Marriott International Reports Strong Fourth Quarter 2017 Results

  • Marriott International
  • 02.15.18
Marriott International, Inc. reported fourth quarter 2017 results. Arne M. Sorenson, president and chief executive officer of Marriott International, said, "2017 was a terrific year. We made great progress on the integration of Starwood, capturing significant property and corporate overhead cost synergies while also increasing our worldwide RevPAR index." 

Highlights:
• Fourth quarter reported diluted EPS totaled $0.54, a 13 percent decrease from prior year results. Fourth quarter adjusted diluted EPS totaled $1.12, a 32 percent increase over fourth quarter 2016 adjusted results. Adjusted results exclude merger-related adjustments. Adjusted fourth quarter 2017 results also exclude the gain on the disposition of the company's ownership interest in Avendra and the provisional tax charge resulting from the U.S. Tax Cuts and Jobs Act of 2017;
 
• Full year 2017 reported diluted EPS totaled $3.61, a 37 percent increase from prior year results. Full year 2017 adjusted diluted EPS totaled $4.36, a 32 percent increase over full year 2016 combined results. Adjusted full year 2017 results exclude merger-related adjustments, the gain on the disposition of the company's ownership interest in Avendra and the provisional tax charge resulting from the U.S. Tax Cuts and Jobs Act of 2017. Combined full year 2016 results assume Marriott's acquisition of Starwood and Starwood's sale of its timeshare business had been completed on January 1, 2015;
 
• Worldwide comparable systemwide constant dollar RevPAR rose 4.6 percent in the 2017 fourth quarter, while North American comparable systemwide constant dollar RevPAR rose 3.9 percent;
 
• Worldwide comparable systemwide constant dollar RevPAR rose 3.1 percent for full year 2017, while North American comparable systemwide constant dollar RevPAR rose 2.1 percent;
 
• The company added over 76,000 rooms during 2017, including roughly 11,000 rooms converted from competitor brands and nearly 30,000 rooms in international markets;
 
• At year-end, Marriott's worldwide development pipeline increased to approximately 2,700 hotels and more than 460,000 rooms, including nearly 34,000 rooms approved, but not yet subject to signed contracts;
 
• Fourth quarter reported net income totaled $201 million, an 18 percent decrease from prior year results. Fourth quarter adjusted net income totaled $415 million, a 24 percent increase over prior year adjusted results;
 
• Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) totaled $808 million in the quarter, a 7 percent increase over fourth quarter 2016 adjusted EBITDA;
 
• For full year 2017, Marriott repurchased 29.2 million shares of the company's common stock for $3.0 billion, including 7.4 million shares for $925 million during the fourth quarter. To date in 2018, the company has repurchased 2.3 million shares for $315 million.
 
The discussion in the first section below reflects reported results for the fourth quarter in accordance with U.S. generally accepted accounting principles (GAAP). To further assist investors, the company is also providing adjusted results for the 2017 and 2016 fourth quarters that exclude merger-related adjustments associated with the company's acquisition of Starwood Hotels & Resorts Worldwide (Starwood) on September 23, 2016. In addition, the company has adjusted results for the 2017 fourth quarter to exclude the gain on the disposition of the company's ownership interest in Avendra (Avendra gain) and the provisional charge resulting from the U.S. Tax Cuts and Jobs Act of 2017 (Tax Act).  
 
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 periods on pages A-1 and A-2, adjusted results on page A-3, and combined results on page A-4 have been reclassified to conform to the current reporting.
 
Arne M. Sorenson, president and chief executive officer of Marriott International, said, "2017 was a terrific year. We made great progress on the integration of Starwood, capturing significant property and corporate overhead cost synergies while also increasing our worldwide RevPAR index. We entered into a joint venture with Alibaba to better engage with Chinese customers and invested in PlacePass to provide our guests with even more experiential travel opportunities. We also signed strategic new credit card agreements that will allow us to strengthen our customer offerings, generate significant benefits for our owners and franchisees, and provide higher branding fees for Marriott.  
 
"In the first full year after acquiring Starwood, solid RevPAR gains, strong rooms growth, and property-level margin improvement combined to deliver record fee revenue. With our owners and franchisees, we opened over 76,000 rooms during the year to reach over 1.25 million rooms. Significant new signings drove our development pipeline to a record 460,000 rooms, over 80 percent of which are in the upscale, upper upscale or luxury tiers. Compared to combined full year 2016 results, worldwide systemwide RevPAR rose 3 percent during the year; adjusted operating income increased 13 percent; and adjusted earnings per share increased 32 percent. We returned $3.5 billion to shareholders in share repurchases and dividends during the year.
 
"In 2018, we anticipate our number of rooms will increase roughly 7 percent gross, while rooms deletions should total 1 to 1.5 percent during the year. We also continue to expect global RevPAR will increase by 1 to 3 percent. As a result of U.S. tax reform, we expect our effective tax rate in 2018 will decline meaningfully to approximately 22 percent. Not including incremental asset sales, we expect to return roughly $2.5 billion to shareholders in share repurchases and dividends in 2018.
 
"Our company was founded on the principle of taking care of our associates, so they take care of our guests, who then keep coming back. For 2018, we plan to invest in our workforce by offering an additional one-time contribution to the Marriott International retirement savings plans. Structured as a $5-to-$1 company match of up to $1,000, the vast majority of participating associates should receive this incremental company contribution. This contribution will be available to eligible associates at company-operated hotels, as well as those in corporate and regional offices, in the U.S.  We also expect to invest in global associate support programs."  


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