10-KPeriod: FY2017

MARRIOTT INTERNATIONAL INC /MD/ Annual Report, Year Ended Dec 31, 2017

Filed February 15, 2018For Securities:MAR

Summary

Marriott International, Inc. reported strong performance in its 2017 10-K filing, notably driven by the integration of Starwood Hotels & Resorts, acquired in late 2016. The company's "asset-light" model, focused on management and franchising, continues to generate consistent fee revenue across its extensive brand portfolio. For the year ended December 31, 2017, Marriott saw a significant increase in revenues and operating income, reflecting the full year impact of the Starwood acquisition and favorable market conditions in many regions. Key financial highlights include robust growth in management and franchise fees, driven by both the addition of Starwood properties and organic growth in existing brands. The company's loyalty program remains a strong driver of repeat business, with members accounting for over 50% of room nights. Marriott also demonstrated effective cost management and operational efficiency, as evidenced by improved company-operated house profit margins. The company also announced new multi-year agreements with credit card partners, expected to positively impact revenues in 2018, and continued to actively manage its property portfolio through strategic dispositions.

Financial Highlights

50 data points
Beta

Revenue

$20.45B

Net Income

$1.46B

7.1% Net Margin

EPS (Diluted)

$3.84

Total Assets

$23.85B

Cash & Equivalents

$383.00M

Free Cash Flow

$1.99B

Financial Statements
Beta
Revenue$20.45B
Operating Expenses$17.95B
Operating Income$2.50B
Interest Expense$288.00M
Net Income$1.46B
EPS (Basic)$3.89
EPS (Diluted)$3.84
Shares Outstanding (Basic)375.20M
Shares Outstanding (Diluted)379.90M

Key Highlights

  • 1Completed the integration of Starwood Hotels & Resorts, contributing significantly to revenue and fee growth for the full year 2017.
  • 2Reported strong growth in base management fees (37%) and franchise fees (38%) year-over-year, driven by Starwood acquisition and unit growth.
  • 3Loyalty program members accounted for over 50% of room nights, underscoring its importance for repeat business and customer engagement.
  • 4Worldwide systemwide RevPAR increased by 3.1% in 2017, with ADR up 1.2% and occupancy up 1.4 percentage points, indicating healthy demand across brands.
  • 5Company-operated house profit margins improved by 80 basis points globally due to higher RevPAR, productivity, and cost synergies.
  • 6Entered into new multi-year credit card agreements with JP Morgan Chase and American Express, expected to boost revenues from 2018 onwards.
  • 7Continued strategic property disposition, generating $1,418 million in cash proceeds in 2017.

Frequently Asked Questions

The acquisition of Starwood, completed in September 2016, significantly impacted Marriott's 2017 results. The company's financial statements now include Starwood's operations for the full year 2017. This integration led to substantial increases in revenues, particularly in management and franchise fees, and contributed to improved operating income due to synergies and expanded brand portfolio.

Marriott primarily generates revenue through management fees (base and incentive), franchise fees (royalties, application fees, branding fees), and fees from credit card and timeshare licensing agreements. The company also recognizes revenue from owned and leased properties, though it primarily operates under a 'light asset' model, focusing on management and franchising rather than direct ownership.

Marriott's Loyalty Programs, including Marriott Rewards and SPG, are a critical driver of business. They reward frequent stays and encourage repeat guest business, with loyalty members accounting for over 50% of the company's room nights. The programs also enhance customer engagement and provide a valuable marketing channel for the company's broad portfolio of brands.

Marriott continues to strategically manage its property portfolio, which includes selling company-owned or leased properties where appropriate, often subject to long-term management agreements. In 2017, the company generated substantial cash proceeds from property dispositions and continued to invest in its system through new property development and renovations.

Marriott faces several risks, including intense competition from other hotel chains and alternative lodging services like Airbnb, potential impacts from economic downturns, risks associated with integrating acquisitions (like Starwood), operational risks such as the termination of management/franchise agreements, cybersecurity threats, and managing brand reputation. The filing also notes risks related to international operations and the impact of new accounting standards and tax legislation.