8-KMaterial AgreementsRegulation FDExhibits & Filings

MARRIOTT INTERNATIONAL INC /MD/ 8-K Report, Material Agreement (Feb 27, 2018)

Filed February 27, 2018For Securities:MAR

Summary

Marriott International, Inc. (MAR) filed an 8-K on February 26, 2018, detailing significant amendments to material agreements with Marriott Vacations Worldwide Corporation (MVWC). These amendments primarily facilitate the integration and harmonization of Marriott's and Starwood's vacation ownership channels (Marriott Channels and Starwood Channels) into unified platforms. This integration is a key step towards realizing synergies and a more cohesive customer experience across both brands' timeshare offerings. Investors should note the financial implications, including an annual $3 million reduction in royalty payments from MVWC to Marriott, commencing in 2018. Furthermore, the termination of the Non-Competition Agreement between the two entities allows Marriott to potentially re-engage in the timeshare business, a strategic shift from its previous restriction. The amendments also remove certain restrictions on Marriott's separate operation and marketing of its vacation channels.

Key Highlights

  • 1Marriott International amended key agreements with Marriott Vacations Worldwide Corporation (MVWC) to enable the integration of Marriott and Starwood vacation ownership channels.
  • 2The amendments pave the way for harmonizing and integrating the 'Marriott Channels' and 'Starwood Channels' into single platforms.
  • 3An annual $3 million reduction in base royalty payments from MVWC to Marriott will commence in 2018.
  • 4The Non-Competition Agreement between Marriott and MVWC, dated November 17, 2011, has been terminated.
  • 5Termination of the non-compete agreement lifts restrictions on Marriott engaging in the timeshare and fractional ownership business.
  • 6Restrictions on Marriott's separate operation and marketing of the Marriott and Starwood Channels have been eased through an amended Side Letter Agreement.
  • 7All necessary third-party consents for the platform combinations have been obtained.

Frequently Asked Questions

The primary purpose is to facilitate the harmonization and integration of the 'Marriott Channels' (Marriott and Ritz-Carlton timeshare channels) and the 'Starwood Channels' (Sheraton and Westin timeshare channels) into unified platforms. This integration allows Vistana, a subsidiary involved in the Starwood timeshare business, to participate in the combined Marriott Channels.

Marriott International will see an annual reduction of $3 million in base royalty payments received from MVWC, starting in 2018. This reduction is contingent on Vistana's ability to access the integrated Marriott Channels.

The termination of the Non-Competition Agreement removes a significant restriction that previously prohibited Marriott International and its subsidiaries from engaging in the timeshare and fractional ownership business. This opens up strategic opportunities for Marriott to potentially re-enter or expand its presence in this segment.

No, with the execution of these amendments, the Company has confirmed that there are no remaining third-party consents or approvals required for Marriott to effect the integration and combination of the Marriott and Starwood Channels.