ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 52-2055918 | |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) | |
10400 Fernwood Road, Bethesda, Maryland (Address of principal executive offices) | 20817 (Zip Code) |
Large accelerated filer | ý | Accelerated filer | ¨ | |||
Non-accelerated filer | ¨ (Do not check if a smaller reporting company) | Smaller Reporting Company | ¨ |
Page No. | ||
Part I. | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Part II. | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 6. | ||
Three Months Ended | |||||||
March 31, 2016 | March 31, 2015 | ||||||
REVENUES | |||||||
Base management fees | $ | 172 | $ | 165 | |||
Franchise fees | 207 | 204 | |||||
Incentive management fees | 101 | 89 | |||||
Owned, leased, and other revenue | 247 | 257 | |||||
Cost reimbursements | 3,045 | 2,798 | |||||
3,772 | 3,513 | ||||||
OPERATING COSTS AND EXPENSES | |||||||
Owned, leased, and other - direct | 166 | 194 | |||||
Reimbursed costs | 3,045 | 2,798 | |||||
Depreciation, amortization, and other | 31 | 44 | |||||
General, administrative, and other | 163 | 145 | |||||
3,405 | 3,181 | ||||||
OPERATING INCOME | 367 | 332 | |||||
Gains and other income, net | — | — | |||||
Interest expense | (47 | ) | (36 | ) | |||
Interest income | 6 | 8 | |||||
Equity in earnings | — | 3 | |||||
INCOME BEFORE INCOME TAXES | 326 | 307 | |||||
Provision for income taxes | (107 | ) | (100 | ) | |||
NET INCOME | $ | 219 | $ | 207 | |||
EARNINGS PER SHARE | |||||||
Earnings per share - basic | $ | 0.86 | $ | 0.75 | |||
Earnings per share - diluted | $ | 0.85 | $ | 0.73 | |||
CASH DIVIDENDS DECLARED PER SHARE | $ | 0.25 | $ | 0.20 |
Three Months Ended | |||||||
March 31, 2016 | March 31, 2015 | ||||||
Net income | $ | 219 | $ | 207 | |||
Other comprehensive income (loss): | |||||||
Foreign currency translation adjustments | 22 | (26 | ) | ||||
Derivative instrument adjustments, net of tax | (5 | ) | 9 | ||||
Unrealized gain (loss) on available-for-sale securities, net of tax | 1 | (1 | ) | ||||
Reclassification of losses (gains), net of tax | 1 | (2 | ) | ||||
Total other comprehensive income (loss), net of tax | 19 | (20 | ) | ||||
Comprehensive income | $ | 238 | $ | 187 |
(Unaudited) | |||||||
March 31, 2016 | December 31, 2015 | ||||||
ASSETS | |||||||
Current assets | |||||||
Cash and equivalents | $ | 99 | $ | 96 | |||
Accounts and notes receivable, net | 1,143 | 1,103 | |||||
Prepaid expenses | 79 | 77 | |||||
Other | 25 | 30 | |||||
Assets held for sale | 78 | 78 | |||||
1,424 | 1,384 | ||||||
Property and equipment, net | 1,042 | 1,029 | |||||
Intangible assets | |||||||
Contract acquisition costs and other | 1,468 | 1,451 | |||||
Goodwill | 946 | 943 | |||||
2,414 | 2,394 | ||||||
Equity and cost method investments | 169 | 165 | |||||
Notes receivable, net | 218 | 215 | |||||
Deferred taxes, net | 620 | 672 | |||||
Other noncurrent assets | 234 | 223 | |||||
$ | 6,121 | $ | 6,082 | ||||
LIABILITIES AND SHAREHOLDERS’ DEFICIT | |||||||
Current liabilities | |||||||
Current portion of long-term debt | $ | 300 | $ | 300 | |||
Accounts payable | 597 | 593 | |||||
Accrued payroll and benefits | 779 | 861 | |||||
Liability for guest loyalty programs | 1,013 | 952 | |||||
Accrued expenses and other | 558 | 527 | |||||
3,247 | 3,233 | ||||||
Long-term debt | 3,859 | 3,807 | |||||
Liability for guest loyalty programs | 1,641 | 1,622 | |||||
Other noncurrent liabilities | 1,041 | 1,010 | |||||
Shareholders’ deficit | |||||||
Class A Common Stock | 5 | 5 | |||||
Additional paid-in-capital | 2,751 | 2,821 | |||||
Retained earnings | 5,025 | 4,878 | |||||
Treasury stock, at cost | (11,271 | ) | (11,098 | ) | |||
Accumulated other comprehensive loss | (177 | ) | (196 | ) | |||
(3,667 | ) | (3,590 | ) | ||||
$ | 6,121 | $ | 6,082 |
Three Months Ended | |||||||
March 31, 2016 | March 31, 2015 | ||||||
OPERATING ACTIVITIES | |||||||
Net income | $ | 219 | $ | 207 | |||
Adjustments to reconcile to cash provided by operating activities: | |||||||
Depreciation, amortization, and other | 31 | 44 | |||||
Share-based compensation | 28 | 24 | |||||
Income taxes | 58 | 29 | |||||
Liability for guest loyalty programs | 76 | 45 | |||||
Working capital changes | (106 | ) | (131 | ) | |||
Other | 27 | 44 | |||||
Net cash provided by operating activities | 333 | 262 | |||||
INVESTING ACTIVITIES | |||||||
Capital expenditures | (42 | ) | (75 | ) | |||
Dispositions | 4 | 247 | |||||
Loan advances | (16 | ) | (10 | ) | |||
Loan collections | 2 | 7 | |||||
Contract acquisition costs | (21 | ) | (61 | ) | |||
Escrow deposit for acquisition of a business | — | (136 | ) | ||||
Other | 9 | 6 | |||||
Net cash used in investing activities | (64 | ) | (22 | ) | |||
FINANCING ACTIVITIES | |||||||
Commercial paper/Credit Facility, net | 51 | 246 | |||||
Repayment of long-term debt | (2 | ) | (2 | ) | |||
Issuance of Class A Common Stock | 6 | 17 | |||||
Dividends paid | (64 | ) | (56 | ) | |||
Purchase of treasury stock | (248 | ) | (429 | ) | |||
Other | (9 | ) | — | ||||
Net cash used in financing activities | (266 | ) | (224 | ) | |||
INCREASE IN CASH AND EQUIVALENTS | 3 | 16 | |||||
CASH AND EQUIVALENTS, beginning of period | 96 | 104 | |||||
CASH AND EQUIVALENTS, end of period | $ | 99 | $ | 120 |
Three Months Ended | |||||||
(in millions, except per share amounts) | March 31, 2016 | March 31, 2015 | |||||
Computation of Basic Earnings Per Share | |||||||
Net income | $ | 219 | $ | 207 | |||
Weighted average shares outstanding | 254.4 | 277.7 | |||||
Basic earnings per share | $ | 0.86 | $ | 0.75 | |||
Computation of Diluted Earnings Per Share | |||||||
Net income | $ | 219 | $ | 207 | |||
Weighted average shares outstanding | 254.4 | 277.7 | |||||
Effect of dilutive securities | |||||||
Employee stock option and appreciation right plans | 1.9 | 2.4 | |||||
Deferred stock incentive plans | 0.6 | 0.7 | |||||
Restricted stock units | 2.0 | 2.7 | |||||
Shares for diluted earnings per share | 258.9 | 283.5 | |||||
Diluted earnings per share | $ | 0.85 | $ | 0.73 |
Expected volatility | 30.4 | % |
Dividend yield | 1.3 | % |
Risk-free rate | 1.7 | % |
Expected term (in years) | 8 - 9 |
($ in millions) Guarantee Type | Maximum Potential Amount of Future Fundings | Recorded Liability for Guarantees | |||||
Debt service | $ | 113 | $ | 21 | |||
Operating profit | 100 | 38 | |||||
Other | 9 | 1 | |||||
Total guarantees where we are the primary obligor | $ | 222 | $ | 60 |
• | $57 million of guarantees for Senior Living Services, consisting of lease obligations of $41 million (expiring in 2019) and lifecare bonds of $16 million (estimated to expire in 2019), for which we are secondarily liable. Sunrise Senior Living, Inc. (“Sunrise”) is the primary obligor on both the leases and $3 million of the lifecare bonds; HCP, Inc., as successor by merger to CNL Retirement Properties, Inc. (“CNL”), is the primary obligor on the remaining $13 million of the lifecare bonds. Before we sold the Senior Living Services business in 2003, these were our guarantees of obligations of our then consolidated Senior Living Services subsidiaries. Sunrise and CNL have indemnified us for any fundings we may be called upon to make under these guarantees. Our liability for these guarantees had a carrying value of $3 million at March 31, 2016. In conjunction with our consent of the 2011 extension of certain lease obligations until 2018, Sunrise provided us with $1 million of cash collateral and an $85 million letter of credit issued by Key Bank to secure our continued exposure under |
• | Lease obligations, for which we became secondarily liable when we acquired the Renaissance Hotel Group N.V. in 1997, consisting of annual rent payments of approximately $4 million and total remaining rent payments through the initial term of approximately $18 million. The majority of these obligations expire by the end of 2020. CTF Holdings Ltd. (“CTF”) had originally provided €35 million in cash collateral in the event that we are required to fund under such guarantees, approximately $2 million (€2 million) of which remained at March 31, 2016. Our exposure for the remaining rent payments through the initial term will decline to the extent that CTF obtains releases from the landlords or these hotels exit our system. Since the time we assumed these guarantees, we have not funded any amounts, and we do not expect to fund any amounts under these guarantees in the future. |
• | A guarantee relating to the timeshare business, which was outstanding at the time of the 2011 Timeshare spin-off and for which we became secondarily liable as part of the spin-off. The guarantee relates to a Marriott Vacations Worldwide Corporation (“MVW”) payment obligation, for which we had an exposure of $5 million (7 million Singapore Dollars) at March 31, 2016. MVW has indemnified us for this obligation, which we expect will expire in 2022. We have not funded any amounts under this obligation, and do not expect to do so in the future. Our liability for this obligation had a carrying value of $1 million at March 31, 2016. |
• | A guarantee for a lease, originally entered into in 2000, for which we became secondarily liable in 2012 as a result of our sale of the ExecuStay corporate housing business to Oakwood Worldwide (“Oakwood”). Oakwood has indemnified us for the obligations under this guarantee. Our total exposure at the end of the 2016 first quarter for this guarantee was $6 million in future rent payments through the end of the lease in 2019. |
• | A commitment to invest up to $22 million of equity for non-controlling interests in a partnership that plans to purchase or develop limited-service properties in Asia. We expect to fund $3 million of this commitment in 2016. We do not expect to fund the remaining $19 million of this commitment prior to the end of the commitment period in 2016. |
• | We have a right and under certain circumstances an obligation to acquire our joint venture partner’s remaining interests in two joint ventures over the next five years at a price based on the performance of the ventures. In conjunction with this contingent obligation, we advanced $20 million (€15 million) in deposits, $13 million (€11 million) of which are remaining. The amounts on deposit are refundable to the extent we do not acquire our joint venture partner’s remaining interests. |
• | A commitment to invest up to $10 million of equity into a joint venture in which we have a non-controlling interest in order to fund renovations of guest rooms. We expect to fully fund this commitment, which expires in 2016. |
• | A loan commitment of $36 million related to the construction of a North American Full-Service property. We expect to fund this commitment in 2017. |
• | Various commitments to purchase information technology hardware, software, accounting, finance, and maintenance services in the normal course of business totaling $131 million. We expect to purchase goods and services subject to these commitments as follows: $70 million in 2016, $49 million in 2017, $9 million in 2018, and $3 million thereafter. |
• | Several commitments aggregating $49 million which we do not expect to fund. |
At Period End | |||||||
($ in millions) | March 31, 2016 | December 31, 2015 | |||||
Senior Notes: | |||||||
Series H Notes, interest rate of 6.2%, face amount of $289, maturing June 15, 2016 (effective interest rate of 6.3%) | 289 | 289 | |||||
Series I Notes, interest rate of 6.4%, face amount of $293, maturing June 15, 2017 (effective interest rate of 6.5%) | 293 | 293 | |||||
Series K Notes, interest rate of 3.0%, face amount of $600, maturing March 1, 2019 (effective interest rate of 4.4%) | 596 | 595 | |||||
Series L Notes, interest rate of 3.3%, face amount of $350, maturing September 15, 2022 (effective interest rate of 3.4%) | 348 | 348 | |||||
Series M Notes, interest rate of 3.4%, face amount of $350, maturing October 15, 2020 (effective interest rate of 3.6%) | 347 | 347 | |||||
Series N Notes, interest rate of 3.1%, face amount of $400, maturing October 15, 2021 (effective interest rate of 3.4%) | 395 | 395 | |||||
Series O Notes, interest rate of 2.9%, face amount of $450, maturing March 1, 2021 (effective interest rate of 3.1%) | 446 | 446 | |||||
Series P Notes, interest rate of 3.8%, face amount of $350, maturing October 1, 2025 (effective interest rate of 4.0%) | 343 | 343 | |||||
Commercial paper, average interest rate of 0.8% at March 31, 2016 | 991 | 938 | |||||
$2,000 Credit Facility | — | — | |||||
Other | 111 | 113 | |||||
4,159 | 4,107 | ||||||
Less: Current portion of long-term debt | (300 | ) | (300 | ) | |||
$ | 3,859 | $ | 3,807 |
Debt Principal Payments (net of unamortized discounts) ($ in millions) | Amount | |||
2016 | $ | 298 | ||
2017 | 302 | |||
2018 | 1,000 | |||
2019 | 606 | |||
2020 | 358 | |||
Thereafter | 1,595 | |||
Balance at March 31, 2016 | $ | 4,159 |
At Period End | |||||||
($ in millions) | March 31, 2016 | December 31, 2015 | |||||
Senior, mezzanine, and other loans | $ | 225 | $ | 221 | |||
Less current portion | (7 | ) | (6 | ) | |||
$ | 218 | $ | 215 |
Notes Receivable Principal Payments (net of reserves and unamortized discounts) and Interest Rates ($ in millions) | Amount | |||
2016 | $ | 5 | ||
2017 | 3 | |||
2018 | 61 | |||
2019 | 5 | |||
2020 | 2 | |||
Thereafter | 149 | |||
Balance at March 31, 2016 | $ | 225 | ||
Weighted average interest rate at March 31, 2016 | 7.8% | |||
Range of stated interest rates at March 31, 2016 | 0 - 15% |
March 31, 2016 | December 31, 2015 | ||||||||||||||
($ in millions) | Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||
Senior, mezzanine, and other loans | $ | 218 | $ | 211 | $ | 215 | $ | 209 | |||||||
Marketable securities | 40 | 40 | 37 | 37 | |||||||||||
Total noncurrent financial assets | $ | 258 | $ | 251 | $ | 252 | $ | 246 | |||||||
Senior notes | $ | (2,768 | ) | $ | (2,875 | ) | $ | (2,766 | ) | $ | (2,826 | ) | |||
Commercial paper | (991 | ) | (991 | ) | (938 | ) | (938 | ) | |||||||
Other long-term debt | (97 | ) | (105 | ) | (99 | ) | (108 | ) | |||||||
Other noncurrent liabilities | (65 | ) | (65 | ) | (63 | ) | (63 | ) | |||||||
Total noncurrent financial liabilities | $ | (3,921 | ) | $ | (4,036 | ) | $ | (3,866 | ) | $ | (3,935 | ) |
($ in millions) | Foreign Currency Translation Adjustments | Derivative Instrument Adjustments | Available-For-Sale Securities Unrealized Adjustments | Accumulated Other Comprehensive Loss | |||||||||||
Balance at year-end 2015 | $ | (192 | ) | $ | (8 | ) | $ | 4 | $ | (196 | ) | ||||
Other comprehensive income (loss) before reclassifications (1) | 22 | (5 | ) | 1 | 18 | ||||||||||
Reclassification of losses from accumulated other comprehensive loss | — | 1 | — | 1 | |||||||||||
Net other comprehensive income (loss) | 22 | (4 | ) | 1 | 19 | ||||||||||
Balance at March 31, 2016 | $ | (170 | ) | $ | (12 | ) | $ | 5 | $ | (177 | ) |
($ in millions) | Foreign Currency Translation Adjustments | Derivative Instrument Adjustments | Available-For-Sale Securities Unrealized Adjustments | Accumulated Other Comprehensive Loss | |||||||||||
Balance at year-end 2014 | $ | (72 | ) | $ | (9 | ) | $ | 11 | $ | (70 | ) | ||||
Other comprehensive (loss) income before reclassifications (1) | (26 | ) | 9 | (1 | ) | (18 | ) | ||||||||
Reclassification of losses (gains) from accumulated other comprehensive loss | 3 | (5 | ) | — | (2 | ) | |||||||||
Net other comprehensive (loss) income | (23 | ) | 4 | (1 | ) | (20 | ) | ||||||||
Balance at March 31, 2015 | $ | (95 | ) | $ | (5 | ) | $ | 10 | $ | (90 | ) |
(1) | Other comprehensive income (loss) before reclassifications for foreign currency translation adjustments includes intra-entity foreign currency transactions that are of a long-term investment nature. These resulted in a loss of $20 million for the 2016 first quarter and a gain of $52 million for the 2015 first quarter. |
(in millions, except per share amounts) | ||||||||||||||||||||||||||
Common Shares Outstanding | Total | Class A Common Stock | Additional Paid-in- Capital | Retained Earnings | Treasury Stock, at Cost | Accumulated Other Comprehensive Loss | ||||||||||||||||||||
256.3 | Balance at year-end 2015 | $ | (3,590 | ) | $ | 5 | $ | 2,821 | $ | 4,878 | $ | (11,098 | ) | $ | (196 | ) | ||||||||||
— | Net income | 219 | — | — | 219 | — | — | |||||||||||||||||||
— | Other comprehensive income | 19 | — | — | — | — | 19 | |||||||||||||||||||
— | Cash dividends ($0.25 per share) | (64 | ) | — | — | (64 | ) | — | — | |||||||||||||||||
1.6 | Employee stock plan | (26 | ) | — | (70 | ) | (8 | ) | 52 | — | ||||||||||||||||
(3.7 | ) | Purchase of treasury stock | (225 | ) | — | — | — | (225 | ) | — | ||||||||||||||||
254.2 | Balance at March 31, 2016 | $ | (3,667 | ) | $ | 5 | $ | 2,751 | $ | 5,025 | $ | (11,271 | ) | $ | (177 | ) |
• | North American Full-Service, which includes The Ritz-Carlton, EDITION, JW Marriott, Autograph Collection Hotels, Renaissance Hotels, Marriott Hotels, Delta Hotels and Resorts, and Gaylord Hotels located in the United States and Canada; |
• | North American Limited-Service, which includes AC Hotels by Marriott, Courtyard, Residence Inn, SpringHill Suites, Fairfield Inn & Suites, TownePlace Suites, and Moxy Hotels properties located in the United States and Canada; and |
• | International, which includes The Ritz-Carlton, Bulgari Hotels & Resorts, EDITION, JW Marriott, Autograph Collection Hotels, Renaissance Hotels, Marriott Hotels, Marriott Executive Apartments, AC Hotels by Marriott, Courtyard, Residence Inn, Fairfield Inn & Suites, Protea Hotels, and Moxy Hotels located outside the United States and Canada. |
Three Months Ended | |||||||
($ in millions) | March 31, 2016 | March 31, 2015 | |||||
North American Full-Service Segment | $ | 2,321 | $ | 2,175 | |||
North American Limited-Service Segment | 833 | 738 | |||||
International | 556 | 542 | |||||
Total segment revenues | 3,710 | 3,455 | |||||
Other unallocated corporate | 62 | 58 | |||||
Total consolidated revenues | $ | 3,772 | $ | 3,513 |
Three Months Ended | |||||||
($ in millions) | March 31, 2016 | March 31, 2015 | |||||
North American Full-Service Segment | $ | 185 | $ | 146 | |||
North American Limited-Service Segment | 155 | 151 | |||||
International | 75 | 77 | |||||
Total segment profits | 415 | 374 | |||||
Other unallocated corporate | (48 | ) | (39 | ) | |||
Interest expense, net of interest income | (41 | ) | (28 | ) | |||
Income taxes | (107 | ) | (100 | ) | |||
Net Income | $ | 219 | $ | 207 |
($ in millions) | March 31, 2016 | March 31, 2015 | Increase (decrease) from prior year | Percentage change from prior year | ||||||||||
Base management fees | $ | 172 | $ | 165 | $ | 7 | 4 | % | ||||||
Franchise fees | 207 | 204 | 3 | 1 | % | |||||||||
Incentive management fees | 101 | 89 | 12 | 13 | % | |||||||||
480 | 458 | 22 | 5 | % | ||||||||||
Owned, leased, and other revenue | 247 | 257 | (10 | ) | (4 | )% | ||||||||
Cost reimbursements | 3,045 | 2,798 | 247 | 9 | % | |||||||||
$ | 3,772 | $ | 3,513 | $ | 259 | 7 | % |
Three Months Ended | ||||||||
($ in millions) | March 31, 2016 | March 31, 2015 | ||||||
Net Income | $ | 219 | $ | 207 | ||||
Interest expense | 47 | 36 | ||||||
Tax Provision | 107 | 100 | ||||||
Depreciation and amortization | 31 | 32 | ||||||
Depreciation classified in Reimbursed costs | 14 | 14 | ||||||
Interest expense from unconsolidated joint ventures | 1 | 1 | ||||||
Depreciation and amortization from unconsolidated joint ventures | 3 | 3 | ||||||
EBITDA | $ | 422 | $ | 393 | ||||
Starwood transaction and transition costs | 8 | — | ||||||
EDITION impairment charges | — | 12 | ||||||
Share-based compensation (including share-based compensation reimbursed by third-party owners) | 28 | 24 | ||||||
Adjusted EBITDA | $ | 458 | $ | 429 |
Three Months Ended | ||||||||||||||
($ in millions) | March 31, 2016 | March 31, 2015 | Change 2016 vs. 2015 | |||||||||||
Total segment revenues | $ | 3,710 | $ | 3,455 | $ | 255 | 7 | % | ||||||
Total segment profits | $ | 415 | $ | 374 | $ | 41 | 11 | % |
Company-Operated | Franchised / Licensed | Other (2) | Total | ||||||||||||||||||||
Properties | Rooms | Properties | Rooms | Properties | Rooms | Properties | Rooms | ||||||||||||||||
North American Full-Service | |||||||||||||||||||||||
Marriott Hotels | 129 | 68,970 | 201 | 62,162 | — | — | 330 | 131,132 | |||||||||||||||
JW Marriott | 15 | 9,690 | 10 | 4,469 | — | — | 25 | 14,159 | |||||||||||||||
Marriott Conference Centers | 10 | 2,915 | — | — | — | — | 10 | 2,915 | |||||||||||||||
Renaissance Hotels | 28 | 12,229 | 57 | 15,816 | — | — | 85 | 28,045 | |||||||||||||||
Autograph Collection Hotels | 3 | 1,065 | 55 | 12,443 | — | — | 58 | 13,508 | |||||||||||||||
Delta Hotels and Resorts | 25 | 6,764 | 12 | 3,020 | — | — | 37 | 9,784 | |||||||||||||||
Gaylord Hotels | 5 | 8,098 | — | — | — | — | 5 | 8,098 | |||||||||||||||
The Ritz-Carlton | 39 | 11,414 | 1 | 429 | — | — | 40 | 11,843 | |||||||||||||||
The Ritz-Carlton Residences (1) | 31 | 3,757 | 1 | 55 | — | — | 32 | 3,812 | |||||||||||||||
EDITION | 2 | 568 | — | — | — | — | 2 | 568 | |||||||||||||||
EDITION Residences (1) | 1 | 25 | — | — | — | — | 1 | 25 | |||||||||||||||
Total North American Full-Service | 288 | 125,495 | 337 | 98,394 | — | — | 625 | 223,889 | |||||||||||||||
North American Limited-Service | |||||||||||||||||||||||
Courtyard | 275 | 43,637 | 649 | 86,441 | — | — | 924 | 130,078 | |||||||||||||||
Residence Inn | 113 | 16,982 | 582 | 68,103 | — | — | 695 | 85,085 | |||||||||||||||
Fairfield Inn & Suites | 5 | 1,324 | 766 | 69,433 | — | — | 771 | 70,757 | |||||||||||||||
SpringHill Suites | 31 | 4,973 | 312 | 35,849 | — | — | 343 | 40,822 | |||||||||||||||
TownePlace Suites | 15 | 1,740 | 264 | 26,375 | — | — | 279 | 28,115 | |||||||||||||||
AC Hotels by Marriott | — | — | — | — | 7 | 1,193 | 7 | 1,193 | |||||||||||||||
Moxy Hotels | — | — | 1 | 186 | — | — | 1 | 186 | |||||||||||||||
Total North American Limited-Service | 439 | 68,656 | 2,574 | 286,387 | 7 | 1,193 | 3,020 | 356,236 | |||||||||||||||
Total North American Locations | 727 | 194,151 | 2,911 | 384,781 | 7 | 1,193 | 3,645 | 580,125 | |||||||||||||||
International | |||||||||||||||||||||||
Marriott Hotels | 148 | 42,132 | 40 | 11,957 | — | — | 188 | 54,089 | |||||||||||||||
JW Marriott | 47 | 18,554 | 5 | 1,355 | — | — | 52 | 19,909 | |||||||||||||||
Marriott Executive Apartments | 27 | 4,131 | — | — | — | — | 27 | 4,131 | |||||||||||||||
Renaissance Hotels | 53 | 16,952 | 24 | 6,835 | — | — | 77 | 23,787 | |||||||||||||||
Autograph Collection Hotels | 3 | 584 | 34 | 9,236 | 5 | 348 | 42 | 10,168 | |||||||||||||||
Protea Hotels | 47 | 5,710 | 52 | 3,670 | — | — | 99 | 9,380 | |||||||||||||||
The Ritz-Carlton | 52 | 14,686 | — | — | — | — | 52 | 14,686 | |||||||||||||||
The Ritz-Carlton Residences (1) | 8 | 416 | — | — | — | — | 8 | 416 | |||||||||||||||
The Ritz-Carlton Serviced Apartments | 4 | 579 | — | — | — | — | 4 | 579 | |||||||||||||||
Bulgari Hotels & Resorts | 2 | 117 | 1 | 85 | — | — | 3 | 202 | |||||||||||||||
Bulgari Residences (1) | 1 | 5 | — | — | — | — | 1 | 5 | |||||||||||||||
EDITION | 1 | 173 | 1 | 78 | — | — | 2 | 251 | |||||||||||||||
Courtyard | 74 | 15,462 | 49 | 9,274 | — | — | 123 | 24,736 | |||||||||||||||
Residence Inn | 5 | 517 | 2 | 200 | — | — | 7 | 717 | |||||||||||||||
Fairfield Inn & Suites | 6 | 848 | 2 | 386 | — | — | 8 | 1,234 | |||||||||||||||
AC Hotels by Marriott | — | — | — | — | 80 | 9,852 | 80 | 9,852 | |||||||||||||||
Moxy Hotels | — | — | 2 | 414 | — | — | 2 | 414 | |||||||||||||||
Total International | 478 | 120,866 | 212 | 43,490 | 85 | 10,200 | 775 | 174,556 | |||||||||||||||
Timeshare (3) | — | — | 60 | 12,889 | — | — | 60 | 12,889 | |||||||||||||||
Total | 1,205 | 315,017 | 3,183 | 441,160 | 92 | 11,393 | 4,480 | 767,570 |
(1) | Represents projects where we manage the related owners’ association. We include residential products once they possess a certificate of occupancy. |
(2) | We present results for all AC Hotels by Marriott properties and five International Autograph Collection properties in the “Equity in earnings” caption of our Income Statements. |
(3) | Timeshare properties licensed by MVW under the Marriott Vacation Club, The Ritz-Carlton Destination Club, The Ritz-Carlton Residences, and Grand Residences by Marriott brand names. MVW’s property and room counts are reported on a period-end basis for the MVW quarter ended March 25, 2016 and include products that are in active sales as well as those that are sold out. |
Comparable Company-Operated North American Properties | Comparable Systemwide North American Properties | |||||||||||||
Three Months Ended March 31, 2016 | Change vs. Three Months Ended March 31, 2015 | Three Months Ended March 31, 2016 | Change vs. Three Months Ended March 31, 2015 | |||||||||||
Marriott Hotels | ||||||||||||||
Occupancy | 72.9 | % | 0.7 | % | pts. | 69.6 | % | — | % | pts. | ||||
Average Daily Rate | $ | 197.78 | 2.3 | % | $ | 180.18 | 2.6 | % | ||||||
RevPAR | $ | 144.14 | 3.3 | % | $ | 125.35 | 2.6 | % | ||||||
Renaissance Hotels | ||||||||||||||
Occupancy | 75.2 | % | (0.8 | )% | pts. | 71.7 | % | (0.8 | )% | pts. | ||||
Average Daily Rate | $ | 188.15 | 2.9 | % | $ | 169.49 | 2.7 | % | ||||||
RevPAR | $ | 141.45 | 1.8 | % | $ | 121.58 | 1.6 | % | ||||||
Autograph Collection Hotels | ||||||||||||||
Occupancy | nm | nm | 73.8 | % | 1.6 | % | pts. | |||||||
Average Daily Rate | nm | nm | $ | 226.47 | 0.8 | % | ||||||||
RevPAR | nm | nm | $ | 167.15 | 3.0 | % | ||||||||
The Ritz-Carlton | ||||||||||||||
Occupancy | 72.2 | % | 1.8 | % | pts. | 72.2 | % | 1.8 | % | pts. | ||||
Average Daily Rate | $ | 386.55 | 3.6 | % | $ | 386.55 | 3.6 | % | ||||||
RevPAR | $ | 278.93 | 6.2 | % | $ | 278.93 | 6.2 | % | ||||||
Composite North American Full-Service | ||||||||||||||
Occupancy | 73.0 | % | 0.6 | % | pts. | 70.3 | % | 0.1 | % | pts. | ||||
Average Daily Rate | $ | 215.07 | 2.7 | % | $ | 193.02 | 2.7 | % | ||||||
RevPAR | $ | 156.91 | 3.5 | % | $ | 135.75 | 2.9 | % | ||||||
Courtyard | ||||||||||||||
Occupancy | 69.5 | % | 0.6 | % | pts. | 69.0 | % | 0.2 | % | pts. | ||||
Average Daily Rate | $ | 140.88 | 2.4 | % | $ | 136.99 | 2.4 | % | ||||||
RevPAR | $ | 97.88 | 3.3 | % | $ | 94.50 | 2.6 | % | ||||||
Residence Inn | ||||||||||||||
Occupancy | 75.0 | % | — | % | pts. | 74.7 | % | (0.5 | )% | pts. | ||||
Average Daily Rate | $ | 147.30 | 3.2 | % | $ | 139.05 | 3.0 | % | ||||||
RevPAR | $ | 110.48 | 3.1 | % | $ | 103.90 | 2.3 | % | ||||||
Fairfield Inn & Suites | ||||||||||||||
Occupancy | nm | nm | 64.4 | % | (1.0 | )% | pts. | |||||||
Average Daily Rate | nm | nm | $ | 106.62 | 2.0 | % | ||||||||
RevPAR | nm | nm | $ | 68.70 | 0.5 | % | ||||||||
TownePlace Suites | ||||||||||||||
Occupancy | 66.3 | % | 0.1 | % | pts. | 70.5 | % | 0.3 | % | pts. | ||||
Average Daily Rate | $ | 102.87 | 2.3 | % | $ | 103.73 | 1.8 | % | ||||||
RevPAR | $ | 68.25 | 2.4 | % | $ | 73.08 | 2.2 | % | ||||||
SpringHill Suites | ||||||||||||||
Occupancy | 73.1 | % | 2.4 | % | pts. | 70.5 | % | (0.5 | )% | pts. | ||||
Average Daily Rate | $ | 127.49 | 1.2 | % | $ | 118.83 | 1.9 | % | ||||||
RevPAR | $ | 93.18 | 4.5 | % | $ | 83.83 | 1.1 | % | ||||||
Composite North American Limited-Service | ||||||||||||||
Occupancy | 71.2 | % | 0.6 | % | pts. | 69.8 | % | (0.3 | )% | pts. | ||||
Average Daily Rate | $ | 140.46 | 2.5 | % | $ | 127.50 | 2.4 | % | ||||||
RevPAR | $ | 100.04 | 3.4 | % | $ | 88.95 | 2.0 | % | ||||||
Composite North American - All | ||||||||||||||
Occupancy | 72.2 | % | 0.6 | % | pts. | 70.0 | % | (0.1 | )% | pts. | ||||
Average Daily Rate | $ | 183.42 | 2.6 | % | $ | 150.15 | 2.6 | % | ||||||
RevPAR | $ | 132.45 | 3.5 | % | $ | 105.05 | 2.4 | % |
Comparable Company-Operated Properties | Comparable Systemwide Properties | |||||||||||||
Three Months Ended March 31, 2016 | Change vs. Three Months Ended March 31, 2015 | Three Months Ended March 31, 2016 | Change vs. Three Months Ended March 31, 2015 | |||||||||||
Caribbean and Latin America | ||||||||||||||
Occupancy | 75.6 | % | (0.6 | )% | pts. | 68.8 | % | 0.2 | % | pts. | ||||
Average Daily Rate | $ | 286.12 | 5.9 | % | $ | 248.34 | 3.7 | % | ||||||
RevPAR | $ | 216.34 | 5.1 | % | $ | 170.89 | 4.0 | % | ||||||
Europe | ||||||||||||||
Occupancy | 63.9 | % | (0.7 | )% | pts. | 61.0 | % | — | % | pts. | ||||
Average Daily Rate | $ | 141.50 | 3.2 | % | $ | 137.47 | 2.8 | % | ||||||
RevPAR | $ | 90.45 | 2.0 | % | $ | 83.92 | 2.7 | % | ||||||
Middle East and Africa | ||||||||||||||
Occupancy | 69.8 | % | 0.6 | % | pts. | 68.0 | % | 0.7 | % | pts. | ||||
Average Daily Rate | $ | 158.90 | (4.3 | )% | $ | 148.48 | (3.3 | )% | ||||||
RevPAR | $ | 110.96 | (3.4 | )% | $ | 100.94 | (2.3 | )% | ||||||
Asia Pacific | ||||||||||||||
Occupancy | 71.1 | % | 4.3 | % | pts. | 71.8 | % | 4.1 | % | pts. | ||||
Average Daily Rate | $ | 151.05 | 0.4 | % | $ | 154.74 | 1.3 | % | ||||||
RevPAR | $ | 107.37 | 6.8 | % | $ | 111.16 | 7.4 | % | ||||||
Total International (1) | ||||||||||||||
Occupancy | 68.9 | % | 1.3 | % | pts. | 66.6 | % | 1.3 | % | pts. | ||||
Average Daily Rate | $ | 166.43 | 1.1 | % | $ | 164.08 | 1.5 | % | ||||||
RevPAR | $ | 114.75 | 3.1 | % | $ | 109.34 | 3.5 | % | ||||||
Total Worldwide (2) | ||||||||||||||
Occupancy | 71.0 | % | 0.9 | % | pts. | 69.3 | % | 0.1 | % | pts. | ||||
Average Daily Rate | $ | 177.19 | 2.1 | % | $ | 152.84 | 2.4 | % | ||||||
RevPAR | $ | 125.77 | 3.4 | % | $ | 105.91 | 2.6 | % |
(1) | Includes properties located outside of the United States and Canada for The Ritz-Carlton, Bulgari Hotels & Resorts, EDITION, Autograph Collection Hotels, Renaissance Hotels, Marriott Hotels, AC Hotels, Courtyard, Residence Inn, Fairfield Inn & Suites, Protea Hotels, and Moxy Hotels brands. |
(2) | Includes properties worldwide for The Ritz-Carlton, Bulgari Hotels & Resorts, EDITION, Autograph Collection Hotels, Renaissance Hotels, Marriott Hotels, Gaylord Hotels, Courtyard, Residence Inn, SpringHill Suites, Fairfield Inn & Suites, TownePlace Suites, AC Hotels by Marriott, Protea Hotels, and Moxy Hotels brands. |
Three Months Ended | ||||||||||||||
($ in millions) | March 31, 2016 | March 31, 2015 | Change 2016 vs. 2015 | |||||||||||
Segment revenues | $ | 2,321 | $ | 2,175 | $ | 146 | 7 | % | ||||||
Segment profits | $ | 185 | $ | 146 | $ | 39 | 27 | % |
Three Months Ended | ||||||||||||||
($ in millions) | March 31, 2016 | March 31, 2015 | Change 2016 vs. 2015 | |||||||||||
Segment revenues | $ | 833 | $ | 738 | $ | 95 | 13 | % | ||||||
Segment profits | $ | 155 | $ | 151 | $ | 4 | 3 | % |
Three Months Ended | ||||||||||||||
($ in millions) | March 31, 2016 | March 31, 2015 | Change 2016 vs. 2015 | |||||||||||
Segment revenues | $ | 556 | $ | 542 | $ | 14 | 3 | % | ||||||
Segment profits | $ | 75 | $ | 77 | $ | (2 | ) | (3 | )% |
• | having to pay certain costs relating to the Starwood Combination, such as legal, accounting, financial advisor, and other fees and expenses; |
• | our stock price could decline to the extent that the current market prices reflect a market assumption that the Starwood Combination will be completed; and |
• | having had our management focus on the Starwood Combination instead of on pursuing other opportunities that could have been beneficial to us. |
• | the absence of any judgment, order, law, or other legal restraint by a court or other governmental entity of competent jurisdiction that prevents the consummation of the Starwood Combination; |
• | the approval for listing by NASDAQ of the shares of Marriott common stock issuable in the Starwood Combination; and |
• | the spin-off of Starwood’s Vistana vacation ownership business (“Vistana”), or, if the spin-off of Vistana and Vistana’s subsequent merger with a wholly owned subsidiary of Interval Leisure Group, Inc. is not consummated, the completion of another spin-off, split-off or analogous distribution of Vistana or the sale of Vistana by Starwood. |
(a) | Unregistered Sale of Securities |
(b) | Use of Proceeds |
(c) | Issuer Purchases of Equity Securities |
(in millions, except per share amounts) | |||||||||||||
Period | Total Number of Shares Purchased (2) | Average Price per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) | Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs (1) | |||||||||
January 1, 2016 - January 31, 2016 | 2.3 | $ | 61.73 | 2.3 | 12.1 | ||||||||
February 1, 2016 - February 29, 2016 | 1.4 | $ | 60.86 | 1.4 | 35.7 | ||||||||
March 1, 2016 - March 31, 2016 | — | $ | — | — | 35.7 |
(1) | On February 11, 2016, we announced that our Board of Directors increased the authorization to repurchase our common stock by 25 million shares as part of an ongoing share repurchase program. As of March 31, 2016, 35.7 million shares remained available for repurchase under Board approved authorizations. We may repurchase shares in the open market or in privately negotiated transactions. |
(2) | The Company’s ability to repurchase its shares was limited during the 2016 first quarter by restrictions under the securities laws and other legal considerations relating to the Starwood Combination. See Liquidity and Capital Resources for additional information about the Company’s share repurchases. |
Exhibit No. | Description | Incorporation by Reference (where a report is indicated below, that document has been previously filed with the SEC and the applicable exhibit is incorporated by reference thereto) | ||
2.1 | Amendment No. 1 to Agreement and Plan of Merger, dated March 20, 2016, by and among Marriott International, Inc., Starwood Hotels & Resorts Worldwide, Inc., and certain of their subsidiaries. | Exhibit No. 2.1 to our Form 8-K filed March 21, 2016 (File No. 001-13881). | ||
3.1 | Restated Certificate of Incorporation. | Exhibit No. 3.(i) to our Form 8-K filed August 22, 2006 (File No. 001-13881). | ||
3.2 | Amended and Restated Bylaws. | Exhibit No. 3.(ii) to our Form 8-K filed June 18, 2014 (File No. 001-13881). | ||
12 | Statement of Computation of Ratio of Earnings to Fixed Charges. | Filed with this report. | ||
31.1 | Certification of Chief Executive Officer Pursuant to Rule 13a-14(a). | Filed with this report. | ||
31.2 | Certification of Chief Financial Officer Pursuant to Rule 13a-14(a). | Filed with this report. | ||
32 | Section 1350 Certifications. | Furnished with this report. | ||
101.INS | XBRL Instance Document. | Submitted electronically with this report. | ||
101.SCH | XBRL Taxonomy Extension Schema Document. | Submitted electronically with this report. | ||
101.CAL | XBRL Taxonomy Calculation Linkbase Document. | Submitted electronically with this report. | ||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. | Submitted electronically with this report. | ||
101.LAB | XBRL Taxonomy Label Linkbase Document. | Submitted electronically with this report. | ||
101.PRE | XBRL Taxonomy Presentation Linkbase Document. | Submitted electronically with this report. |
MARRIOTT INTERNATIONAL, INC. |
28th day of April, 2016 |
/s/ Bao Giang Val Bauduin |
Bao Giang Val Bauduin |
Controller and Chief Accounting Officer (Duly Authorized Officer) |
Three Months Ended | ||||||||
($ in millions, except ratio) | March 31, 2016 | March 31, 2015 | ||||||
Income before income taxes | $ | 326 | $ | 307 | ||||
Income related to equity method investees | — | (3 | ) | |||||
326 | 304 | |||||||
Add/(deduct): | ||||||||
Fixed charges | 60 | 57 | ||||||
Interest capitalized | — | (7 | ) | |||||
Distributed income of equity method investees | — | 1 | ||||||
Earnings available for fixed charges | $ | 386 | $ | 355 | ||||
Fixed charges: | ||||||||
Interest expensed and capitalized (1) | $ | 47 | $ | 43 | ||||
Estimate of interest within rent expense | 13 | 14 | ||||||
Total fixed charges | $ | 60 | $ | 57 | ||||
Ratio of earnings to fixed charges | 6.4 | 6.2 |
(1) | “Interest expensed and capitalized” includes amortized premiums, discounts, and capitalized expenses related to indebtedness. |
1. | I have reviewed this quarterly report on Form 10-Q of Marriott International, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
April 28, 2016 | /s/ Arne M. Sorenson |
Arne M. Sorenson President and Chief Executive Officer (Principal Executive Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of Marriott International, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
April 28, 2016 | /s/ Kathleen K. Oberg |
Kathleen K. Oberg Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
(1) | the quarterly report on Form 10-Q of the Company for the period ended March 31, 2016, (the “Quarterly Report”) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and |
(2) | the information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
April 28, 2016 | /s/ Arne M. Sorenson |
Arne M. Sorenson President and Chief Executive Officer (Principal Executive Officer) |
(1) | the quarterly report on Form 10-Q of the Company for the period ended March 31, 2016, (the “Quarterly Report”) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and |
(2) | the information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
April 28, 2016 | /s/ Kathleen K. Oberg |
Kathleen K. Oberg Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
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Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Apr. 15, 2016 |
|
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2016 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | MAR | |
Entity Registrant Name | MARRIOTT INTERNATIONAL INC /MD/ | |
Entity Central Index Key | 0001048286 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 254,231,720 |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
REVENUES | ||
Base management fees | $ 172 | $ 165 |
Franchise fees | 207 | 204 |
Incentive management fees | 101 | 89 |
Owned, leased, and other revenue | 247 | 257 |
Cost reimbursements | 3,045 | 2,798 |
Revenues | 3,772 | 3,513 |
OPERATING COSTS AND EXPENSES | ||
Owned, leased, and other - direct | 166 | 194 |
Reimbursed costs | 3,045 | 2,798 |
Depreciation, amortization, and other | 31 | 44 |
General, administrative, and other | 163 | 145 |
Costs and Expenses, Total | 3,405 | 3,181 |
OPERATING INCOME | 367 | 332 |
Gains and other income, net | 0 | 0 |
Interest expense | (47) | (36) |
Interest income | 6 | 8 |
Equity in earnings | 0 | 3 |
Income before income taxes | 326 | 307 |
Provision for income taxes | (107) | (100) |
NET INCOME | $ 219 | $ 207 |
EARNINGS PER SHARE | ||
Earnings per share - basic (in USD per share) | $ 0.86 | $ 0.75 |
Earnings per share - diluted (in USD per share) | 0.85 | 0.73 |
CASH DIVIDENDS DECLARED PER SHARE (in USD per share) | $ 0.25 | $ 0.20 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 219 | $ 207 |
Other comprehensive income (loss): | ||
Foreign currency translation adjustments | 22 | (26) |
Derivative instrument adjustments, net of tax | (5) | 9 |
Unrealized gain (loss) on available-for-sale securities, net of tax | 1 | (1) |
Reclassification of losses (gains), net of tax | 1 | (2) |
Total other comprehensive income (loss), net of tax | 19 | (20) |
Comprehensive income | $ 238 | $ 187 |
Basis of Presentation |
3 Months Ended |
---|---|
Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | BASIS OF PRESENTATION The condensed consolidated financial statements present the results of operations, financial position, and cash flows of Marriott International, Inc. (“Marriott,” and together with its consolidated subsidiaries, “we,” “us,” or “the Company”). In order to make this report easier to read, we also refer throughout to (i) our Condensed Consolidated Financial Statements as our “Financial Statements,” (ii) our Condensed Consolidated Statements of Income as our “Income Statements,” (iii) our Condensed Consolidated Balance Sheets as our “Balance Sheets,” (iv) our properties, brands, or markets in the United States (“U.S.”) and Canada as “North America” or “North American,” and (v) our properties, brands, or markets outside of the U.S. and Canada as “International.” References throughout to numbered “Footnotes” refer to the numbered Notes in these Notes to Condensed Consolidated Financial Statements, unless otherwise noted. These Financial Statements have not been audited. We have condensed or omitted certain information and footnote disclosures normally included in financial statements presented in accordance with U.S. generally accepted accounting principles (“GAAP”). The financial statements in this report should be read in conjunction with the consolidated financial statements and notes thereto in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015 (“2015 Form 10-K”). Certain terms not otherwise defined in this Form 10-Q have the meanings specified in our 2015 Form 10-K. Preparation of financial statements that conform with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements, the reported amounts of revenues and expenses during the reporting periods, and the disclosures of contingent liabilities. Accordingly, ultimate results could differ from those estimates. The accompanying Financial Statements reflect all normal and recurring adjustments necessary to present fairly our financial position as of March 31, 2016 and December 31, 2015, the results of our operations for the three months ended March 31, 2016 and March 31, 2015, and cash flows for the three months ended March 31, 2016 and March 31, 2015. Interim results may not be indicative of fiscal year performance because of seasonal and short-term variations. We have eliminated all material intercompany transactions and balances between entities consolidated in these Financial Statements. New Accounting Standards Accounting Standards Update No. 2014-09 - “Revenue from Contracts with Customers” (“ASU No. 2014-09”) ASU No. 2014-09 supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, as well as most industry-specific guidance, and significantly enhances comparability of revenue recognition practices across entities and industries by providing a principles-based, comprehensive framework for addressing revenue recognition issues. In order for a provider of promised goods or services to recognize as revenue the consideration that it expects to receive in exchange for the promised goods or services, the provider should apply the following five steps: (1) identify the contract with a customer(s); (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. ASU No. 2014-09 also specifies the accounting for some costs to obtain or fulfill a contract with a customer and provides enhanced disclosure requirements. The Financial Accounting Standards Board (“FASB”) has deferred ASU No. 2014-09 for one year, and with that deferral, the standard will be effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, which for us will be our 2018 first quarter. We are permitted to use either the retrospective or the modified retrospective method when adopting ASU No. 2014-09. We are still assessing the potential impact that ASU No. 2014-09 will have on our financial statements and disclosures, but we believe that there could be changes to the revenue recognition of real estate sales, franchise fees, and incentive management fees. Accounting Standards Update No. 2016-02 - “Leases” (“ASU No. 2016-02”) In February 2016, the FASB issued ASU No. 2016-02, which introduces a lessee model that brings substantially all leases onto the balance sheet. Under the new standard, a lessee will recognize on its balance sheet a lease liability and a right-of-use asset for all leases, including operating leases, with a term greater than 12 months. The new standard will also distinguish leases as either finance leases or operating leases. This distinction will affect how leases are measured and presented in the income statement and statement of cash flows. ASU No. 2016-02 is effective for annual and interim periods in fiscal years beginning after December 15, 2018. We are still assessing the potential impact that ASU No. 2016-02 will have on our financial statements and disclosures. Accounting Standards Update No. 2016-09 - “Stock Compensation” (“ASU No. 2016-09”) In March 2016, the FASB issued ASU No. 2016-09, which involves several aspects of the accounting for share-based payments, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The new guidance will require all income tax effects of awards to be recorded as income tax expense (or benefit) in the income statement. Currently, excess tax benefits are recorded in additional paid-in-capital in the balance sheet. In the statement of cash flows, the new guidance requires excess tax benefits to be presented as an operating activity rather than as a financing activity. ASU No. 2016-09 is effective for annual and interim periods beginning after December 15, 2016. We are still assessing the potential impact that ASU No. 2016-09 will have on our financial statements and disclosures. |
Acquisitions and Dispositions |
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Mar. 31, 2016 | |
Acquisitions and Dispositions [Abstract] | |
Acquisitions and Dispositions | ACQUISITIONS AND DISPOSITIONS Planned Acquisition On November 15, 2015, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) to combine with Starwood Hotels & Resorts Worldwide, Inc. (“Starwood”). The Merger Agreement provides for the Company to combine with Starwood in a series of transactions after which Starwood will be an indirect wholly owned subsidiary of the Company (the “Starwood Combination”). On March 20, 2016, we entered into Amendment Number 1 (the “Amendment”) to the Merger Agreement. The Amendment modified the merger consideration payable to shareholders of Starwood. If the combination transactions are completed, shareholders of Starwood will receive 0.80 shares of our Class A Common Stock, par value $0.01 per share, and $21.00 in cash, without interest, for each share of Starwood common stock, par value $0.01 per share, that they own immediately before these transactions. On April 8, 2016, shareholders of both Marriott and Starwood approved the combination transactions, and in the 2016 first quarter, we cleared the antitrust and competition reviews in a number of jurisdictions, including the United States and Canada. We expect that the combination will close in mid-2016, after remaining customary conditions are satisfied, including receipt of additional antitrust approvals and the completion of Starwood’s previously announced spin-off of its vacation ownership business, or another spin-off, split-off, analogous disposition, or sale of its vacation ownership business. Planned Dispositions At the end of the 2016 first quarter, we held $78 million of assets classified as “Assets held for sale” and $3 million of liabilities associated with those assets, which we recorded under “Accrued expenses and other” on our Balance Sheet. In the 2016 second quarter, we sold one of these assets, a North American Limited-Service segment plot of land ($47 million in assets and $1 million in liabilities). We expect to sell the remaining Miami Beach EDITION residences ($31 million in assets and $2 million in liabilities) in 2016. |
Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | EARNINGS PER SHARE The table below presents the reconciliation of the earnings and number of shares used in our calculations of basic and diluted earnings per share:
We compute the effect of dilutive securities using the treasury stock method and average market prices during the period. We excluded antidilutive stock options and stock appreciation rights of 0.5 million for the 2016 first quarter and 0.2 million for the 2015 first quarter from our calculation of diluted earnings per share because their exercise prices were greater than the average market prices. |
Share-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||
Share-Based Compensation | SHARE-BASED COMPENSATION Under our Stock and Cash Incentive Plan (the “Stock Plan”), we award: (1) stock options (our “Stock Option Program”) to purchase our Class A Common Stock (“common stock”); (2) stock appreciation rights (“SARs”) for our common stock (our “SAR Program”); (3) restricted stock units (“RSUs”) of our common stock; and (4) deferred stock units. We also issue performance-based RSUs (“PSUs”) to named executive officers and some of their direct reports under the Stock Plan. We grant awards at exercise prices or strike prices that equal the market price of our common stock on the date of grant. We recorded share-based compensation expense for award grants of $28 million for the 2016 first quarter and $24 million for the 2015 first quarter. Deferred compensation costs for unvested awards totaled $234 million at March 31, 2016 and $116 million at December 31, 2015. RSUs and PSUs We granted 1.6 million RSUs during the 2016 first quarter to certain officers and key employees, and those units vest generally over four years in equal annual installments commencing one year after the grant date. We granted 0.2 million PSUs during the 2016 first quarter to certain executive officers, subject to continued employment and the satisfaction of certain performance conditions based on achievement of pre-established targets for Adjusted EBITDA, RevPAR Index, room openings, and/or net administrative expense over, or at the end of, a three-year vesting period. We also granted 0.4 million PSUs during the 2016 first quarter to certain senior leaders and members of the Company’s Starwood integration team that, subject to the closing of the Starwood Combination and continued employment, vest based upon achievement of pre-established targets related to the Starwood Combination over, or at the end of, a three-year performance period. RSUs, including PSUs, granted in the 2016 first quarter had a weighted average grant-date fair value of $62. SARs We granted 0.4 million SARs to officers, key employees, and non-employee directors during the 2016 first quarter. These SARs generally expire ten years after the grant date and both vest and may be exercised in cumulative installments of one quarter at the end of each of the first four years following the grant date. The weighted average grant-date fair value of SARs granted in the 2016 first quarter was $22 and the weighted average exercise price was $67. We used the following assumptions as part of a binomial lattice-based valuation to determine the fair value of the SARs we granted during the 2016 first quarter:
In making these assumptions, we base expected volatility on the historical movement of the Company’s stock price. We base risk-free rates on the corresponding U.S. Treasury spot rates for the expected duration at the date of grant, which we convert to a continuously compounded rate. The dividend yield assumption takes into consideration both historical levels and expectations of future dividend payout. The weighted average expected terms for SARs are an output of our valuation model which utilizes historical data in estimating the period of time that the SARs are expected to remain unexercised. We calculate the expected terms for SARs for separate groups of retirement eligible and non-retirement eligible employees. Our valuation model also uses historical data to estimate exercise behaviors, which include determining the likelihood that employees will exercise their SARs before expiration at a certain multiple of stock price to exercise price. Other Information As of the end of the 2016 first quarter, we had 23 million remaining shares authorized under the Stock Plan, including 6 million shares under the Stock Option Program and the SAR Program. |
Income Taxes |
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Mar. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXES Our effective tax rate increased from 32.4% to 32.8% for the three months ended March 31, 2016, primarily due to additional deferred tax expense resulting from a tax rate change in a foreign jurisdiction, partially offset by the beneficial tax impact of the strengthening U.S. Dollar in relation to foreign currencies. For the 2016 first quarter, our unrecognized tax benefits balance of $25 million increased by $1 million from year-end 2015 for tax positions taken during the current period. The unrecognized tax benefits balance included $16 million of tax positions that, if recognized, would impact our effective tax rate. We file income tax returns, including returns for our subsidiaries, in various jurisdictions around the world. The U.S. Internal Revenue Service (“IRS”) has examined our federal income tax returns, and we have settled all issues for tax years through 2013. We participate in the IRS Compliance Assurance Program, which accelerates IRS examination of key transactions with the goal of resolving any issues before the taxpayer files its return. As a result, our 2014 tax year audit is substantially complete, pending the resolution of one issue. Our 2015 and 2016 tax year audits are currently ongoing. Various foreign, state, and local income tax returns are also under examination by the applicable taxing authorities. We paid cash for income taxes, net of refunds, of $43 million in the 2016 first quarter and $58 million in the 2015 first quarter. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Guarantees We issue guarantees to certain lenders and hotel owners, chiefly to obtain long-term management contracts. The guarantees generally have a stated maximum funding amount and a term of four to ten years. The terms of guarantees to lenders generally require us to fund if cash flows from hotel operations are inadequate to cover annual debt service or to repay the loan at maturity. The terms of the guarantees to hotel owners generally require us to fund if the hotels do not attain specified levels of operating profit. Guarantee fundings to lenders and hotel owners are generally recoverable as loans repayable to us out of future hotel cash flows and/or proceeds from the sale of hotels. We also enter into project completion guarantees with certain lenders in conjunction with hotels that we or our joint venture partners are building. We present the maximum potential amount of our future guarantee fundings and the carrying amount of our liability for guarantees for which we are the primary obligor at March 31, 2016 in the following table:
Our liability at March 31, 2016, for guarantees for which we are the primary obligor is reflected in our Balance Sheets as $60 million of “Other noncurrent liabilities.” Our guarantees listed in the preceding table include $11 million of debt service guarantees, $44 million of operating profit guarantees, and $1 million of other guarantees that will not be in effect until the underlying properties open and we begin to operate the properties or certain other events occur. The table above does not include a “contingent purchase obligation,” which is not currently in effect, that we entered into in the 2014 first quarter to provide credit support to lenders for a construction loan. We entered into that agreement in conjunction with signing a management agreement for The Times Square EDITION hotel in New York City (currently projected to open in 2017), and the hotel’s ownership group obtaining acquisition financing and entering into agreements concerning future construction financing for the mixed use project (which includes both the hotel and adjacent retail space). Under the agreement, we granted the lenders the right, upon an uncured event of default by the hotel owner under, and an acceleration of, the mortgage loan, to require us to purchase the hotel component of the property for $315 million during the first two years after opening (the “put option”). Because we would acquire the building upon exercise of the put option, we have not included the amount in the table above. The lenders may extend this period for up to three years to complete foreclosure if the loan has been accelerated and certain other conditions are met. We do not currently expect that the lenders will require us to purchase the hotel component. We have no ownership interest in this hotel. The preceding table also does not include the following guarantees:
In addition to the guarantees described in the preceding paragraphs, in conjunction with financing obtained for specific projects or properties owned by joint ventures in which we are a party, we may provide industry standard indemnifications to the lender for loss, liability, or damage occurring as a result of the actions of the other joint venture owner or our own actions. Commitments In addition to the guarantees we note in the preceding paragraphs, as of March 31, 2016, we had the following commitments outstanding, which are not recorded on our Balance Sheets:
Letters of Credit At March 31, 2016, we had $77 million of letters of credit outstanding (all outside the Credit Facility, as defined in Footnote No. 7, “Long-Term Debt”), the majority of which were for our self-insurance programs. Surety bonds issued as of March 31, 2016, totaled $161 million, the majority of which state governments requested in connection with our self-insurance programs. Legal Proceedings On January 19, 2010, several former Marriott employees (the “plaintiffs”) filed a putative class action complaint against us and the Stock Plan (the “defendants”), alleging that certain equity awards of deferred bonus stock granted to the plaintiffs and other current and former employees for fiscal years 1963 through 1989 are subject to vesting requirements under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), that are in certain circumstances more rapid than those set forth in the awards. The action was brought in the United States District Court for the District of Maryland (Greenbelt Division), and Dennis Walter Bond Sr. and Michael P. Steigman were the remaining named plaintiffs. Class certification was denied, and on January 16, 2015, the court granted Marriott’s motion for summary judgment and dismissed the case. Plaintiffs appealed to the U.S. Court of Appeals for the Fourth Circuit, and we cross-appealed on statute of limitation grounds. Oral arguments were held before the Fourth Circuit on October 28, 2015, and on January 29, 2016, the Fourth Circuit unanimously granted Marriott’s motion for summary judgment on the grounds that the action was untimely and affirmed the judgment in Marriott’s favor. The court subsequently denied the plaintiffs’ motion for rehearing en banc, and issued a formal mandate giving effect to its judgment on March 8, 2016. In March 2012, the Korea Fair Trade Commission (“KFTC”) obtained documents from two of our managed hotels in Seoul, Korea in connection with an investigation which we believe is focused on pricing of hotel services within the Seoul region. Since then, the KFTC has conducted additional fact-gathering at those two hotels and also has collected information from another Marriott managed hotel located in Seoul. We understand that the KFTC also has sought documents from numerous other hotels in Seoul and other parts of Korea that we do not operate, own, or franchise. We have not received a complaint or other legal process. We are cooperating with this investigation, which continues to be ongoing. Between November 18, 2015 and December 18, 2015, seven lawsuits challenging the Starwood Combination were filed in the Circuit Court for Baltimore City, Maryland on behalf of purported shareholders of Starwood, naming various combinations of Starwood’s directors, Starwood, Marriott, and others, as defendants. On February 11, 2016 the Court issued an order dismissing, without prejudice, all claims and all counts against Marriott, and on April 4, 2016, the Court issued an order dismissing all claims and counts against Starwood. |
Long-Term Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt | LONG-TERM DEBT We provide detail on our long-term debt balances in the following table as of the end of the 2016 first quarter and year-end 2015:
All of our long-term debt is recourse to us but unsecured. We paid cash for interest, net of amounts capitalized, of $23 million in the 2016 first quarter and $12 million in the 2015 first quarter. We are party to a multicurrency revolving credit agreement (the “Credit Facility”) that provides for $2,000 million of aggregate effective borrowings to support general corporate needs, including working capital, capital expenditures, share repurchases, letters of credit, and acquisitions. The availability of the Credit Facility also supports our commercial paper program. In addition, we may use borrowings under the Credit Facility, or commercial paper supported by the Credit Facility, to finance all or part of the cash component of the consideration to Starwood shareholders in connection with the Starwood Combination and certain fees and expenses incurred in connection with the combination. Borrowings under the Credit Facility generally bear interest at LIBOR (the London Interbank Offered Rate) plus a spread, based on our public debt rating. We also pay quarterly fees on the Credit Facility at a rate based on our public debt rating. While any outstanding commercial paper borrowings and/or borrowings under our Credit Facility generally have short-term maturities, we classify the outstanding borrowings as long-term based on our ability and intent to refinance the outstanding borrowings on a long-term basis. The Credit Facility expires on July 18, 2018. Marriott is in the process of amending and restating the Credit Facility to increase the aggregate amount of available borrowings to up to $3,750 million and extend its expiration to 2021. We expect to complete the amendment and restatement during the 2016 second quarter. See the “Cash Requirements and Our Credit Facilities” caption later in this report in the “Liquidity and Capital Resources” section for information on our available borrowing capacity at March 31, 2016. On March 20, 2016, when we entered into the Amendment to the Merger Agreement, we also obtained a commitment letter for a $3,500 million 364-day senior bridge term loan facility (the “Bridge Facility Commitment”). We are pursuing alternative financing to the Bridge Facility Commitment, such as the amendment and restatement of our current Credit Facility discussed above, and expect to finance the cash required to complete the Starwood Combination transaction using a combination of variable and fixed rate debt instruments with varying maturities, although we cannot assure that such financing will be available at all, or on acceptable terms. The following table presents future principal payments that are due for our debt as of the end of the 2016 first quarter:
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Notes Receivable |
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Notes Receivable | NOTES RECEIVABLE The following table presents the composition of our notes receivable balances (net of reserves and unamortized discounts) at the end of the 2016 first quarter and year-end 2015:
We do not have any past due notes receivable amounts at the end of the 2016 first quarter. The unamortized discounts for our notes receivable were $30 million at the end of the 2016 first quarter and $31 million at year-end 2015. The following table presents the expected future principal payments (net of reserves and unamortized discounts) as well as interest rates for our notes receivable as of the end of the 2016 first quarter:
At the end of the 2016 first quarter, our recorded investment in impaired “Senior, mezzanine, and other loans” of $72 million was unchanged from year-end 2015. At both the end of the 2016 first quarter and at year-end 2015, we had a $55 million allowance for credit losses, leaving $17 million of exposure to our investment in impaired loans. Our average investment in impaired notes receivable totaled $72 million for the 2016 first quarter and $65 million for the 2015 first quarter. |
Fair Value of Financial Instruments |
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Fair Value of Financial Instruments | FAIR VALUE OF FINANCIAL INSTRUMENTS We believe that the fair values of our current assets and current liabilities approximate their reported carrying amounts. We present the carrying values and the fair values of noncurrent financial assets and liabilities that qualify as financial instruments, determined under current guidance for disclosures on the fair value of financial instruments, in the following table:
We estimate the fair value of our senior, mezzanine, and other loans, including the current portion, by discounting cash flows using risk-adjusted rates, both of which are Level 3 inputs. We carry our marketable securities at fair value. Our marketable securities include debt securities of the U.S. Government, its sponsored agencies and other U.S. corporations invested for our self-insurance programs, as well as shares of publicly traded companies, which we value using directly observable Level 1 inputs. The carrying value of these marketable securities was $40 million at the end of the 2016 first quarter. We estimate the fair value of our other long-term debt, including the current portion and excluding leases, using expected future payments discounted at risk-adjusted rates, which are Level 3 inputs. We determine the fair value of our senior notes using quoted market prices, which are directly observable Level 1 inputs. As noted in Footnote No. 7, “Long-Term Debt,” even though our commercial paper borrowings generally have short-term maturities of 30 days or less, we classify outstanding commercial paper borrowings as long-term based on our ability and intent to refinance them on a long-term basis. As we are a frequent issuer of commercial paper, we use pricing from recent transactions as Level 2 inputs in estimating fair value. At the end of the 2016 first quarter and year-end 2015, we determined that the carrying value of our commercial paper approximated its fair value due to the short maturity. Our other long-term liabilities largely consist of guarantees. We measure our liability for guarantees at fair value on a nonrecurring basis, that is when we issue or modify a guarantee, using Level 3 internally developed inputs. At the end of the 2016 first quarter and year-end 2015, we determined that the carrying values of our guarantee liabilities approximated their fair values based on Level 3 inputs. See the “Fair Value Measurements” caption of Footnote No. 2, “Summary of Significant Accounting Policies” of our 2015 Form 10-K for more information on the input levels we use in determining fair value. |
Other Comprehensive (Loss) Income and Shareholders' (Deficit) Equity |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Comprehensive (Loss) Income and Shareholders' (Deficit) Equity | OTHER COMPREHENSIVE INCOME (LOSS) AND SHAREHOLDERS' (DEFICIT) EQUITY The following tables detail the accumulated other comprehensive income (loss) activity for the 2016 first quarter and 2015 first quarter:
The following table details the changes in common shares outstanding and shareholders’ deficit for the 2016 first quarter:
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Business Segments |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Segments | BUSINESS SEGMENTS We are a diversified global lodging company with operations in the following three reportable business segments:
Our North American Full-Service and North American Limited-Service segments meet the applicable accounting criteria to be reportable business segments. The following four operating segments do not meet the criteria for separate disclosure as reportable business segments: Asia Pacific, Caribbean and Latin America, Europe, and Middle East and Africa, and accordingly, we combined these four operating segments into an “all other category” which we refer to as “International.” We evaluate the performance of our operating segments using “segment profits” which is based largely on the results of the segment without allocating corporate expenses, income taxes, or indirect general, administrative, and other expenses. We allocate gains and losses, equity in earnings or losses from our joint ventures, and direct general, administrative, and other expenses to each of our segments. The caption “Other unallocated corporate” in the subsequent discussion represents a portion of our revenues, general, administrative, and other expenses, equity in earnings or losses, and other gains or losses that we do not allocate to our segments. It also includes license fees we receive from our credit card programs and license fees from MVW. Our chief operating decision maker monitors assets for the consolidated company but does not use assets by operating segment when assessing performance or making operating segment resource allocations. Segment Revenues
Segment Profits
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Basis of Presentation (Policies) |
3 Months Ended |
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Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
New Accounting Standards | New Accounting Standards Accounting Standards Update No. 2014-09 - “Revenue from Contracts with Customers” (“ASU No. 2014-09”) ASU No. 2014-09 supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, as well as most industry-specific guidance, and significantly enhances comparability of revenue recognition practices across entities and industries by providing a principles-based, comprehensive framework for addressing revenue recognition issues. In order for a provider of promised goods or services to recognize as revenue the consideration that it expects to receive in exchange for the promised goods or services, the provider should apply the following five steps: (1) identify the contract with a customer(s); (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. ASU No. 2014-09 also specifies the accounting for some costs to obtain or fulfill a contract with a customer and provides enhanced disclosure requirements. The Financial Accounting Standards Board (“FASB”) has deferred ASU No. 2014-09 for one year, and with that deferral, the standard will be effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, which for us will be our 2018 first quarter. We are permitted to use either the retrospective or the modified retrospective method when adopting ASU No. 2014-09. We are still assessing the potential impact that ASU No. 2014-09 will have on our financial statements and disclosures, but we believe that there could be changes to the revenue recognition of real estate sales, franchise fees, and incentive management fees. Accounting Standards Update No. 2016-02 - “Leases” (“ASU No. 2016-02”) In February 2016, the FASB issued ASU No. 2016-02, which introduces a lessee model that brings substantially all leases onto the balance sheet. Under the new standard, a lessee will recognize on its balance sheet a lease liability and a right-of-use asset for all leases, including operating leases, with a term greater than 12 months. The new standard will also distinguish leases as either finance leases or operating leases. This distinction will affect how leases are measured and presented in the income statement and statement of cash flows. ASU No. 2016-02 is effective for annual and interim periods in fiscal years beginning after December 15, 2018. We are still assessing the potential impact that ASU No. 2016-02 will have on our financial statements and disclosures. Accounting Standards Update No. 2016-09 - “Stock Compensation” (“ASU No. 2016-09”) In March 2016, the FASB issued ASU No. 2016-09, which involves several aspects of the accounting for share-based payments, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The new guidance will require all income tax effects of awards to be recorded as income tax expense (or benefit) in the income statement. Currently, excess tax benefits are recorded in additional paid-in-capital in the balance sheet. In the statement of cash flows, the new guidance requires excess tax benefits to be presented as an operating activity rather than as a financing activity. ASU No. 2016-09 is effective for annual and interim periods beginning after December 15, 2016. We are still assessing the potential impact that ASU No. 2016-09 will have on our financial statements and disclosures. |
Earnings Per Share Dilutive Securities | We compute the effect of dilutive securities using the treasury stock method and average market prices during the period. |
Earnings Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of the Earnings (Losses) and Number of Shares Used in Calculations of Basic and Diluted Earnings Per Share | The table below presents the reconciliation of the earnings and number of shares used in our calculations of basic and diluted earnings per share:
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Share-Based Compensation (Tables) |
3 Months Ended | ||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||
Assumptions for SARs | We used the following assumptions as part of a binomial lattice-based valuation to determine the fair value of the SARs we granted during the 2016 first quarter:
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Commitments and Contingencies (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maximum Potential Amount of Future Fundings as the Primary Obligor for Guarantees and the Liability for Expected Future Fundings | We present the maximum potential amount of our future guarantee fundings and the carrying amount of our liability for guarantees for which we are the primary obligor at March 31, 2016 in the following table:
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Long-Term Debt (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt | We provide detail on our long-term debt balances in the following table as of the end of the 2016 first quarter and year-end 2015:
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Debt Principal Payments (Net of Unamortized Discounts) | The following table presents future principal payments that are due for our debt as of the end of the 2016 first quarter:
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Notes Receivable (Tables) |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Composition of our Notes Receivable Balances (Net of Reserves and Unamortized Discounts) | The following table presents the composition of our notes receivable balances (net of reserves and unamortized discounts) at the end of the 2016 first quarter and year-end 2015:
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Notes Receivable Principal Payments (Net of Reserves and Unamortized Discounts) and Interest Rates | The following table presents the expected future principal payments (net of reserves and unamortized discounts) as well as interest rates for our notes receivable as of the end of the 2016 first quarter:
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Fair Value of Financial Instruments (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Carrying Values and Fair Values of Non-Current Financial Assets and Liabilities | We present the carrying values and the fair values of noncurrent financial assets and liabilities that qualify as financial instruments, determined under current guidance for disclosures on the fair value of financial instruments, in the following table:
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Other Comprehensive (Loss) Income and Shareholders' (Deficit) Equity (Tables) |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) Activity | The following tables detail the accumulated other comprehensive income (loss) activity for the 2016 first quarter and 2015 first quarter:
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Changes in Shareholders' Deficit | The following table details the changes in common shares outstanding and shareholders’ deficit for the 2016 first quarter:
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Business Segments (Tables) |
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Revenues | Segment Revenues
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Segment Profits | Segment Profits
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Acquisitions and Dispositions- Acquisitions (Details) |
Mar. 20, 2016
$ / shares
shares
|
---|---|
Business Acquisition [Line Items] | |
Common stock, par value (in USD per share) | $ 0.01 |
Starwood Hotels & Resorts Worldwide, Inc. | |
Business Acquisition [Line Items] | |
Proposed payments to acquire businesses (in USD per share) | $ 21.00 |
Common Stock | Starwood Hotels & Resorts Worldwide, Inc. | |
Business Acquisition [Line Items] | |
Equity interests issuable per share owned by acquiree | shares | 0.80 |
Earnings Per Share - Reconciliation of the Earnings (Losses) and Number of Shares Used in Calculations of Basic and Diluted Earnings Per Share (Detail) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | |
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Mar. 31, 2016 |
Mar. 31, 2015 |
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Computation of Basic Earnings Per Share | ||
Net income | $ 219 | $ 207 |
Weighted average shares outstanding | 254.4 | 277.7 |
Basic earnings per share (in USD per share) | $ 0.86 | $ 0.75 |
Computation of Diluted Earnings Per Share | ||
Net income | $ 219 | $ 207 |
Weighted average shares outstanding | 254.4 | 277.7 |
Effect of dilutive securities | ||
Shares for diluted earnings per share | 258.9 | 283.5 |
Diluted earnings per share (in USD per share) | $ 0.85 | $ 0.73 |
Employee stock option and appreciation right plans | ||
Effect of dilutive securities | ||
Effect of dilutive securities | 1.9 | 2.4 |
Deferred stock incentive plans | ||
Effect of dilutive securities | ||
Effect of dilutive securities | 0.6 | 0.7 |
Restricted stock units | ||
Effect of dilutive securities | ||
Effect of dilutive securities | 2.0 | 2.7 |
Earnings Per Share - Additional Information (Detail) - shares shares in Millions |
3 Months Ended | |
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Mar. 31, 2016 |
Mar. 31, 2015 |
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Employee stock option and appreciation right plans | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Securities not included in the calculation of diluted earnings per share (in shares) | 0.5 | 0.2 |
Share Based Compensation - Assumptions for SARs Granted (Detail) - Stock Appreciation Rights |
3 Months Ended |
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Mar. 31, 2016 | |
Share based Compensation Arrangement by Share based Payment Award, Fair Value Assumptions, Method Used [Line Items] | |
Expected volatility | 30.40% |
Dividend yield | 1.30% |
Risk-free rate | 1.70% |
Minimum | |
Share based Compensation Arrangement by Share based Payment Award, Fair Value Assumptions, Method Used [Line Items] | |
Expected term (in years) | 8 years |
Maximum | |
Share based Compensation Arrangement by Share based Payment Award, Fair Value Assumptions, Method Used [Line Items] | |
Expected term (in years) | 9 years |
Income Taxes - Additional Information (Detail) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
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Income Tax Disclosure [Abstract] | ||
Effective income tax rate | 32.80% | 32.40% |
Unrecognized tax benefits | $ 25 | |
Unrecognized tax benefits, increase resulting from current period tax positions | 1 | |
Unrecognized tax benefits that, if recognized, would impact the effective tax rate | 16 | |
Net cash payments for income taxes, net of refunds | $ 43 | $ 58 |
Commitments and Contingencies - Letters of Credit (Details) $ in Millions |
Mar. 31, 2016
USD ($)
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Commitments and Contingencies Disclosure [Line Items] | |
Surety bonds issued | $ 161 |
Outside Effective Credit Facility | |
Commitments and Contingencies Disclosure [Line Items] | |
Letters of credit outstanding | $ 77 |
Commitments and Contingencies - Legal Proceedings (Details) |
1 Months Ended | |
---|---|---|
Dec. 18, 2015
lawsuit
|
Mar. 31, 2012
hotel
|
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Pricing Investigation by Korea Fair Trade Commission | ||
Loss Contingencies [Line Items] | ||
Number of hotels included in pricing investigation, managed by Company | hotel | 2 | |
Challenge to Starwood Combination | ||
Loss Contingencies [Line Items] | ||
Loss Contingency, New Claims Filed, Number | lawsuit | 7 |
Long-Term Debt - Additional Information (Detail) - USD ($) |
3 Months Ended | |||
---|---|---|---|---|
Mar. 20, 2016 |
Mar. 31, 2016 |
Mar. 31, 2015 |
Dec. 31, 2015 |
|
Debt Disclosure [Abstract] | ||||
Cash paid for interest, net of amounts capitalized | $ 23,000,000 | $ 12,000,000 | ||
Multicurrency revolving credit agreement, aggregate borrowings | 2,000,000,000 | $ 2,000,000,000 | ||
Line of Credit Facility [Line Items] | ||||
Line of credit facility, potential amendment, aggregate borrowings | $ 3,750,000,000 | |||
Bridge Loan | Bridge Facility Available for Financing Starwood Combination | ||||
Line of Credit Facility [Line Items] | ||||
Bridge facility commitment | $ 3,500,000,000 | |||
Bridge facility, term | 364 days |
Long-Term Debt - Debt Principal Payments (Net of Unamortized Discounts) (Detail) - USD ($) $ in Millions |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Debt Disclosure [Abstract] | ||
2016 | $ 298 | |
2017 | 302 | |
2018 | 1,000 | |
2019 | 606 | |
2020 | 358 | |
Thereafter | 1,595 | |
Balance at March 31, 2016 | $ 4,159 | $ 4,107 |
Notes Receivable - Composition of our Notes Receivable Balances (Net of Reserves and Unamortized Discounts) (Detail) - USD ($) $ in Millions |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Receivables [Abstract] | ||
Senior, mezzanine, and other loans | $ 225 | $ 221 |
Less current portion | (7) | (6) |
Notes receivable, noncurrent | $ 218 | $ 215 |
Notes Receivable - Additional Information (Detail) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
Dec. 31, 2015 |
|
Receivables [Abstract] | |||
Notes receivable, past due | $ 0 | ||
Notes receivable, unamortized discounts, balance | 30,000,000 | $ 31,000,000 | |
Investment in impaired notes receivables | 72,000,000 | ||
Notes receivable reserve representing an allowance for credit losses | 55,000,000 | 55,000,000 | |
Investment in impaired loans with no related allowance for credit losses | 17,000,000 | $ 17,000,000 | |
Average investment in notes receivables | $ 72,000,000 | $ 65,000,000 |
Notes Receivable - Principal Payments (Net of Reserves and Unamortized Discounts) and Interest Rates (Detail) - USD ($) $ in Millions |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Receivables [Abstract] | ||
2016 | $ 5 | |
2017 | 3 | |
2018 | 61 | |
2019 | 5 | |
2020 | 2 | |
Thereafter | 149 | |
Senior, mezzanine, and other loans | $ 225 | $ 221 |
Weighted average interest rate at March 31, 2016 | 7.80% | |
Range of stated interest rates at March 31, 2016, minimum | 0.00% | |
Range of stated interest rates at March 31, 2016, maximum | 15.00% |
Fair Value of Financial Instruments - Additional Information (Detail) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2016
USD ($)
| |
Commercial Paper | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Commercial paper, maturity term (generally 30 days or less) | 30 days |
Fair Value, Inputs, Level 1 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Carrying value of our marketable securities | $ 40 |
Business Segments - Additional Information (Detail) |
3 Months Ended |
---|---|
Mar. 31, 2016
segment
| |
Segment Reporting [Abstract] | |
Number of reportable business segments | 3 |
Number of operating segments related to reorganization | 4 |
Business Segments - Segment Revenues (Detail) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Revenues | $ 3,772 | $ 3,513 |
Total segment | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Revenues | 3,710 | 3,455 |
Other unallocated corporate | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Revenues | 62 | 58 |
North American Full-Service Segment | Total segment | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Revenues | 2,321 | 2,175 |
North American Limited-Service Segment | Total segment | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Revenues | 833 | 738 |
International | Total segment | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Revenues | $ 556 | $ 542 |
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