WASHINGTON, Feb. 5 - Marriott International, Inc. (NYSE: MAR - news) today reported net income of $335 million for its 1997 fiscal year ended Jan. 2, 1998, compared to $306 million in 1996. Diluted earnings per share rose to $2.46 from $2.25 in the preceding year, and sales totaled $12.0 billion, up 18 percent from $10.2 billion a year ago.
The company said that its 1997 net income was reduced by approximately
$19 million (13 cents per diluted share)
as a result of the March 1997 acquisition of Renaissance Hotel Group
N.V. (RHG), and by an after-tax loss of $14
million (10 cents per diluted share) on the October 1997 sale to Sodexho
Alliance of its management services
business in the United Kingdom. Before the impact of these two items,
net income and diluted earnings per share
both were up 20 percent in 1997, on 12 percent sales growth.
J.W. Marriott, Jr., chairman and chief executive officer of Marriott
International, said the company's strong
performance in 1997 was paced by its lodging group.
``This was an outstanding year for Marriott Lodging,'' Mr. Marriott
explained. ``We achieved substantial growth
in sales and profits for established hotels, developed a record number
of new properties, and successfully
integrated the biggest acquisition in Marriott history. We introduced
several exciting new lodging products to
meet the needs of today's travelers, and launched Marriott Rewards,
the largest and most popular frequent guest
program in the industry.''
``Our senior living and management services operations also posted solid
gains in 1997,'' Mr. Marriott continued.
``Looking ahead to 1998, the growth prospects for our businesses are
excellent. In addition, we expect our
planned spin-off and merger transactions to create significant value,
and we are working hard to ensure both new
organizations get off to strong starts.''
As previously reported, Marriott International has entered into a definitive
agreement to merge its food service
and facilities management business (Marriott Management Services) with
the North American operations of
Sodexho Alliance. Prior to the merger, Marriott International plans
to spin off to its shareholders, on a tax-free
basis, a new company comprised of its lodging, senior living and distribution
services businesses. This new
company will adopt the Marriott International name, and the present
Marriott International will change its name to
Sodexho Marriott Services, Inc. The spin-off and merger transactions,
which are subject to shareholder and
regulatory approvals, are expected to be completed in March 1998.
For the 1997 fourth quarter, Marriott International reported net income
of $108 million and diluted earnings per
share of 79 cents. Before the impact of the RHG acquisition, which
reduced 1997 fourth quarter net income by $7
million (five cents per diluted share), and the loss on the sale of
the company's U.K. management services
business, net income and diluted earnings per share were up 17 percent
and 18 percent, respectively, over 1996
fourth quarter results. Sales totaled $3.9 billion, a gain of 12 percent
compared to the 1996 quarter.
LODGING operations reported a 26 percent increase in operating profit on 20 percent higher sales in 1997. Results reflected revenue gains at U.S. hotels well in excess of inflation, improved performance by European properties, contributions from new units, and expansion of the company's vacation club (timeshare) resort business.
Across the Marriott lodging brands, revenue per available room (REVPAR)
for comparable company-operated
U.S. hotels grew by an average of nine percent in the 1997 fourth quarter
and eight percent for the full year.
Average room rates for these properties increased eight percent in
1997, while occupancy remained at 78 percent.
The company added a net total of 326 properties (70,800 rooms) to its
lodging system in 1997, including 150
hotels (46,500 rooms) in the RHG acquisition. Hotel openings during
the year included:
Marriott Vacation Club International achieved record sales and profits
in 1997. The division generated a 21
percent increase in timeshare weeks sold, reflecting continued high
levels of sales activity at established resorts
in Orlando, Kauai, Hilton Head and Palm Desert, as well as strong buyer
interest at recently-opened properties in
Ft. Lauderdale, Boston and Marbella (Spain).
CONTRACT SERVICES reported a 16 percent increase in sales in
1997, while profits were up slightly, before the
loss on the sale of the U.K. management services business. Profit comparisons
between years are affected by
sales to investors, since the beginning of 1996, of 43 senior living
communities which Marriott continues to
operate under long-term agreements. Excluding the impact of these transactions,
contract services profits
increased 11 percent for the year. All three contract services businesses
posted higher sales in 1997.
Marriott Management Services achieved solid profit growth in 1997. Each
of its North American product lines --
health care, higher education, corporate services, school services,
laundries and Canada -- generated higher
profits in 1997, benefiting from expansion of services to existing
clients, and contributions from new accounts.
The division's success rate on new contract bids and its account retention
rate both rose in 1997, and remained
among the highest in the industry.
Marriott Senior Living Services reported significantly higher profits
in 1997, before the impact of the sale
transactions cited above (which is largely offset by reduced interest
expense). Results were boosted by a two
percentage point increase in occupancy -- to 95 percent -- for comparable
Marriott communities, and
contributions from new senior living facilities. During 1997, the division
opened 18 assisted living communities --
13 Brighton Gardens, its popular brand serving the quality tier, and
five Village Oaks, its new moderate price
product featuring a unique companion living program. At year-end, Marriott
operated 89 communities totaling
17,700 living units. The company plans to add more than 200 properties
over a five-year period, including 30
assisted living communities expected to open in 1998.
Marriott Distribution Services sales were up sharply in 1997, reflecting
the addition of major restaurant customers
since mid-1996. Profits were lower, however, primarily due to start-up
losses at new distribution centers, and
operating inefficiencies associated with assimilating the new business.
INTEREST EXPENSE increased 29 percent in 1997, as a result of
incremental borrowings to finance the RHG
acquisition and other growth outlays. Corporate expenses rose 19 percent
in 1997, primarily due to noncash
charges related to investments generating significant income tax benefits.
The company's 1997 effective income
tax rate of 39.5 percent, compared to 39 percent in 1996, reflects
a one percentage point increase attributable to the
RHG acquisition.
MARRIOTT INTERNATIONAL, INC. is a leading worldwide hospitality company,
with nearly 4,600 operating
units in the United States and 53 other countries and territories.
Major businesses include hotels operated and
franchised under the Marriott, Ritz-Carlton, Courtyard, Residence Inn,
Fairfield, TownePlace Suites, Renaissance,
New World and Ramada International brands; vacation club (timeshare)
resorts; food service and facilities
management for clients in business, education, and health care; senior
living communities and services; and food
service distribution. The company is headquartered in Washington, D.C.
and has approximately 195,000
employees.
Note: This press release contains ``forward-looking statements'' within
the meaning of federal securities law,
including statements concerning the number of lodging and senior living
communities expected to be added in
future years, planned transactions and their intended results, and
similar statements concerning anticipated
future events and expectations that are not historical facts. The forward-looking
statements in this press release
are subject to numerous risks and uncertainties, including the effects
of economic conditions; supply and
demand changes for hotel rooms, vacation timesharing intervals and
senior living accommodations; competitive
conditions in the lodging and contract services industries; relationships
with clients and property owners; the
impact of government regulations; and the availability of capital to
finance growth, which could cause actual
results to differ materially from those expressed in or implied by
the statements herein.
MARRIOTT INTERNATIONAL, INC.
FINANCIAL HIGHLIGHTS
Fiscal year ended (a)
Jan. 2, 1998 Jan. 3, 1997
Change
(in millions, except per share amounts)
Sales
Lodging
$ 7,008 $ 5,854
+ 20%
Contract Services
5,026
4,318 + 16%
Total Sales
12,034 10,172
+ 18%
Operating Profit (c)
Lodging
569
452 + 26%
Contract Services
157 (b) 177
- 11%
Total Operating
Profit 726
(b) 629
+ 15%
Corporate Expenses
(94)
(79)
Interest Expense
(110)
(85)
Interest Income
32
37
Income before Income Taxes 554 (b) 502 + 10%
Provision for Income Taxes
219
196
Net Income
$ 335 (b) $
306 + 9%
Earnings Per Share --
Basic
$ 2.64 (b) $ 2.40
+ 10%
Diluted
$ 2.46 (b) $ 2.25
+ 9%
Average Diluted Shares
139.2
138.9
Notes
(a) Fiscal year 1997, which ended on Jan. 2, 1998,
included 52 weeks.
Fiscal year 1996, which
ended on Jan. 3, 1997, included 53 weeks.
(b) Reflects $22 million pretax loss on sale of
the company's management
services business in the
United Kingdom, which reduced net income by
$14 million (11 cents per
basic share, and 10 cents per diluted
share).
(c) Before corporate expenses and interest.
MARRIOTT INTERNATIONAL, INC.
FINANCIAL HIGHLIGHTS
Quarter ended (a)
Jan. 2, 1998 Jan. 3, 1997
Change
(in millions, except per share amounts)
Sales
Lodging
$ 2,240 $ 1,892
+ 18%
Contract Services
1,636
1,555 + 5%
Total Sales
3,876
3,447 + 12%
Operating Profit (c)
Lodging
174
142 + 23%
Contract Services
54 (b) 83
- 35%
Total Operating
Profit 228
(b) 225
+ 1%
Corporate Expenses
(30)
(31)
Interest Expense
(33)
(25)
Interest Income
13
12
Income before Income Taxes 178 (b) 181 - 2%
Provision for Income Taxes 70 71
Net Income $ 108 (b) $ 110 - 2%
Earnings Per Share --
Basic
$ .85 (b) $
.86 - 1%
Diluted
$ .79 (b) $
.80 - 1%
Average Diluted Shares
139.7
139.9
Notes
(a) 16 weeks for quarter ended Jan. 2, 1998, and
17 weeks for quarter
ended Jan. 3, 1997.
(b) Reflects $22 million pretax loss on sale of
the company's management
services business in the
United Kingdom, which reduced net income by
$14 million (11 cents per
basic share, and 10 cents per diluted
share).
(c) Before corporate expenses and interest.
MARRIOTT INTERNATIONAL, INC.
KEY LODGING STATISTICS
Fiscal Year
1997
REVPAR Occupancy
Average Daily Rate
vs. 1996 1997 vs.1996
1997 vs.1996
Brand
Marriott Hotels,
Resorts and Suites
+ 9% 77.7% + 0.1% pts. $128.64
+ 9.0%
Ritz-Carlton
+ 10% 79.0% + 3.5% pts. $185.27
+ 4.9%
Renaissance Hotels*
+ 6% 69.3% - 0.6% pts. $121.03
+ 6.5%
Residence Inn
+ 6% 84.0% - 1.1% pts. $ 95.24
+ 7.6%
Courtyard
+ 8% 80.6% ---.
$ 83.77 + 7.5%
Fairfield Inns
and Suites
-- 75.4% - 1.6% pts. $ 50.65
+ 2.1%
Fourth Quarter 1997
Brand
1997
REVPAR Occupancy
Average Daily Rate
vs.1996 1997 vs. 1996
1997 vs.1996
Marriott Hotels,
Resorts and Suites
+ 10% 73.6% - 0.3% pts. $132.88
+ 10.3%
Ritz-Carlton
+ 12% 76.3% + 3.0% pts. $187.36
+ 7.7%
Renaissance Hotels*
+ 6% 64.7% - 2.0% pts. $126.39
+ 9.2%
Residence Inn
+ 6% 80.0% - 0.2% pts. $ 94.80
+ 6.7%
Courtyard
+ 9% 76.4% + 0.1% pts. $ 83.56
+ 8.6%
Fairfield Inns
and Suites
+ 1% 68.4% - 2.3% pts. $ 50.03
+ 4.1%
NOTE: Statistics above are based on comparable company-operated U.S.
properties for the 52 and 13 week
periods ended Jan. 2, 1998 and Jan. 3, 1997.
Brand
Number of Properties Number of Rooms/Villas
Dec. 1997 vs.Dec. 1996 Dec. 1997 vs.Dec. 1996
Marriott Hotels,
Resorts and Suites
326 + 10
124,600 + 3,800
Marriott Executive
Residences**
8 + 8
1,500 + 1,500
Ritz-Carlton
33 ---
11,400 + 500
Renaissance Hotels*
70 + 70
26,800 + 26,800
New World*
14 + 14
6,900 + 6,900
Ramada International*
74 + 74
14,500 + 14,500
Courtyard
349 + 53
47,700 + 6,400
Residence Inn
258 + 34
30,600 + 4,100
Fairfield Inns and Suites
344 + 60
32,900 + 5,600
TownePlace Suites
2 + 2
200 + 200
1,478 +325
297,100 + 70,300
Marriott Vacation
Club International
32 + 1
3,400 + 500
1,510 +326
300,500 + 70,800
* Acquired March 1997.
** Includes unbranded serviced apartments.