$248.27

6.2%

Europe

$107.97

3.6%

61.6%

1.7%

pts.

$175.22

0.8%

Middle East & Africa

$118.65

0.4%

60.5%

0.5%

pts.

$196.10

-0.5%

Asia Pacific

$128.17

6.4%

71.2%

2.2%

pts.

$179.96

3.1%

Total International4

$128.07

5.7%

66.6%

1.9%

pts.

$192.16

2.7%

Worldwide3

$103.72

6.2%

69.1%

1.9%

pts.

$150.02

3.2%

Statistics are in constant dollars.  International includes properties located outside the United States and Canada, except for Worldwide which includes the United States.

Includes Marriott Hotels, Renaissance, Autograph Collection, The Ritz-Carlton, Bulgari, Residence Inn, and Courtyard properties.

Includes Marriott Hotels, Renaissance, Autograph Collection, Gaylord Hotels, The Ritz-Carlton, Bulgari, Residence Inn, Courtyard, Fairfield Inn & Suites, TownePlace Suites, and SpringHill Suites properties.

Includes Marriott Hotels, Renaissance, Autograph Collection, The Ritz-Carlton, Bulgari, Residence Inn, Courtyard, and Fairfield Inn & Suites properties.

A-4

MARRIOTT INTERNATIONAL, INC.

KEY LODGING STATISTICS

Comparable Company-Operated North American Properties1

Three Months Ended March 31, 2014 and March 31, 2013

REVPAR

Occupancy

Average

Daily Rate

Brand

2014

vs.

 2013

2014

vs.

2013

2014

vs.

2013

Marriott Hotels

$136.07

5.5%

73.1%

1.7%

pts.

$186.20

3.0%

Renaissance 

$122.63

3.8%

71.1%

1.5%

pts.

$172.46

1.5%

The Ritz-Carlton

$252.58

5.2%

72.5%

1.0%

pts.

$348.56

3.7%

Composite North American Full-Service2

$144.87

5.3%

72.5%

1.7%

pts.

$199.70

2.8%

Courtyard

$84.77

8.6%



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