10-KPeriod: FY2016

MARRIOTT INTERNATIONAL INC /MD/ Annual Report, Year Ended Dec 31, 2016

Filed February 21, 2017For Securities:MAR

Summary

Marriott International, Inc. (MAR) filed its 2016 10-K report detailing a transformative year primarily driven by the significant acquisition of Starwood Hotels & Resorts Worldwide. This acquisition dramatically expanded Marriott's global footprint, brand portfolio, and room count, positioning it as a dominant force in the hospitality industry. The company operates a diversified business model focused on management, franchising, and licensing, owning a relatively small portion of its properties. Despite the integration challenges presented by the Starwood acquisition, Marriott's core business demonstrated resilience, with growth in key performance indicators like RevPAR and occupancy, reflecting a recovery in travel demand post-recessionary periods. Financially, the acquisition led to a substantial increase in assets and long-term debt. Marriott incurred significant merger-related costs but maintained a strong cash flow from operations. The company continues to invest in its loyalty programs and digital platforms, which are crucial drivers of repeat business. While facing competitive pressures and economic uncertainties, Marriott's strategic focus on its extensive brand portfolio, owner and franchisee relationships, and operational efficiency aims to sustain its market leadership and deliver value to shareholders.

Financial Highlights

50 data points
Beta

Revenue

$15.41B

Net Income

$808.00M

5.2% Net Margin

EPS (Diluted)

$2.73

Total Assets

$24.14B

Cash & Equivalents

$858.00M

Free Cash Flow

$1.42B

Financial Statements
Beta
Revenue$15.41B
Operating Expenses$13.98B
Operating Income$1.42B
Interest Expense$234.00M
Net Income$808.00M
EPS (Basic)$2.78
EPS (Diluted)$2.73
Shares Outstanding (Basic)290.90M
Shares Outstanding (Diluted)295.70M

Key Highlights

  • 1Completed the significant acquisition of Starwood Hotels & Resorts Worldwide in September 2016, substantially expanding its global presence and brand portfolio.
  • 2Operates a robust business model primarily focused on management and franchising, with a minimal owned property portfolio, leading to a capital-light approach.
  • 3Reported systemwide comparable RevPAR growth of 1.8% in 2016, driven by increased occupancy and average daily rates.
  • 4Invested heavily in loyalty programs (Marriott Rewards, SPG) and digital platforms to drive customer engagement and repeat business, with loyalty members accounting for over 50% of room nights in 2016.
  • 5Experienced a significant increase in long-term debt and total assets due to the Starwood acquisition, with total assets growing from $6.08 billion in 2015 to $24.14 billion in 2016.
  • 6Managed and franchised a total of 6,080 properties with 1,190,604 rooms worldwide as of year-end 2016.
  • 7Maintained effective internal controls over financial reporting, with an ongoing process to integrate Starwood's systems and controls.

Frequently Asked Questions

The most significant event for Marriott International in 2016 was the completion of its acquisition of Starwood Hotels & Resorts Worldwide in September 2016. This transformative deal substantially expanded Marriott's global footprint, brand portfolio, and market reach.

Marriott primarily generates revenue through base management fees and incentive management fees from its managed properties, and franchise fees from properties operated under franchise agreements. They also earn revenue from their owned and leased properties and cost reimbursements from managed and franchised properties.

Marriott follows a capital-light strategy, focusing on operating, franchising, and licensing hotels rather than owning them. As of year-end 2016, the company owned only a small fraction of the 6,080 properties in its system, minimizing capital investment and financial leverage.

The acquisition of Starwood significantly increased Marriott's total assets, which grew from $6.08 billion at the end of 2015 to $24.14 billion at the end of 2016. This also led to a substantial rise in long-term debt, from $3.81 billion to $8.20 billion, as the company financed a portion of the acquisition.

Key risks include intense industry competition, economic uncertainty impacting travel demand, challenges associated with integrating the Starwood acquisition (including potential diversion of management attention and unanticipated costs), operational risks such as potential termination of management or franchise agreements, and risks related to international operations and data security.