Attached files
| file | filename |
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| 8-K - 8-K - MARRIOTT INTERNATIONAL INC /MD/ | mar-2017q4earningsrelease8.htm |
| EX-99.1 - MARRIOTT INTERNATIONAL INC /MD/ | mar-2017q4earningsreleasee.htm |
MARRIOTT INTERNATIONAL
FOURTH QUARTER 2017
EARNINGS CONFERENCE CALL
FORWARD-LOOKING STATEMENTS
NOTE ON FORWARD-LOOKING STATEMENTS: This document contains “forward-looking statements” within the meaning
of federal securities laws, including our RevPAR, profit margin and earnings outlook and assumptions; the number of lodging
properties we expect to add to or remove from our system in the future; our expectations about investment spending and tax
rate; and similar statements concerning anticipated future events and expectations that are not historical facts. We caution
you that these statements are not guarantees of future performance and are subject to numerous risks and uncertainties,
including those we identify below and other risk factors that we identify in our most recent quarterly report on Form 10-Q or
annual report on Form 10-K. Risks that could affect forward-looking statements in this document include changes in market
conditions; changes in global and regional economies; supply and demand changes for hotel rooms; competitive conditions
in the lodging industry; relationships with clients and property owners; the availability of capital to finance hotel growth and
refurbishment; the extent to which we can continue to successfully integrate Starwood and realize the anticipated benefits of
combining Starwood and Marriott; changes to our provisional estimates of the impact of the U.S. Tax Cuts and Jobs Acts of
2017; and changes to our estimates of the impact of the new revenue recognition accounting standard. Any of these factors
could cause actual results to differ materially from the expectations we express or imply in this document. We make these
forward-looking statements as of February 14, 2018. We undertake no obligation to publicly update or revise any forward-
looking statement, whether as a result of new information, future events or otherwise.
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• More than 6,500 properties
• Broad choice from 30 brands
• Aspirational destinations
• Leading loyalty programs
• Effective and efficient sales and marketing channels
• Operating know-how delivers high guest satisfaction
and hotel profitability for owners and franchisees
SEIZING THE OPPORTUNITY
3
SUBSTANTIAL ROOMS GROWTH
Sheraton Petaling Jaya Hotel, Malaysia
Delta Hotels by Marriott Riverfront, South Sioux City, NE
The Westin Chattanooga, TN
The Ritz-Carlton, Koh Samui, Thailand
Moxy London Stratford
4
5
SIGNIFICANT BENEFITS OF SCALE
• Mobile check-in and check-out added to 1,600 hotels
• Global GuestVoice system rollout
• Marriott Moments
• Alibaba joint venture
• House profit margins up 80 bps
• Integration cost savings
• Procurement
• OTA commissions
• Loyalty costs
2017 ACCOMPLISHMENTS
POWERFUL LOYALTY
PROGRAMS
• Nearly 110 million members
• Member stays represent over half of
occupied rooms
• Lower charge‐out rate to owners in
2017 and 2018
• Harmonize program terms in 2018
• New credit card agreements with
improved terms
• New credit cards expected in 2018
6
7
SIGNIFICANT BENEFITS OF SCALE
Continued cost savings
• Group intermediary savings
• Revenue management focus
on profits
• More procurement and
benchmarking initiatives
• Lower loyalty costs
COMING SOON
8
REVPAR RESULTS & OUTLOOK
Systemwide Comparable
2017 Fourth
Quarter 2017 Full Year 2018E Full Year
North America 3.9% 2.1% 1% to 2%
Asia Pacific 7.2% 6.8% Mid-single digit rate
Caribbean & Latin America 5.6% 4.0% Low-single digit rate
Europe 5.4% 7.2% Mid-single digit rate
Middle East & Africa 5.7% 2.0% Flat
International 6.2% 5.9% 3% to 5%
Worldwide 4.6% 3.1% 1% to 3%
9
FOURTH QUARTER 2017
AVENDRA SALE & TAX REFORM IMPACT
AVENDRA SALE
Marriott Share of Proceeds $659
Gain $659
Tax on Gain
COMBINED IMPACT
Net Income ($167)
Diluted EPS ($0.45)
($ millions, except EPS)
TAX REFORM
Transition Tax
Deferred Tax Liabilities
Other Tax Impact
$159
$19
($745)
($259)
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FOURTH QUARTER 2017
Total fees
Owned, leased, and other, net
Depreciation, amortization, and other
General, administrative, and other
Operating income
Gains/(losses) and other income
Net interest expense
Equity in earnings
Income before income taxes
Provision for income taxes
Net income
Fully diluted EPS
Unit & RevPAR
growth & higher
non-property fees
Sale of 4 hotels
Litigation reserves
in 2017; favorable
litigation settlement
in 2016
$865
95
(72)
(259)
$629
(2)
(58)
10
$579
(164)
$415
$1.12
Q4 2017
As Adjusted
Q4 2016
As Adjusted B/(W)
$773
109
(71)
(234)
$577
2
(62)
2
$519
(185)
$334
$0.85
12%
(13)%
(1)%
(11)%
9%
NM
6%
400%
12%
11%
24%
32%
($ millions, except EPS)
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PERFORMANCE VERSUS GUIDANCE
Fourth Quarter Adjusted Diluted EPS
Guidance as of November 7, 2017
Total fee revenue
Owned, leased, and other, net
General, administrative, and other
Net interest expense
Equity in earnings
Provision for income taxes
Outperformance at midpoint
$1.12
$0.98 to $1.00
$0.06
0.01
0.01
0.01
0.07
$0.13
(0.03)
RevPAR at top of
range, strong
margins, higher
branding &
relicensing fees
Stock
compensation tax
benefit, favorable
mix of business,
favorable discrete
items
Litigation reserves,
higher
development
expenses
NEW REVENUE RECOGNITION RULES
New Rule Old Rule
1. Contract Investment
Amortization
Reduction of Fee Revenue Included in Depreciation, Amortization &
Other
2. Pre‐opening Services Revenues and direct costs are deferred and
recognized over the initial term of the
management or franchise agreement
Recognized over the pre‐opening services
period or as the costs were incurred
3. Incentive Management Fees Recognized to extent it is probable that the
fees will not be reversed later in the year
Recognized year‐to‐date as if the management
agreement ended at quarter‐end
4. Franchise Application &
Relicensing Fees
Deferred and recognized over the initial term
of the franchise agreement
Recognized at hotel opening or relicensing
5. Development Costs Capitalize only incremental costs (paid only if
deal is signed) that are specifically related to
the deal and amortize over the initial term of
the management or franchise agreement
Direct costs of the team working on the deal
capitalized and amortized over the initial term
of the management or franchise agreement
6. Centralized Programs & Services
(Part of Cost Reimbursements
and Reimbursed Costs)
Recognize timing differences on income
statement
Recognize timing differences on balance sheet
12
13
FIRST QUARTER REVPAR OUTLOOK
Systemwide Comparable 2018E First Quarter
North America Flat to up 2%
Asia Pacific Mid-single digit rate
Caribbean & Latin America Mid-single digit rate
Europe Mid-single digit rate
Middle East & Africa Flat
International 3% to 5%
Worldwide 1% to 3%
2018 OUTLOOK
Fee revenues
Contract Investment Amortization
Owned, leased and other revenue, net
of direct expenses
Depreciation, amortization, and other
expenses
General, administrative, and other
expenses
Operating income
Gains and other income
Net interest expense
Equity in earnings (losses)
Earnings per share
Effective tax rate
Adjusted EBITDA
Full Year 2018E Outlook
$3,535 to $3,620
Approx. $55
$285 to $295
Approx. $230
$935 to $945
$2,590 to $2,695
Approx. $45
Approx. $305
Approx. $40
$5.11 to $5.34
22%
$3,315 to $3,420 14
($ millions, except EPS)
$3,560 to $3,645
Approx. $0
$310 to $320
Approx. $295
$925 to $935
$2,640 to $2,745
Approx. $45
Approx. $305
Approx. $40
$5.22 to $5.45
$3,375 to $3,480
Full Year 2018E Excluding
the Impact of the New
Revenue Standard
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2018 OUTLOOK
• Excludes P&L impact of Avendra spending, merger-
related costs, and timing of centralized programs
and services
• $600 to $700 million investment spending
• Assumes no further asset sales
• Approximately $2.5 billion return to shareholders
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QUESTIONS & ANSWERS