10-KPeriod: FY2001

MARRIOTT INTERNATIONAL INC /MD/ Annual Report, Year Ended Dec 28, 2001

Filed March 22, 2002For Securities:MAR

Summary

Marriott International, Inc. (MAR) filed its 2001 10-K report, detailing a challenging year impacted by the economic downturn and the events of September 11th. The company recorded significant restructuring and other charges totaling $271 million in the fourth quarter of 2001, primarily due to severance costs, facility exits, development project cancellations, reserves for guarantees and loan losses, and write-downs. Despite these headwinds, the company's sales remained flat at $10.15 billion, with systemwide sales reaching $20 billion. Marriott continued its strategic focus on management and franchising, owning a minimal percentage of its lodging properties. The company's diverse portfolio, including Full-Service, Select-Service, Extended-Stay Lodging, Timeshare, Senior Living Services, and Distribution Services, faced varied impacts. Lodging operations saw a decline in operating profit, largely due to a 10.4% decrease in comparable company-operated U.S. properties' REVPAR. However, the Timeshare segment demonstrated resilience with a 7% operating profit increase, driven by contract sales and note sale gains. Senior Living Services experienced a sales increase but reported an operating loss due to restructuring charges, while Distribution Services saw increased sales but a decline in operating profit. The company maintained a strong liquidity position with nearly $2 billion in cash and available borrowing capacity at year-end 2001.

Key Highlights

  • 1Significant restructuring and other charges of $271 million were recorded in Q4 2001 due to economic downturn and post-9/11 impacts, affecting net income.
  • 2Total sales remained flat at $10.15 billion in 2001, while systemwide sales grew slightly to $20 billion, indicating resilience across the portfolio.
  • 3Lodging segment operating profit decreased by 32% due to a 10.4% decline in comparable U.S. properties' REVPAR, alongside a 2% drop in sales.
  • 4The Timeshare segment showed strength with a 7% increase in operating profit, boosted by higher contract sales and gains from note sales.
  • 5Senior Living Services saw sales rise by 9% but reported an operating loss of $45 million, primarily due to a $60 million write-down of 25 senior living communities classified as held for sale.
  • 6Marriott maintained a strong liquidity position, with nearly $2 billion in cash and available borrowing capacity at the end of 2001.
  • 7The company plans to open over 150 hotels (25,000-30,000 rooms) in 2002, demonstrating confidence in future growth despite current challenges.

Frequently Asked Questions

The events of September 11, 2001, coupled with a general economic downturn, led to a significant decline in demand for hotel rooms. This resulted in reduced management and franchise fees, cancellation of development projects, and anticipated losses under guarantees and loans. Marriott responded by implementing cost-saving measures and incurred substantial restructuring and other charges totaling $271 million in the fourth quarter of 2001.

The Lodging segment experienced a decrease in sales and operating profit, with comparable U.S. properties' REVPAR declining by 10.4%. The Timeshare segment showed resilience with a 7% operating profit increase. Senior Living Services saw sales growth but reported an operating loss due to restructuring charges, particularly the write-down of 25 communities. The Distribution Services segment's sales increased, but operating profit declined due to customer business loss and inefficiencies.

Despite the challenging environment in 2001, Marriott expressed confidence in future growth by planning to open over 150 hotels (approximately 25,000-30,000 rooms) in 2002. The company stated it believes it has access to sufficient financial resources to support this growth and ongoing operations.

Marriott implemented companywide cost-saving measures and recorded significant restructuring charges to address the downturn. The company also maintained a strong liquidity position with nearly $2 billion in cash and available borrowing capacity, ensuring it could meet its short-term and long-term liquidity requirements and finance its growth plans.