Summary
Marriott International, Inc. (MAR) reported its 2018 full-year results, reflecting growth driven by an increasing number of properties in its system and generally favorable economic conditions. The company's "asset-light" business model, focused on management and franchising, continued to drive growth with minimal capital investment. A significant event impacting the company was the Starwood Hotels & Resorts Worldwide acquisition, which is largely integrated, though the report notes ongoing integration challenges and the potential for unrealized benefits. A major concern highlighted is the November 2018 data security incident affecting the Starwood reservations database, which involved unauthorized access to a large volume of guest data. While Marriott stated it had not seen a meaningful impact on demand from this incident, it anticipates significant future expenses related to legal proceedings, regulatory investigations, and enhanced IT security. The company also reported a material weakness in its internal control over financial reporting related to its loyalty program, which is being remediated.
Financial Highlights
50 data points| Revenue | $20.76B |
| Operating Expenses | $18.39B |
| Operating Income | $2.37B |
| Interest Expense | $340.00M |
| Net Income | $1.91B |
| EPS (Basic) | $5.45 |
| EPS (Diluted) | $5.38 |
| Shares Outstanding (Basic) | 350.10M |
| Shares Outstanding (Diluted) | 354.20M |
Key Highlights
- 1Marriott International reported systemwide comparable RevPAR growth of 2.6% for 2018, indicating a positive trend in room revenues.
- 2The company added 494 new properties with over 80,000 rooms in 2018, and its development pipeline reached a record 478,000 rooms, highlighting strong future growth potential.
- 3The integration of Starwood Hotels & Resorts Worldwide is largely complete, contributing to expanded brand portfolio and global reach, although some integration challenges persist.
- 4A significant data security incident impacting the Starwood reservations database was disclosed, involving unauthorized access to sensitive guest information, leading to ongoing investigations and potential future costs.
- 5Marriott identified a material weakness in its internal controls related to the accounting for its loyalty program, prompting remediation efforts to enhance its financial reporting processes.
- 6Fee revenues (base management, franchise, and incentive management fees) increased by 10% in 2018, demonstrating the effectiveness of the company's core management and franchising business model.
- 7The company continued its share repurchase program, buying back 21.5 million shares in 2018, demonstrating a commitment to returning capital to shareholders.