2. Established in 1993
Marriott operates, franchise and license 3,916
properties worldwide with 675,623 rooms as of end of
year 2013.
72 countries & territories total.
3. Portfolio of Brands
Signature Brand
Marriott Hotels & Resorts ®
Luxury
The Ritz-Carlton ®
Bulgari Hotels & Resorts
JW Marriott Hotels &
Resorts®
Lifestyle/Collections
Renaissance ® Hotels
Autograph Collection ®
Hotels & Resorts
AC Hotels by Marriott SM
EDITION ® Hotels
Moxy Hotels SM
4. Portfolio of Brands
Destination Entertainment
Gaylord Hotels ®
Marriott Vacation Club ®
Extended Stay Lodging
Residence Inn by Marriott ®
(“Residence Inn ® ”)
TownePlace Suites by Marriott
® (“TownePlace Suites ® ”)
Marriott Executive Apartments
®
Selective Service Lodging
Courtyard by Marriott
® (“Courtyard ® ”)
Fairfield Inn & Suites by
Marriott ® (“Fairfield Inn &
Suites ® ”)
SpringHill Suites by Marriott ®
(“SpringHill Suites ® ”)
Conference Centers
Marriott Conference Centers
®
6. Business in America
Country Properties
Rooms
Aruba 5
1,955
Bahamas 1 17
Barbados 1
118
Brazil 5
1,243
British Virgin Islands 1 58
Canada 80
15,749
Cayman Islands 5
772
7. Continued Business in America
Country Properties
Rooms
Costa Rica 7
1,222
Curacao 2
484
Dominican Republic 2
445
Ecuador 2
401
El Salvador 1
133
Honduras 1
153
8. Continued Business in America
Country Properties
Rooms
Puerto Rico 9
2,226
Saint Kitts and Nevis 2 541
Suriname 1
140
Trinidad and Tobago 1 119
United States 3,255
522,298
U.S. Virgin Islands 5
1,095
Venezuela 3
688
9. Business in United Kingdom and Ireland
Country Properties
Rooms
United Kingdom (England, 64 12,191
Scotland, and Wales)
Ireland 2 454
Total United Kingdom
& Ireland 66
12,645
10. Business in Continental Europe
Country Properties
Rooms
Azerbaijan 1 243
Armenia 2 326
Austria 8
1,922
Belgium 5
881
Czech Republic 6
1,088
Denmark 1
402
France 21
4,266
11. Business in Continental Europe
Country Properties
Rooms
Greece 1
314
Hungary 4 891
Israel 3
539
Italy 23
3,677
Kazakhstan 5
634
Netherlands 3
946
Poland 2
12. Business in Continental Europe
Country Properties
Rooms
Russia 13
3,013
Spain 75
9,590
Sweden 2
406
Switzerland 6
1,181
Turkey 10
2,560
13. Business in Middle East and Africa
Country Properties
Rooms
Algeria 1 204
Bahrain 3 537
Egypt 8
3,763
Jordan 3
644
Kuwait 2 577
Oman 2
495
Pakistan 2
508
Qatar 6
1,509
Saudi Arabia 7
14. Business in Asia
Country Properties
Rooms
China 67 (9 in Hong Kong) 25,140
Guam 1 436
India 23 5,752
Indonesia 10 2,261
Japan 12 3,684
Malaysia 7 3,070
Philippines 2 657
Singapore 3 1,059
South Korea 5 1,751
Thailand 18 3,815
Vietnam 2 786
Total Asia 150 48,411
Australia 5 1,527
15. Risk Factors of International Operations
Political Risk: Corruption, Unstable Government, currency control.
Financial Risk: Economic Conditions
16. Management’s Discussion and
Analysis
A worldwide operator, franchisor, and licensor of hotels and timeshare
properties in 72 countries and territories under numerous brand names
(The Ritz-Carlton, Renaissance Hotels and JW Marriott)
- Four business segments: North American Full-Service, North American
Limited-Service, International, and Luxury.
Operated 42 percent under management agreements,; franchisees
operated 55 percent under franchise agreements and only 2 percent from
them owning and leasing.
Long-term management contracts and franchising provide more stable
earnings in periods of economic softness. It helps to minimize financial
leverage and risk in a cyclical industry.
17. Management’s Discussion and
Analysis
Business continued to improve in 2013. With low supply growth in the U.S., improved pricing
in most markets around the world and increased in the number of properties in their system.
Demand was strong at luxury properties then full-service properties and limited-service
properties.
Strong demand in North America, Eastern Europe, Russia, and Norther United Kingdom.
Western Europe with moderate RevPAR growth.
London and France RevPar growth declined.
Strong demand in the United Arab Emirates but weak in Egypt, Jordan, and Qatar.
Demand in the Asai Pacific region continued to grow. Especially in Thailand and
Indonesia with higher demand and strong RevPar grwoth.
18. Revenue, Assets, and Financial
Data
2013 2012 Change
Revenue 12,784 11,814 8.2%
Operating Cost 11,796 10,874 8.5%
EBT 988 940 5.1%
EBIT 897 849 5.7%
NET Income 620 571 8.6%
• Marriott’s financial statements include properties, brands, and markets of the North
American and International locations.
• Between the years of 2012-2013 Marriott:
- International Properties increased by 2.7%
• The $32 million decrease in segment results in 2013, compared to 2012, reflected $18
million of higher general, administrative, and other expenses, $11 million of lower owned,
leased, and other revenue net of direct expenses, $7 million of lower incentive management
fees, and $4 million of decreased joint venture equity earnings, partially offset by $11
million of higher base management and franchise fees.
19. Revenue Assets and Financial Data
2013 2012 Change
Assets 6,794 6342 7.1%
Liabilities 8,209 7,627 7.6%
Stockholder Equity 1415 1285 10.1%
• For the twelve months ended December 31, 2013 , compared to the twelve months
ended December 31, 2012, luxury properties increased by 7.7 percent.
• The increase in general, administrative, and other expenses reflected an unfavorable
variance from $8 million in reversals of guarantee accruals in 2012
for three properties and the following 2013 items: (1) a $3 million impairment of
deferred contract acquisition costs for a property that left our system; (2) a $2
million impairment of deferred contract acquisition costs for a property with cash
flow shortfalls; (3) $4 million of higher expenses to support our growth; and (4) $2
million of other net miscellaneous cost increases.
20. Foreign Exchange Risk/Hedging
• We are exposed to market risk from changes in interest rates, stock
prices, currency exchange rates, and debt prices. We manage our
exposure to these risks by monitoring available financing alternatives,
through development and application of credit granting policies and by
entering into derivative arrangements.
• Marriott uses the “fair value of financial instruments” to measure
reoccurring and nonrecurring assets and liabilities.
• Fair value is defined as the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between market
participants at the measurement date.
21. Foreign Exchange
Risk/Hedging
Uses derivatives to hedge and has quarterly reviews to the review the
effectiveness of the hedging decisions
We manage our exposure to these risks by monitoring available financing
alternatives, as well as through development and application of credit granting
policies.
We also use derivative instruments, including cash flow hedges, net
investment in non-U.S. operations hedges, fair value hedges, and other
derivative instruments, as part of our overall strategy to manage our exposure
to market risks.
As a matter of policy, we only enter into transactions that we believe will be
highly effective at offsetting the underlying risk, and we do not use derivatives
for trading or speculative purposes
22. • The functional currency used for both consolidated and
unconsolidated entities within the United States is the US
Dollar
• The functional Currency used for entities in foreign
countries is generally the primary currency of that
economic environment.
• Financial Statements whose functional currency is not in
the US dollars are translated into US dollars.
Assets and Liabilities are translated at the exchange
rate in effect of the financial statement date.
Income statement accounts are translated using the
weighted average exchange rate for the period.
Functional Currency and the
Translation of Financial Statements
23. Functional Currency and
the Translation of Financial Statements
Translated Items Include
Gains and losses from currency exchange rate changes for
intercompany receivables and payables (not of a long-term
investment nature) and gains and losses from non-U.S. currency
transactions.
These amounted to losses of $5 million in 2013 , $3 million in
2012 , and $7 million in 2011 and are reported as operating
costs and expenses
Translation adjustments from currency exchange and the effect of
exchange rate changes on intercompany transactions of a long-term
investments are recorded as a separate component of shareholders’
equity.
Gains and other income attributable to currency translation
adjustments from the sale or complete or substantially complete
liquidation of investments.
• In 2013 these items did not have any effect on financial
statement. In 2012 it amounted to $1 million and $2 million for
2011.
24. Other Relevant Information
Marriott has franchising, licensing, and joint venture programs
that permit other hotel owners and operators and Marriott
Vacations Worldwide Corporation to use many of Marriott’s
lodging brand names and systems.
This greatly reduces the capital investment needed to expand
operation.
Generally receives an initial application fee and continuing royalty fees,
which typically range from four percent to six percent of room revenues
for all brands, plus two percent to three percent of food and beverage
revenues for certain full-service hotels.
The global economic climate is improving in many
markets around the world
Average Daily Rates for rooms has increased 4.3% and Revenue Per
Room has increased 4.6%.
Has led to an increase in the number of foreign properties.
25. Other Relevant Information
Additional Challenges in doing business in foreign
Countries.
Compliance with complex and changing laws, regulations
and policies of governments that may impact operations
Compliance with U.S. and foreign laws that affect the
activities of companies abroad, such as anti-corruption laws,
competition laws, currency regulations, and laws affecting
dealings with certain nations
The difficulties involved in managing an organization doing
business in many different countries
Limitations on the ability to repatriate non-U.S. earnings in a
tax effective manner
Uncertainties as to the enforceability of contract and
intellectual property rights under various local laws .
