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Marriott's 3rd Qtr Net Income Rose to $103 million Compared
to $101 million for Last Year; Synthetic Fuel Production
Offsets RevPAR Declines 
Key Lodging Statistics
-  Outlook for overall lodging demand continues to be soft, with group
business continuing to outperform transient business -

WASHINGTON, D.C. � October 3, 2002 � Marriott International, Inc. (NYSE:MAR) today reported diluted earnings per share of 41 cents in its 2002 third quarter ended September 6, up 5 percent from the year-ago quarter.  Net income for the quarter was $103 million, up $2 million  from the year-ago quarter, which ended on September 7, 2001. The quarter�s results included $11 million of pre-tax income related to the sale of Marriott�s Village Oaks senior living portfolio and a $30 million pre-tax charge related to Marriott�s previously announced exit from its distribution business.  After adjusting for these items, earnings per share for the quarter was $0.46.  Synthetic fuel operations contributed 9 cents per share of after-tax earnings during the quarter.  Systemwide sales totaled $4.8 billion, roughly the same as last year. 

J.W. Marriott, Jr., chairman and chief executive officer of Marriott International, noted the company�s continued earnings strength despite lower levels of lodging demand.  "We are pleased with the relative strength of our lodging profits, despite continued weakness in U.S. industry-wide revenue per available room (REVPAR).  As a result of the strong system growth we have achieved over the past several years, base management and franchise fees, which represent over three quarters of our total fees from hotels, declined only slightly, while overall REVPAR declined 6.8 percent.  The preference for our brands is unmistakable.  During the past 12 months we continued to outpace our competitors in terms of both rooms added and new rooms in the pipeline.  In addition, Marriott has increased its overall REVPAR premium this year.

"Room openings for 2002 are on track, with almost 7,100 gross new rooms opened in the third quarter.  For 2002 through 2004, we continue to expect to add between 25,000 and 30,000 hotel rooms annually to our worldwide lodging portfolio through management and franchise agreements, both newly constructed and conversions from other brands. At the end of the third quarter, the company's pipeline of properties either under construction or approved for development exceeded 50,000 rooms.

�During the quarter, we commenced our exit from the distribution business with the announcement of the pending sale of two distribution centers. We are grateful for the many years of dedication from our associates in this segment.  We expect to complete the wind-down of the distribution business by year-end 2002.� 

MARRIOTT LODGING reported an 8 percent decrease in operating results.  Profits reflected weaker lodging demand, partially offset by timeshare results and contributions from new properties worldwide. 

Across Marriott�s lodging brands, REVPAR for comparable U.S. properties declined by an average of 6.8 percent in the 2002 third quarter.  Average room rates for these hotels decreased 5.1 percent, while occupancy declined slightly to 72.9 percent.  The company�s full-service brands (including Marriott Hotels, Resorts and Suites, The Ritz-Carlton, and Renaissance Hotels, Resorts and Suites) experienced a REVPAR decline of 7.8 percent in the quarter, driven primarily by a 4.8 percent decline in rate.   Marriott's select-service and extended-stay brands (including Courtyard, Fairfield Inn, Residence Inn, TownePlace Suites, and SpringHill Suites) posted a REVPAR decline of 5.4 percent in the third quarter of 2002, almost entirely driven by a 4.8 percent decline in average daily rate.  

Third quarter 2002 results for international lodging operations reflected better trends than the U.S., with stable REVPAR and almost 2 percentage points in higher margins.  Lodging demand strengthened in Japan, Korea, and Russia.

Marriott's timeshare business reported flat contract sales in the quarter, after excluding sales from the year-ago quarter related to the acquisition of the Grand Residence Club in Lake Tahoe.  Contract sales were strong at timeshare resorts in Colorado, Hawaii, and California, but remained soft in Orlando. Profits in the timeshare business were up 5 percent compared to the third quarter of 2001, primarily as a result of higher gains on the sale of timeshare mortgage notes. Mortgage note sale gains totaled $18 million in the third quarter of 2002, compared to $13 million in the year-ago quarter.  

The company has added 185 hotels and timeshare resorts (32,887 rooms) to its worldwide lodging portfolio over the past 12 months, while 22 properties (4,211 rooms) exited the system. A net total of 42 hotels and resorts (6,583 rooms) were added in the 2002 third quarter, including five Marriott Hotels, Resorts and Suites (1,657 rooms), nine Courtyard hotels (1,275 rooms) and 13 Residence Inns (1,598 rooms).  At quarter-end, the company�s lodging group encompassed 2,505 hotels and timeshare resorts (454,587 rooms).

MARRIOTT SENIOR LIVING SERVICES posted 8 percent sales growth in the quarter. The division reported $17 million in profits, including $11 million related to the sale of Village Oaks.  After adjusting for Village Oaks, Senior Living�s profits were $6 million versus $3 million a year ago.  Occupancy for comparable communities was 84 percent in the quarter, flat with last year�s third quarter.  The company operates 153 facilities totaling 26,257 residential units.  As announced last quarter, the company continues to explore strategic alternatives for Senior Living Services, including a spin-off or sale, and expects to announce a resolution by year-end 2002.

MARRIOTT DISTRIBUTION SERVICES reported a 9 percent decrease in sales in the 2002 third quarter.  The division posted a loss of $34 million, $30 million of which was related to the company�s exit from the distribution business, including the sale of segment assets.  We expect to incur additional material charges in connection with exiting the business, but we are currently unable to estimate their magnitude.  
 
CORPORATE EXPENSES were $25 million in the 2002 third quarter, a $12 million increase from the year ago levels.  The increase reflects $3 million of foreign exchange losses and the inclusion in last year�s corporate expenses of a $4 million gain on the sale of a tax investment.  Interest expense was $19 million in the quarter, a decrease of $7 million, reflecting lower average borrowing levels and rates.  Long-term debt, net of cash reserves, at the end of the quarter was $1.6 billion, down from $2.3 billion at year end 2001.  

The company repurchased 3.1 million shares of common stock during the third quarter of 2002 at a total cost of $105 million.  Subsequent to the third quarter, the company repurchased an additional 2.2 million shares, for total year-to-date purchases of 6.0 million shares.  Currently, there are 7.5 million shares remaining under the share repurchase authorization. 

During the 2002 third quarter the company sold real estate assets for approximately $233 million.  Subsequent to the end of the third quarter, Marriott sold its 11 percent stake in Interval International for $63 million and its Village Oaks portfolio for $62 million, bringing total year-to-date asset sales to $665 million.  A $44 million pre-tax gain on the sale of the Interval International investment will be included in the company�s fourth quarter results. Contingent liabilities at the end of the quarter, including guarantees and loan commitments, were essentially flat with year-end 2001 levels.

The company's synthetic fuel business produced more synthetic fuel and, consequently, higher cash flow and after-tax earnings than anticipated.  The segment posted a pre-tax deficit of $32 million for the third quarter of 2002.  As a result, taxes were favorably impacted by $54 million, resulting in 9 cents per share of earnings in the quarter. 

Outlook

The company expects fourth quarter REVPAR to increase 8 to 10 percent over 2001 levels and earnings per share to total $0.65 to $0.69 in the fourth quarter.  This EPS estimate includes $0.12 per share after-tax from synthetic fuel and an $0.11 per share after-tax gain on the sale of the Interval International investment, but does not include any additional charges related to the exit from the distribution services business. 

Given the expected improvement in fourth quarter year-over-year REVPAR, lower than anticipated average borrowings, the gain on Interval International investment sale and higher than expected production from the synthetic fuel business, the company believes that earnings per share of $1.88 to $1.92 is achievable in 2002.  This estimate includes the third quarter impacts of the Village Oaks sale and the distribution business charge.  The outlook reflects an average REVPAR decline of 4 to 6 percent for comparable U.S. hotels in 2002 and a house profit margin decline of approximately one to two percentage points.   

While visibility regarding 2003 is quite low, the company currently expects REVPAR to range from flat to an increase of 4 percent versus 2002 levels, with hotel profit margins down modestly.  This would result in lodging profits ranging from $770 million to $800 million.  Including the after-tax synthetic fuel impact of approximately $0.30 per share, we expect 2003 earnings per share to total $2.05 to $2.15.  
  
The company expects investment spending in 2002 to include approximately $50 million for maintenance spending and approximately $250 million for new company-developed hotels.  We expect timeshare spending to total approximately $200 million.  We also expect to invest $300 million in equity slivers, mezzanine financing and mortgage loans for hotels developed by our partners.  Based on these spending levels and assuming continued success with asset sales, we expect net cash flow to approximate $700 million in 2002 before share repurchases.   The company expects that total investment spending in 2003 will be $600 million to $700 million.     

------------------------  

 
 MARRIOTT INTERNATIONAL, INC.
Financial Highlights
12 Weeks Ended September 6, 2002
(in millions, except per share amounts)
                                            Senior   Distri-    Syn-
                                                           Living    bution  thetic
    Sales                            Lodging  Services  Services  Fuel      Total

    Management and franchise fees     $162       $8        $-      $-    $170
    Other                              425       77       351      55     908
                                      ----     ----      ----    ----    ----
                                       587       85       351      55   1,078
    Other revenues from managed and
     franchised properties           1,282       94         -       -   1,376
                                      ----     ----      ----    ----    ----
                                     1,869      179       351      55   2,454
                                      ----     ----      ----    ----    ----
    Operating costs and expenses
    Operating costs                    427       68       385      87     967
    Other costs from managed and
     franchised properties           1,282       94         -       -   1,376
                                      ----     ----      ----    ----    ----
                                     1,709      162       385      87   2,343
                                      ----     ----      ----    ----    ----

    Segment financial results         $160      $17      $(34)   $(32)   $111
                                      ====     ====      ====    ====

    Corporate expenses                                                    (25)
    Interest expense                                                      (19)
    Interest income                                                        28

    Income before income taxes                                             95

    Benefit (Provision) for income taxes                                    8
    Net income                                                           $103

    Basic Earnings Per Share                                            $0.43
    Diluted Earnings Per Share                                          $0.41

    Diluted Shares                                                      252.1

MARRIOTT INTERNATIONAL, INC.
Financial Highlights
12 Weeks Ended 
September 7, 2001 (in millions, except per share amounts)

                                                    Senior   Distri-   Syn-
                                                    Living    bution  thetic        Better/
    Sales                    Lodging  Services  Services  Fuel  Total  (Worse)

    Management and franchise
     fees                       $179       $8       $-     $-    $187
    Other                        447       74      385      -     906
                                ----     ----     ----   ----    ----
                                 626       82      385      -   1,093

    Other revenues from managed
     and franchised properties 1,197       83        -      -   1,280
                                ----     ----     ----   ----    ----
                               1,823      165      385      -   2,373    3%
                                ----     ----     ----   ----    ----
    Operating costs and
     expenses

    Operating costs              452       79      384      -     915
    Other costs from managed
     and franchised properties 1,197       83        -      -   1,280
                                ----     ----     ----   ----    ----
                               1,649      162      384      -   2,195   -7%
                                ----     ----     ----   ----    ----

    Segment financial results   $174       $3       $1     $-    $178  -38%
                                ====     ====     ====   ====

    Corporate expenses                                            (13)
    Interest expense                                              (26)
    Interest income                                                23
    Income before income taxes                                    162  -41%
    Benefit (Provision) for income
     taxes                                                        (61)
                                                                 ----
    Net income                                                   $101    2%

    Basic Earnings Per Share                                    $0.41    5%
    Diluted Earnings Per Share                                  $0.39    5%

    Diluted Shares                                              264.8

 MARRIOTT INTERNATIONAL, INC.
Financial Highlights
 September 6, 2002
(in millions, except per share amounts)

                                                            Senior   Distri-   Syn-
                                                           Living    bution  thetic
    Sales                            Lodging  Services  Services  Fuel  Total

    Management and franchise
     fees                             $527      $25        $-      $-    $552
    Other                            1,239      236     1,102     113   2,690
                                      ----     ----      ----    ----    ----
                                     1,766      261     1,102     113   3,242
    Other revenues from managed
     and franchised properties       3,887      275         -       -   4,162
                                      ----     ----      ----    ----    ----
                                     5,653      536     1,102     113   7,404
                                      ----     ----      ----    ----    ----
    Operating costs and expenses
    Operating costs                  1,261      233     1,144     194   2,832
    Other costs from managed and
     franchised properties           3,887      275         -       -   4,162
                                      ----     ----      ----    ----    ----
                                     5,148      508     1,144     194   6,994
                                      ----     ----      ----    ----    ----

    Segment financial results         $505      $28      $(42)   $(81)   $410
                                      ====     ====      ====    ====

    Corporate expenses                                                    (77)
    Interest expense                                                      (59)
    Interest income                                                        75

    Income before income taxes                                            349

    Provision for income taxes                                            (35)
    Net income                                                           $314

    Basic Earnings Per Share                                            $1.30
    Diluted Earnings Per Share                                          $1.23

    Diluted Shares                                                      257.8

MARRIOTT INTERNATIONAL, INC.
Financial Highlights
36 Weeks Ended September 7, 2001
(in millions, except per share amounts)

                                                   Senior   Distri-   Syn-
                                                  Living    bution  thetic        Better/
    Sales                    Lodging  Services  Services  Fuel  Total  (Worse)

    Management and franchise
     fees                       $594      $24       $-     $-    $618
    Other                      1,294      225    1,143      -   2,662
                                ----     ----     ----   ----    ----
                               1,888      249    1,143      -   3,280

    Other revenues from managed
     and franchised properties 3,759      245        -      -   4,004
                                ----     ----     ----   ----    ----
                               5,647      494    1,143      -   7,284    2%
                                ----     ----     ----   ----    ----
    Operating costs
     and expenses

    Operating costs            1,260      240    1,137      -   2,637
    Other costs from managed
     and franchised properties 3,759      245        -      -   4,004
                                ----     ----     ----   ----    ----
                               5,019      485    1,137      -   6,641   -5%
                                ----     ----     ----   ----    ----

    Segment financial results   $628       $9       $6     $-    $643  -36%
                                ====     ====     ====   ====

    Corporate expenses                                            (72)
    Interest expense                                              (75)
    Interest income                                                59
    Income before income taxes                                    555  -37%

    Provision for income taxes                                   (203)
    Net income                                                   $352  -11%

    Basic Earnings Per Share                                    $1.44  -10%
    Diluted Earnings Per Share                                  $1.36  -10%

    Diluted Shares                                              261.1

MARRIOTT INTERNATIONAL, INC.
Business Segment Results

                                                                               Thirty-six weeks
                                   Twelve weeks ended            ended
                                  September   September   September  September
                                   6, 2002     7, 2001          6, 2002    7, 2001
                                  ---------   ---------   ---------  ---------
    ($ in millions)
    Sales
       Full-Service                 $1,194      $1,170       $3,714     $3,779
       Select-Service                  231         209          676        645
       Timeshare                       297         286          847        764
       Extended-Stay                   147         158          416        459
                                  ---------   ---------   ---------  ---------

       Total Lodging                 1,869       1,823        5,653      5,647
       Senior Living Services          179         165          536        494
       Distribution Services           351         385        1,102      1,143
       Synthetic Fuel                   55           -          113          -
                                  ---------   ---------   ---------  ---------
                                    $2,454      $2,373       $7,404     $7,284
                                  =========   =========   =========  =========

    Segment financial results
       Full-Service                    $76         $70         $265       $314
       Select-Service                   27          45           95        133
       Timeshare                        40          38          110        120
       Extended-Stay                    17          21           35         61
                                  ---------   ---------   ---------  ---------

       Total Lodging                   160         174          505        628
       Senior Living Services           17           3           28          9
       Distribution Services           (34)          1          (42)         6
       Synthetic Fuel                  (32)          -          (81)         -
                                  ---------   ---------   ---------  ---------
                                      $111        $178         $410       $643
                                  =========   =========   =========  =========
 

MARRIOTT INTERNATIONAL, INC.
Normalized Results
($ in millions)

    12 weeks ended               September 6, 2002           September 7, 2001

                                                                                  Before
                                                    Village Oaks         Village Oaks
    Segment financial         As      Gain and MDS      Gain and MDS
     results                    Reported    Charge                 Charge

       Full-Service          $76            $-                        $76            $70
       Select-Service         27            -                         27             45
       Timeshare              40             -                         40             38
       Extended Stay          17          -                          17             21
                                       -------     -------               -------                 -------

           Total Lodging     160          -                      160            174
       Senior Living
        Services              17         11              6              3
       Distribution
 Services            (34)       (30)            (4)             1
 Synthetic Fuel        (32)         -            (32)             -
                           -------     -------       -------        -------
                            $111       $(19)          $130           $178
                           =======     =======       =======        =======
 

    36 weeks ended                 September 6, 2002         September 7, 2001

                                                                             Before
                                                    Village Oaks      Village Oaks
    Segment financial         As     Gain and MDS   Gain and MDS
     results               Reported       Charge                Charge

       Full-Service         $265         $-           $265           $314
       Select-Service         95          -             95            133
       Timeshare             110          -            110            120
       Extended Stay          35          -             35             61
                           -------     -------       -------        -------

           Total Lodging     505          -            505            628
       Senior Living
        Services              28         11             17              9
       Distribution
 Services             (42)       (30)           (12)             6
 Synthetic Fuel        (81)         -            (81)             -
                           -------     -------       -------        -------
                            $410       $(19)          $429           $643
                           =======     =======       =======        =======
 
MARRIOTT INTERNATIONAL, INC.
KEY LODGING STATISTICS
.
  Third Quarter  
  2002              
  REVPAR   Occupancy   Average Daily Rate  
Brand vs. 2001   2002 vs. 2001   2002 vs. 2001  
Marriott Hotels, Resorts and Suites -7.7%   72.0% -2.4% pts. $126.21  -4.7%  
The Ritz-Carlton -8.8%   65.8% -1.5% pts. $206.93  -6.7%  
Renaissance Hotels, Resorts and Suites -7.5%   66.1% -2.9% pts. $120.83  -3.5%  
Domestic Composite - Full-Service1 -7.8%   70.6% -2.3% pts. $132.26  -4.8%  
Residence Inn -6.9%   81.9% 0.6% pts. $97.02  -7.6%  
Courtyard -8.2%   73.3% -1.7% pts. $91.95  -6.1%  
Fairfield Inn -0.8%   73.4% 0.1% pts. $66.51  -1.0%  
TownePlace Suites -2.0%   79.5% 1.1% pts. $64.72  -3.3%  
SpringHill Suites -2.7%   69.4% -0.8% pts. $78.48  -1.6%  
Domestic Composite - Select-Service & Extended-Stay2 -5.4%   75.0% -0.5% pts. $81.66  -4.8%  
Domestic Composite - All3 -6.8%   72.9% -1.4% pts. $104.47  -5.1%  
               
                 
  Third Quarter Year-to-Date  
  2002              
  REVPAR   Occupancy   Average Daily Rate  
Brand vs. 2001   2002 vs. 2001   2002 vs. 2001  
Marriott Hotels, Resorts and Suites -9.9%   71.6% -2.6% pts. $136.77  -6.6%  
The Ritz-Carlton -10.4%   68.4% -1.5% pts. $235.09  -8.4%  
Renaissance Hotels, Resorts and Suites -10.1%   66.7% -4.0% pts. $131.53  -4.7%  
Domestic Composite - Full-Service1 -9.9%   70.7% -2.7% pts. $143.66  -6.6%  
Residence Inn -10.4%   78.9% -1.2% pts. $98.27  -9.0%  
Courtyard -11.1%   70.8% -3.8% pts. $95.17  -6.3%  
Fairfield Inn -2.2%   68.1% -0.6% pts. $65.16  -1.3%  
TownePlace Suites -4.3%   74.8% 2.3% pts. $63.40  -7.3%  
SpringHill Suites -1.6%   70.1% 1.5% pts. $78.88  -3.7%  
Domestic Composite - Select-Service & Extended-Stay2 -8.0%   71.5% -1.6% pts. $82.78  -6.0%  
Domestic Composite - All3 -9.2%   71.1% -2.1% pts. $110.81  -6.5%  
                 
                 
Number of Properties Number of Rooms/Suites    
Brand Sept. 2002   vs. Sept. 2001 Sept. 2002   vs. Sept. 2001    
Full-Service Lodging                
Marriott Hotels, Resorts and Suites 439    +17  162,530    +4,713     
The Ritz-Carlton 48    +5  15,904    +1,831     
Renaissance Hotels, Resorts and Suites 123    +5  44,996    +2,351     
Ramada International 143    +14  20,894    +2,421     
Select-Service Lodging                
Courtyard 578    +35  82,902    +6,021     
Fairfield Inn 500    +29  47,971    +3,056     
SpringHill Suites 96    +19  11,027    +2,504     
Extended-Stay Lodging                
Residence Inn 411    +31  48,530    +3,938     
TownePlace Suites 103    +7  10,608    +654     
Marriott Executive Apartments  11    +1  2,008    +225     
Timeshare                
Marriott Vacation Club International 45    (2) 6,680    +870     
Horizons 2    +0  146    +0     
The Ritz-Carlton Club 4    +1  143    +43     
Marriott Grand Residence Club 2    +1  248    +49     
Total 2,505    +163  454,587    +28,676     
               
1Full-Service composite statistics include domestic managed comparable properties for the Marriott Hotels, Resorts and Suites, Renaissance Hotels, Resorts and Suites, and The Ritz-Carlton brands. Statistics exclude non-U.S. properties.                
                 
2 Select-Service and Extended-Stay composite statistics include domestic managed comparable properties for the Courtyard and Residence Inn brands, and domestic managed and franchised comparable properties for the TownePlace Suites, Fairfield Inn and SpringHill Suites brands. Statistics exclude non-U.S. properties.                
                 
3Composite statistics include domestic managed comparable properties for the Marriott Hotels, Resorts and Suites, Renaissance Hotels, Resorts and Suites, The Ritz-Carlton, Courtyard, and Residence Inn brands, and domestic managed and franchised comparable properties for the TownePlace Suites, Fairfield Inn and SpringHill Suites brands. Statistics exclude non-U.S. properties.                

 
This press release contains �forward-looking statements� within the meaning of federal securities laws, including REVPAR, profit margin and earning trends; statements concerning the number of lodging properties expected to be added in future years; expected investment spending; anticipated results from synthetic fuel operations; the anticipated time-frame for exiting the distribution services business; and similar statements concerning anticipated future events and expectations that are not historical facts.  

MARRIOTT INTERNATIONAL, INC. (NYSE:MAR), a leading worldwide hospitality company celebrating its 75th Anniversary in 2002, has over 2,600 operating units in the United States and 65 other countries and territories. 

###

Contact:
Marriott International, Inc.
Tom Marder
(301) 380-2553
[email protected]
www.marriott.com
Also See: Marriott Reports Loss of $116 million for Fourth Quarter; For 2001, Marriott Earned $236 million Compared to $479 million Last Year / Key Lodging Statistics / Feb 2002
Marriott Reports Reports Earnings Down 32% from the First Quarter of 2002 / April 2002
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