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Marriott International Reports First Quarter 2017 Results Highlights

Column: industry Tag: Marriott International Published: 2017-05-10 11:07 Source: Author:

On September 23, 2016, Marriott completed its acquisition of Starwood Hotels & Resorts Worldwide (Starwood). The discussion in the first section below reflects reported results for the first quarter in accordance with US generally accepted accounting principles (GAAP). To further assist investors, the company is also providing (a) adjusted results that exclude merger-related costs; and (b) combined financials and selected performance information for 2016 that assume Marriott’s acquisition of Starwood and Starwood’s sale of its timeshare business had been completed on January 1, 2015, but use the estimated fair value of assets and liabilities as of the actual closing date of the acquisition. Combined results also reflect other adjustments as described below. Throughout this press release, the business associated with brands that were in Marriott’s portfolio before the Starwood acquisition are referred to as “Legacy-Marriott”, while the Starwood business and brands that the company acquired are referred to as “Legacy-Starwood.”

Branding fees from credit cards and residential sales are reported in the Franchise fees line on the income statement. Prior to the first quarter of 2017, those fees were reported in Owned, leased and other revenue. Reported results for the 2016 first quarter on page A-1 and combined results on page A-2 have been reclassified to conform to the current reporting.

Arne M. Sorenson, president and chief executive officer of Marriott International, said, “We were pleased by our performance in the quarter across the board. RevPAR exceeded our expectations in North America and Europe due to stronger group attendance and higher-rated business transient demand. Demand in Greater China and elsewhere in the Asia Pacific region was also better than expected. With just over 3 percent RevPAR growth worldwide, our teams did an excellent job driving margin improvement of 100 basis points at company-operated hotels. Given the stronger than expected RevPAR performance in North America in the first quarter and improving demand trends in the Europe and Asia Pacific regions, we have increased our full year 2017 RevPAR expectations.

We continue to make great progress on integrating the Starwood and Marriott lodging businesses, gaining efficiencies at both the corporate and property levels. Legacy-Starwood hotels are enjoying the benefits of Marriott’s OTA contracts and procurement agreements, and are in the process of transitioning to our above-property shared-service model for finance and accounting. Our global sales organization, which maintains relationships with our largest customers, is now fully integrated.

In the first quarter, we sold the Westin Maui for $317 million subject to a long-term management agreement, furthering our goal of recycling owned real estate capital. We expect the proceeds of the sale, together with strong cash from operations and our modest capital needs, will allow us to return more than $2 billion of cash to our shareholders in 2017. To date in 2017, we have already returned more than $1 billion in dividends and share repurchases.”

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