Hotel Online  Special Report

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  Marriott Reports 2nd Qtr Net Profit Rose to $160 million
from $125 million a Year Earlier,
RevPAR Up 13% Worldwide; 
-
Over One-third Hotel Rooms Added to Marriott's system in the 2nd Qtr 
Were Conversions from Other Brands; Lodging Statistics

.

WASHINGTON, July 15, 2004 - Marriott International, Inc. (NYSE: MAR) today reported income from continuing operations of $160 million, up 27 percent, and diluted earnings per share from continuing operations of $0.67, up 29 percent for the quarter ended June 18, 2004.  Highlights for the quarter were as follows:
  • Worldwide, systemwide comparable REVPAR for the second quarter ended June 18, 2004, increased 13 percent (14 percent using actual exchange rates).  Room rates increased 3.7 percent during the quarter while occupancy increased nearly 6 percentage points to 74 percent;
  • Incentive management fees rose 29 percent, reflecting an approximately 200 basis point improvement in the company's worldwide house profit margins;
  • 186 managed and franchised hotels (31,000 rooms) were added to our system since the 2003 second quarter, reaching over 500,000 rooms;
  • Over one-third of the new hotel rooms added to Marriott's system in the second quarter were conversions from other brands;
  • Timeshare segment results increased 16 percent during the quarter reflecting strong leisure demand;
  • Marriott estimates 2004 full year diluted EPS from continuing operations, including the impact of synthetic fuel, to total $2.32 to $2.40 per share, which reflects growth of approximately 20 to 24 percent over 2003.
J.W. Marriott, Jr., chairman and chief executive officer of Marriott International, said, "After three difficult years, strong demand returned to the markets most impacted by the downturn.

"We were particularly pleased to welcome back international visitors to the U.S.  The number of international guests visiting our U.S. hotels increased 34 percent during the quarter, benefiting from favorable exchange rates, and was particularly evident in New York and San Francisco.

"Properties in Asia and the Middle East generated significantly higher sales and profits due to higher traveler demand from around the world.  A year ago, in the 2003 second quarter, these regions were hurt by the war in Iraq and Severe Acute Respiratory Syndrome (SARS).

"Owner and franchisee interest in our brands remains robust and we converted over 3,000 rooms to our brands during the quarter.  Since 2000, we have grown our room base by over one-third and we are well positioned to benefit from worldwide demand growth.  Marriott's incentive fees during the quarter surged 29 percent reflecting an approximately 200 basis point improvement in the company's worldwide house profit margins.  Our incentive fee performance reflects the considerable upside our hotels enjoy in this improving demand environment.  Clearly, our prospects remain extremely bright," said Mr. Marriott.

In the second fiscal quarter (12 week period from March 27, 2004 to June 18, 2004), REVPAR for our 1,888 comparable systemwide North American properties rose 9.3 percent, driven by a 3.5 percent increase in average daily rate and a 3.9 percentage point increase in occupancy to nearly 74 percent.  REVPAR at our 344 comparable systemwide North American full-service hotels (including Marriott Hotels & Resorts, The Ritz-Carlton, and Renaissance Hotels & Resorts) increased 9.9 percent, including 4.7 percentage points of improved occupancy to 73 percent.  Demand for luxury lodging increased dramatically.  Comparable systemwide North American Ritz-Carlton REVPAR increased 16.4 percent with strength in both resort and downtown locations.   REVPAR at comparable systemwide North American select-service and extended-stay brands (including Courtyard, Fairfield Inn, Residence Inn, TownePlace Suites, and SpringHill Suites) increased 8.5 percent, with 3.3 percentage points improvement in occupancy to 75 percent.  The Courtyard brand, benefiting from an increase in business traveler demand as well as continued property reinventions and renovations, posted an 11.2 percent REVPAR increase for systemwide comparable North American properties during the quarter.  Sixteen percent of the Courtyard system in North America is non-comparable as a result of new hotels coming into the system in 2003 or 2004 and existing properties that were under renovation during those years.

International REVPAR at comparable systemwide properties increased 24.6 percent (33.1 percent using actual exchange rates) benefiting from strong demand in the 2004 quarter compared to the impact of SARS and the war in Iraq on the 2003 quarter.  Constant dollar systemwide REVPAR increased nearly 55 percent in Asia and more than 15 percent in the Caribbean and Mexico.

The West India Quay Marriott in London's Canary Wharf opened during the quarter and included our 500,000th room.  Overall during the quarter, we added 53 properties (7,745 rooms), including new timeshare resorts in Las Vegas and Hilton Head (both of which will be ready for occupancy in 2005) bringing the total number of hotels in the system to 2,791 (502,575 rooms).  Fifteen properties (2,090 rooms) exited the system during the quarter.  Owners continue to be attracted to the strength of our brands, converting 17 hotels (2,665 rooms) to Marriott's brands in the second quarter (excluding five hotels converted to the Ramada International brand).

Bulgari Hotels & Resorts, a joint venture company formed by Bulgari, the contemporary Italian Jeweler, and Marriott's Luxury Group, opened its first hotel, the 58-room Bulgari Hotel in Milan during the second quarter.  The Bulgari Hotel in Milan is characterized by luxury, contemporary Italian design and impeccable service. The second Bulgari hotel has begun development in Bali and is expected to open mid-2005.  The Marriott Luxury Group includes The Ritz-Carlton and Bulgari Hotels & Resorts.

Nearly 2,200 hotels in the Marriott system offered high-speed internet access as of the end of the second quarter, more than any other hotel system in the world, a significant competitive advantage for all of the company's brands.  We also have wireless internet access in lobbies, meeting rooms, and public spaces in over 1,700 hotels throughout the U.S. We expect the roll out of high-speed internet access to our U.S. properties will be complete by the end of the year and that 2,000 hotels will have wireless internet access.

MARRIOTT REVENUES for the second quarter totaled $2.4 billion, up 19 percent over the prior year.  Base management fees increased 20 percent over the year ago quarter as a result of growth in managed units and a 16 percent increase in managed hotel REVPAR worldwide (using actual exchange rates).  Franchise fees increased 29 percent over the year ago quarter reflecting unit expansion, a nearly 11 percent increase in worldwide franchised comparable REVPAR (using actual exchange rates), as well as the impact of units added last year that continue to ramp up.  Incentive fees also increased 29 percent.  Roughly one-third of the improvement in our incentive fees was attributable to properties in North America.  The remainder of the improvement came from properties outside the U.S., particularly in Asia and the Middle East.

Owned, leased, corporate housing and other revenues increased 26 percent, primarily driven by higher REVPAR and the addition of four new leased full-service properties in Berlin, London and Dublin.

Revenues from timeshare interval sales and services increased 20 percent.  Similar to the first quarter, leisure demand was very strong.  Including results at our three joint ventures, contract sales increased 39 percent.

MARRIOTT'S OPERATING INCOME increased 74 percent in the 2004 second quarter from $68 million to $118 million, as a result of the 24 percent increase in combined base, franchise and incentive fees, robust timeshare interval sales, and lower operating losses from our synthetic fuel joint venture, slightly offset by higher general and administrative expenses.  Marriott's general and administrative expenses increased 19 percent, to $127 million, driven primarily by higher litigation expenses, lower foreign exchange gains and increased overhead costs related to the company's unit growth.

LODGING SEGMENT RESULTS.  Full-service lodging results were $113 million, up $26 million over prior year, as a result of higher fees, slightly offset by higher administrative expenses.  Select-service and extended-stay lodging results were $57 million, up $13 million over prior year, driven by higher fees. Timeshare results rose 16 percent, to $51 million, including a $27 million note sale gain.  Results also included a $7 million charge to reflect an increase in the discount rate used to value our timeshare interest-only strips, in light of the increasing interest rate environment. The note sale gain was $5 million lower than in the 2003 second quarter, primarily due to higher interest rates, partially offset by higher volume.  Profits were also helped by improving margins, especially due to lower marketing and selling costs as a percentage of sales and a greater proportion of higher priced intervals sold.

INTEREST INCOME increased $12 million as a result of slightly higher average interest rates and interest earned on the note receivable in connection with the sale of our interest in the Two Flags joint venture, which took place early in the quarter.  We expect to receive the proceeds from that approximately $200 million note in September of this year.

SYNTHETIC FUEL. During the quarter our synthetic fuel joint ventures generated net income of $31 million, including $38 million of tax benefits and credits, compared to $26 million of net income, including $68 million of tax benefits and credits in the year ago quarter.  The increase in the net income from the synthetic fuel operations reflected higher production volume, partially offset by the impact of the change in ownership.  In the second quarter of 2003, we were the sole owner of the synthetic fuel business.  In the 2003 third quarter, we sold an approximately 50 percent interest and we currently consolidate the joint ventures.

Recently, we were informed by the previous owners of the synthetic fuel facilities that the Internal Revenue Service (IRS) field auditors issued a notice of proposed adjustment challenging the placed-in-service dates of three of the four synthetic fuel facilities now owned by our synthetic fuel joint ventures.  One of the conditions to qualify for tax credits under Section 29 of the Internal Revenue Code is that the facility must have been placed-in-service before July 1, 1998.  We strongly believe that all the facilities meet the placed-in-service requirement and we are confident this issue will be resolved in our favor.  We are examining various procedural alternatives for pursuing this issue to resolution.

At the end of the second quarter, total debt was $1.4 billion and cash balances totaled $164 million compared to $1.7 billion in debt and $203 million of cash at March 26, 2004.  Ninety-three percent of our total debt carries fixed rates.  Depreciation and amortization totaled $37 million during the quarter compared to $34 million in the 2003 second quarter.

In the second quarter we sold 10 land parcels for $18 million and we recognized a gain of $3 million on the sales.

We repurchased 1.2 million shares of our stock in the second quarter and 7.8 million year-to-date through June 18, 2004.  Our remaining share authorization totals 24.7 million shares.

OUTLOOK

We expect continued strong group and transient demand for the remainder of 2004.  Based on the strong results to date, we now estimate 2004 systemwide comparable North American REVPAR growth of 7 to 9 percent.

We expect house profit margins to improve modestly in 2004, particularly as room rates have begun to improve.  We also expect to complete a timeshare mortgage note sale transaction in the fourth quarter, open approximately 25,000 to 30,000 new rooms during 2004, and earn roughly $0.40 to $0.42 of after-tax earnings per share this year from our synthetic fuel business.  Under these assumptions, our lodging operating income is expected to increase to a range of $600 million to $615 million for full year 2004.  We expect full year timeshare segment results to total $190 million to $200 million, including a timeshare mortgage note gain of roughly $25 million in the fourth quarter.  Overall, we estimate our 2004 diluted earnings per share from continuing operations to total $2.32 to $2.40.

For the third quarter, assuming North American systemwide comparable REVPAR growth of between 7 to 9 percent, we currently estimate lodging operating income of $115 million to $125 million, compared to $93 million in the 2003 third quarter.  We expect that timeshare segment results will total roughly $30 million.  No timeshare note sale is planned for the third quarter.  We estimate third quarter EPS from continuing operations to range from $0.52 to $0.56, including $0.11 to $0.13 of earnings from synthetic fuel.

In 2004, we continue to estimate total investment spending levels to be roughly $500 million.
 

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

                                  12 Weeks Ended            12 Weeks Ended
                                   June 18, 2004             June 20, 2003

                                        Syn-                Syn-       Percent
                                       thetic              thetic      Better/
                               Lodging  Fuel  Total Lodging Fuel  Total(Worse)
                              -------- ------ ----- ------- ----  ----- ------
    REVENUES
    Base management fees          $106    $-   $106    $88    $-    $88    20
    Franchise fees                  72     -     72     56     -     56    29
    Incentive management fees       36     -     36     28     -     28    29
    Owned, leased, corporate
     housing and other(1)          182     -    182    145     -    145    26
    Timeshare interval sales and
     services(2)                   281     -    281    234     -    234    20
    Cost reimbursements(3)       1,614     -  1,614  1,402     -  1,402    15
    Synthetic fuel                   -   111    111      -    63     63    76
                              -------- -----  ----- ------  ----  -----
       Total Revenues            2,291   111  2,402  1,953    63  2,016    19
    OPERATING COSTS AND EXPENSES
    Owned, leased and corporate
     housing -- direct(4)          157     -    157    119     -    119    32
    Timeshare -- direct            245     -    245    215     -    215    14
    Reimbursed costs             1,614     -  1,614  1,402     -  1,402    15
    General, administrative and
     other(5)                      127     -    127    107     -    107    19
    Synthetic fuel                   -   141    141      -   105    105    34
                              -------- -----  -----  -----  ----  -----
       Total Expenses            2,143   141  2,284  1,843   105  1,948    17
                              -------- -----  -----  -----  ----  -----

    OPERATING INCOME (LOSS)       $148  $(30)   118   $110  $(42)    68    74
                              ======== =====         =====  =====
 

    Gains and other income(6)                    48                  38    26
    Interest expense                            (24)                (25)    4
    Interest income                              39                  27    44
    Provision for loan losses                    (3)                 (1)    *
    Equity in earnings (losses)
     -- Synthetic fuel(7)                         -                   -     -
              -- Other(8)                         1                   3   (67)
                                              -----               -----

    INCOME FROM CONTINUING
     OPERATIONS BEFORE INCOME
     TAXES AND MINORITY INTEREST                179                 110    63
    (Provision) benefit for
     income taxes                               (33)                 16     *
                                              -----               -----
    INCOME FROM CONTINUING
     OPERATIONS BEFORE
     MINORITY INTEREST                          146                 126    16
    Minority Interest                            14                   -     *
                                              -----               -----
    INCOME FROM CONTINUING
     OPERATIONS                                 160                 126    27
    DISCONTINUED OPERATIONS
      Loss from Senior Living
       Services, net of tax                       -                  (1)    *
      Income from Distribution
       Services, net of tax                       -                   -     -
                                              -----               -----

    NET INCOME                                 $160                $125    28
                                              =====               =====

    EARNINGS PER SHARE -- Basic
       Earnings from continuing
        operations                            $0.71               $0.54    31
       Earnings from
        discontinued operations                  -                    -     -
                                              -----               -----
       Earnings per share                     $0.71               $0.54    31
                                              =====               =====

    EARNINGS PER SHARE -- Diluted
       Earnings from continuing
        operations                            $0.67               $0.52    29
       Loss from discontinued
        operations                                -               (0.01)    *
                                              -----               -----
       Earnings per share                     $0.67               $0.51    31
                                              =====               =====

    Basic Shares                              226.9               232.3
    Diluted Shares                            240.3               244.3
 
 

    *  Calculated percentage is not meaningful.

    1 - Owned, leased, corporate housing and other revenue includes revenue from the properties we own or lease, our ExecuStay business, land rent income and other revenue.
    2 - Timeshare interval sales and services includes total timeshare revenue except for base fees, cost reimbursements, note sale gains, and joint venture earnings (losses).
    3 - Cost reimbursements include reimbursements from lodging properties for Marriott funded operating expenses.
    4 - Owned, leased and corporate housing -- direct expenses include operating expenses related to our owned or leased hotels including lease payments, pre-opening expenses and depreciation plus expenses related to our ExecuStay business.
    5 - General, administrative and other expenses include the overhead costs allocated to our lodging business segments (including ExecuStay and timeshare) and our unallocated corporate overhead costs.
    6 - Gains and other income includes gains on the sale of real estate and timeshare notes, income related to our cost method joint ventures and beginning March 27, 2004 includes the earnout payments we made to the previous owner of the Synthetic fuel operation and earnout payments we received from our Synthetic fuel joint venture partner.
    7 - Equity in earnings (losses) -- Synthetic fuel includes our share of the equity in earnings of the Synthetic fuel joint venture and the earnout we received from our Synthetic fuel joint venture partner from November 7, 2003 through March 25, 2004.  Beginning March 26, 2004, the Synthetic fuel operation was consolidated as a result of adopting FIN 46(R), "Consolidation of Variable Interest Entities."
    8 - Equity in earnings (losses) -- Other includes our equity in earnings (losses) of unconsolidated joint ventures.
 

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

                                             24 Weeks Ended June 18, 2004
                                                        Synthetic
                                            Lodging       Fuel       Total
    REVENUES                               --------    ---------    -------
    Base management fees                    $  205     $    -       $  205
    Franchise fees                             133          -          133
    Incentive management fees                   69          -           69
    Owned, leased, corporate
     housing and other(1)                      338          -          338
    Timeshare interval sales
     and services(2)                           599          -          599
    Cost reimbursements(3)                   3,199          -        3,199
    Synthetic fuel                               -        111          111
                                           --------    ---------    -------
      Total Revenues                         4,543        111        4,654

    OPERATING COSTS AND EXPENSES
    Owned, leased and
     corporate housing - direct(4)             289          -          289
    Timeshare - direct                         497          -          497
    Reimbursed costs                         3,199          -        3,199
    General, administrative
     and other(5)                              259          -          259
    Synthetic fuel                               -        141          141
                                           --------    ---------    -------
      Total Expenses                         4,244        141        4,385
                                           --------    ---------    -------

    OPERATING INCOME (LOSS)                 $  299     $  (30)         269
                                           ========    =========    =======
 

    Gains and other income(6)                                           52
    Interest expense                                                   (46)
    Interest income                                                     65
    Provision for loan losses                                            -
    Equity in earnings (losses)
     - Synthetic fuel(7)                                               (28)
     - Other(8)                                                         (1)
    INCOME FROM CONTINUING OPERATIONS
     BEFORE INCOME TAXES
     AND MINORITY INTEREST                                             311
    (Provision) benefit for income taxes                               (51)
    INCOME FROM CONTINUING OPERATIONS                               -------
     BEFORE MINORITY INTEREST                                          260
    Minority Interest                                                   14
    INCOME FROM CONTINUING OPERATIONS                                  274
    DISCONTINUED OPERATIONS
      Income from Senior Living Services,
       net of tax                                                        -
      Loss from Distribution Services,
       net of tax                                                        -

    NET INCOME                                                        $274
    EARNINGS PER SHARE - Basic
     Earnings from
      continuing operations                                         $ 1.20
     Earnings from
      discontinued operations                                            -
     Earnings per share                                             $ 1.20
    EARNINGS PER SHARE - Diluted
       Earnings from
        continuing operations                                       $ 1.14
       Earnings from
        discontinued
    operations                                                           -
       Earnings per share                                           $ 1.14

    Basic Shares                                                     228.2
    Diluted Shares                                                   241.5
 
 

                               24 Weeks Ended June 20, 2003

                                                                    Percent
                                          Synthetic                 Better/
                             Lodging        Fuel       Total        (Worse)
                            -------      ---------    -------       -------
    REVENUES
    Base management fees    $  180       $    -       $  180           14
    Franchise fees             108            -          108           23
    Incentive management
     fees                       57            -           57           21
    Owned, leased, corporate
     housing and other(1)      282            -          282           20
    Timeshare interval
     sales and services(2)     471            -          471           27
    Cost reimbursements(3)   2,810            -        2,810           14
    Synthetic fuel               -          131          131          (15)
                            -------      ---------    -------
      Total Revenues         3,908          131        4,039           15

    OPERATING COSTS
     AND EXPENSES
    Owned, leased and
     corporate housing
     - direct(4)               229            -          229           26
    Timeshare - direct         423            -          423           17
    Reimbursed costs         2,810            -        2,810           14
    General,
     administrative
     and other(5)              219            -          219           18
    Synthetic fuel               -          232          232          (39)
                           -------       --------     -------
      Total Expenses         3,681          232        3,913           12
                           -------       --------    -------
    OPERATING INCOME
     (LOSS)                 $  227       $ (101)         126            *
                           =======       ========

    Gains and
     other income(6)                                      39           33
    Interest expense                                     (51)          10
    Interest income                                       47           38
    Provision for
     loan losses                                          (6)           *
    Equity in
     earnings (losses)
     - Synthetic fuel(7)                                   -            *
     - Other(8)                                            2            *
    INCOME FROM CONTINUING
     OPERATIONS BEFORE
     INCOME TAXES
     AND MINORITY INTEREST                               157           98
    (Provision) benefit
     for income taxes                                     56            *
    INCOME FROM CONTINUING
     OPERATIONS BEFORE
     MINORITY INTEREST                                   213           22
    Minority Interest                                      -            *
    INCOME FROM CONTINUING
     OPERATIONS                                          213           29
    DISCONTINUED OPERATIONS
      Income from Senior
       Living Services,
       net of tax                                         29            *
      Loss from
       Distribution Services,
       net of tax                                         (1)           *
                                                      -------

    NET INCOME                                        $  241           14
    EARNINGS PER SHARE
     - Basic Earnings from continuing
       operations                                     $ 0.91           32
      Earnings from
       discontinued
       operations                                       0.12            *
                                                      -------
      Earnings per share                              $ 1.03           17
    EARNINGS PER SHARE
     - Diluted Earnings from continuing
       operations                                     $ 0.87           31
      Earnings from
       discontinued
       operations                                       0.12            *
                                                      -------
      Earnings per share                              $ 0.99           15

    Basic Shares                                       233.1
    Diluted Shares                                     243.9

    *  Calculated percentage is not meaningful.

    (1) - Owned, leased, corporate housing and other revenue includes revenue from the properties we own or lease, our ExecuStay business, land rent income and other revenue.
    (2) - Timeshare interval sales and services includes total timeshare revenue except for base fees, cost reimbursements, note sale gains, and joint venture earnings (losses).
    (3) - Cost reimbursements include reimbursements from lodging properties for Marriott funded operating expenses.
    (4) - Owned, leased and corporate housing - direct expenses include operating expenses related to our owned or leased hotels including lease payments, pre-opening expenses and depreciation plus expenses related to our ExecuStay business.
    (5) - General, administrative and other expenses include the overhead costs allocated to our lodging business segments (including ExecuStay and timeshare) and our unallocated corporate overhead costs.
    (6) - Gains and other income includes gains on the sale of real estate and timeshare notes, income related to our cost method joint ventures and beginning March 27, 2004 includes the earnout payments we made to the previous owner of the Synthetic fuel operation and earnout payments we received from our Synthetic fuel joint venture partner.
    (7) - Equity in earnings (losses) -- Synthetic fuel includes our share of the equity in earnings of the Synthetic fuel joint venture and the earnout we received from our Synthetic fuel joint venture partner from November 7, 2003 through March 25, 2004.  Beginning March 26, 2004, the Synthetic fuel operation was consolidated as a result of adopting FIN 46(R), "Consolidation of Variable Interest Entities."
    (8) - Equity in earnings (losses) - Other includes our equity in earnings (losses) of unconsolidated joint ventures.
 

                         Marriott International, Inc.
                              Business Segments
                               ($ in millions)
 
 

                                                      Twelve Weeks Ended
                                                June 18, 2004  June 20, 2003
                                                -------------  -------------

    REVENUES
    Full-Service                                     $ 1,548        $ 1,333
    Select-Service                                       264            229
    Extended-Stay                                        129            130
    Timeshare                                            350            261
                                                -------------  -------------
      Total lodging(1)                                 2,291          1,953
    Synthetic fuel                                       111             63
                                                -------------  -------------
      Total                                          $ 2,402        $ 2,016
                                                =============  =============
 

    INCOME FROM CONTINUING OPERATIONS
    Full-Service                                       $ 113           $ 87
    Select-Service                                        39             29
    Extended-Stay                                         18             15
    Timeshare                                             51             44
                                                -------------  -------------
      Total lodging financial results(1)                 221            175
    Synthetic fuel (after tax)                            31             26
    Unallocated corporate expenses                       (33)           (24)
    Interest income, provision for loan losses
     and interest expense                                 12              1
    Income taxes (excluding Synthetic fuel)              (71)           (52)
                                                -------------  -------------
      Total                                            $ 160          $ 126
                                                =============  =============
 

    (1) We consider lodging revenues and lodging financial results to be meaningful indicators of our performance because they measure our growth in profitability as a lodging company and enable investors to compare the sales and results of our lodging operations to those of other lodging companies.
 

                         Marriott International, Inc.
                              Business Segments
                               ($ in millions)

                                                     Twenty-Four Weeks Ended
                                                  June 18, 2004  June 20, 2003
                                                  -------------  -------------

    REVENUES
    Full-Service                                      $3,053         $2,663
    Select-Service                                       511            463
    Extended-Stay                                        244            254
    Timeshare                                            735            528
                                                  -------------  -------------
      Total lodging(1)                                 4,543          3,908
    Synthetic fuel                                       111            131
                                                  -------------  -------------
      Total                                           $4,654         $4,039
                                                  =============  =============
 

    INCOME FROM CONTINUING OPERATIONS
    Full-Service                                        $213           $182
    Select-Service                                        62             53
    Extended-Stay                                         28             25
    Timeshare                                            101             62
                                                  -------------  -------------
      Total lodging financial results(1)                 404            322
    Synthetic fuel (after tax)                            42             45
    Unallocated corporate expenses                       (63)           (54)
    Interest income, provision for loan losses
     and interest expense                                 19            (10)
    Income taxes (excluding Synthetic fuel)             (128)           (90)
                                                  -------------  -------------
      Total                                             $274           $213
                                                  =============  =============
 

    (1)  We consider lodging revenues and lodging financial results to be meaningful indicators of our performance because they measure our growth in profitability as a lodging company and enable investors to compare the sales and results of our lodging operations to those of other lodging companies.
 

MARRIOTT INTERNATIONAL, INC.
                          Total Lodging Products(1)

                                        Number of             Number of
                                        Properties           Rooms/Suites

                                    June 18,  vs. June    June 18,   vs. June
    Brand                             2004    20, 2003      2004     20, 2003
    ------------------------------  -----------------------------------------
    Full-Service Lodging
      Marriott Hotels & Resorts        482       +17      176,981    +6,444
      The Ritz-Carlton                  57        +3       18,644    +1,434
      Bulgari Hotels & Resorts           1        +1           58       +58
      Renaissance Hotels & Resorts     130        +4       46,827    +1,243
      Ramada International             206       +35       27,863    +4,094
    Select-Service Lodging
      Courtyard                        638       +39       91,444    +5,480
      Fairfield Inn                    530       +14       50,191      +825
      SpringHill Suites                116       +13       13,485    +1,483
    Extended-Stay Lodging
      Residence Inn                    454       +18       54,019    +2,140
      TownePlace Suites                112        +6       11,462      +563
      Marriott Executive Apartments     14        +2        2,471      +304
    Timeshare(2)
      Marriott Vacation Club
       International                    43        -1        8,374    +1,038
      Horizons by Marriott Vacation
       Club International                2         -          256       +44
      The Ritz-Carlton Club              4         -          252       +28
      Marriott Grand Residence Club      2         -          248         -
                                    ------------------  -------------------
    Total                            2,791      +151      502,575   +25,178
                                    ==================  ===================

    (1)  Total Lodging Products excludes the 2,591 corporate housing rental units.
    (2)  Includes products under construction and in active sales which are not ready for occupancy.
 
 

                         MARRIOTT INTERNATIONAL, INC.
                            KEY LODGING STATISTICS
           North American Comparable Company-Operated Properties(1)

                           Twelve Weeks Ended June 18, 2004 and June 20, 2003
                                                                Average Daily
                                    REVPAR        Occupancy         Rate
                                    ------        ---------     --------------
     Brand                                vs.            vs.              vs.
                                  2004   2003   2004     2003      2004   2003
     Marriott Hotels & Resorts  $109.27   8.7%  75.5%  4.8% pts. $144.77  1.8%
     The Ritz-Carlton(2)        $200.34  16.4%  73.8%  7.9% pts. $271.44  3.9%
     Renaissance Hotels &
      Resorts                   $100.60   8.5%  72.6%  5.4% pts. $138.67  0.4%
     Composite - Full-Service   $118.43  10.1%  74.8%  5.3% pts. $158.24  2.3%
     Residence Inn               $81.22   6.5%  81.0%  1.6% pts. $100.25  4.3%
     Courtyard                   $71.16  10.7%  73.8%  4.4% pts.  $96.48  4.1%
     TownePlace Suites           $50.42  12.0%  77.7%  6.8% pts.  $64.91  2.2%
     Composite - Select-Service
      & Extended-Stay            $71.87   9.8%  75.8%  4.0% pts.  $94.76  4.1%
     Composite - All            $102.07  10.0%  75.2%  4.8% pts. $135.74  3.0%
 
 

                 North American Comparable Systemwide Properties(1)
                           Twelve Weeks Ended June 18, 2004 and June 20, 2003
                                                                Average Daily
                                    REVPAR        Occupancy         Rate
                                    ------        ---------     -------------
     Brand                                vs.             vs.              vs.
                                  2004   2003   2004     2003      2004   2003
     Marriott Hotels & Resorts   $99.31   8.9%  73.0%  4.4% pts. $135.96  2.3%
     The Ritz-Carlton(2)        $200.34  16.4%  73.8%  7.9% pts. $271.44  3.9%
     Renaissance Hotels &
      Resorts                    $93.79   8.5%  71.5%  4.6% pts. $131.17  1.5%
     Composite - Full-Service   $106.69   9.9%  72.9%  4.7% pts. $146.39  2.8%
     Residence Inn               $78.05   6.3%  80.4%  2.2% pts.  $97.06  3.3%
     Courtyard                   $72.58  11.2%  74.6%  4.3% pts.  $97.32  4.8%
     Fairfield Inn               $46.02   4.9%  69.1%  2.0% pts.  $66.64  1.8%
     TownePlace Suites           $50.05  10.0%  78.0%  6.4% pts.  $64.20  1.0%
     SpringHill Suites           $62.71  10.3%  74.1%  4.0% pts.  $84.66  4.3%
     Composite - Select-Service
      & Extended-Stay            $65.19   8.5%  74.7%  3.3% pts.  $87.27  3.7%
     Composite - All             $83.32   9.3%  73.9%  3.9% pts. $112.73  3.5%

     (1) Composite -- All statistics include properties for the Marriott Hotels & Resorts, Renaissance Hotels & Resorts, The Ritz-Carlton, Courtyard, Residence Inn, TownePlace Suites, Fairfield Inn, and SpringHill Suites brands.  Full-Service composite statistics include properties for Marriott Hotels & Resorts, Renaissance Hotels & Resorts and The Ritz-Carlton.  Select-Service and Extended-Stay composite statistics include properties for the Courtyard, Residence Inn, TownePlace Suites, Fairfield Inn and SpringHill Suites brands.
     (2) Statistics for The Ritz-Carlton are for March through May.
 
 

                         MARRIOTT INTERNATIONAL, INC.
                            KEY LODGING STATISTICS
           North American Comparable Company-Operated Properties(1)
                       Twenty-Four Weeks Ended June 18, 2004 and June 20, 2003
                                                                 Average Daily
                               REVPAR           Occupancy            Rate
                               ------           ---------        -------------
    Brand                  2004 vs. 2003     2004 vs. 2003      2004 vs. 2003
    Marriott Hotels
     & Resorts            $105.72   6.2%    72.8%  3.3% pts.   $145.27   1.4%
    The Ritz-Carlton(2)   $192.67  14.0%    71.2%  7.0% pts.   $270.71   2.8%
    Renaissance Hotels
     & Resorts             $97.90   7.0%    70.3%  4.4% pts.   $139.25   0.4%
    Composite -
     Full-Service         $112.95   7.6%    72.2%  3.8% pts.   $156.34   1.9%
    Residence Inn          $77.31   4.2%    77.6%  0.8% pts.    $99.63   3.2%
    Courtyard              $68.02   8.4%    71.0%  3.9% pts.    $95.79   2.5%
    TownePlace Suites      $47.72  11.5%    73.8%  6.1% pts.    $64.63   2.3%
    Composite -
     Select-Service
     & Extended-Stay       $68.42   7.7%    72.7%  3.3% pts.    $94.15   2.7%
    Composite - All        $97.09   7.6%    72.4%  3.7% pts.   $134.12   2.2%
 

              North American Comparable Systemwide Properties(1)
                       Twenty-Four Weeks Ended June 18, 2004 and June 20, 2003
                                                                 Average Daily
                               REVPAR           Occupancy            Rate
                               ------           ---------        -------------
    Brand                  2004 vs. 2003     2004 vs. 2003      2004 vs. 2003
    Marriott Hotels &
    Resorts                $96.78   6.6%    70.8%  3.2% pts.   $136.68   1.8%
    The Ritz-Carlton(2)   $192.67  14.0%    71.2%  7.0% pts.   $270.71   2.8%
    Renaissance Hotels
     & Resorts             $91.18   7.9%    69.2%  4.4% pts.   $131.68   1.1%
    Composite -
     Full-Service         $102.46   7.7%    70.6%  3.6% pts.   $145.13   2.2%
    Residence Inn          $75.10   5.3%    77.5%  2.0% pts.    $96.85   2.6%
    Courtyard              $69.14   9.3%    71.6%  3.7% pts.    $96.62   3.7%
    Fairfield Inn          $42.63   3.7%    64.7%  1.3% pts.    $65.90   1.6%
    TownePlace Suites      $47.46   8.5%    73.9%  5.2% pts.    $64.24   0.9%
    SpringHill Suites      $59.79   9.3%    71.0%  3.8% pts.    $84.24   3.5%
    Composite -
     Select-Service
     & Extended-Stay       $61.96   7.1%    71.3%  2.8% pts.    $86.89   2.9%
    Composite - All        $79.51   7.4%    71.0%  3.1% pts.   $111.98   2.7%
 

    (1) Composite - All statistics include properties for the Marriott Hotels & Resorts, Renaissance Hotels & Resorts, The Ritz-Carlton, Courtyard, Residence Inn, TownePlace Suites, Fairfield Inn, and SpringHill Suites brands.  Full-Service composite statistics include properties for Marriott Hotels & Resorts, Renaissance Hotels & Resorts and The Ritz-Carlton.  Select-Service and Extended-Stay composite statistics include properties for the Courtyard, Residence Inn, TownePlace Suites, Fairfield Inn and SpringHill Suites brands.
    (2) Statistics for The Ritz-Carlton are for January through May.
 
 

                         MARRIOTT INTERNATIONAL, INC.
                            KEY LODGING STATISTICS
          International Comparable Company-Operated Properties(1,2)
                             Three Months Ended May 31, 2004 and May 31, 2003
                                                                 Average Daily
                               REVPAR           Occupancy            Rate
                               ------           ---------        -------------
    Region/Brand           2004 vs. 2003     2004 vs. 2003      2004 vs. 2003
    Caribbean & Latin
     America              $101.87  16.6%    74.5%  7.5% pts.   $136.65   4.9%
    Continental Europe     $95.21  14.6%    72.5%  7.0% pts.   $131.33   3.6%
    United Kingdom        $140.62  21.7%    77.2%  9.6% pts.   $182.15   6.6%
    Middle East & Africa   $79.23  45.0%    75.6% 19.2% pts.   $104.86   8.1%
    Asia Pacific(3)        $72.53  70.5%    75.2% 25.4% pts.    $96.49  13.0%

    Total International
     (4,5)                 $90.64  29.7%    74.5% 14.8% pts.   $121.64   4.0%
    Ritz-Carlton
     International        $154.24  37.6%    72.6% 21.4% pts.   $212.49  -3.0%
    Total International
     (4)                   $97.59  31.0%    74.3% 15.5% pts.   $131.34   3.7%
 

             International Comparable Systemwide Properties (1,2)
                             Three Months Ended May 31, 2004 and May 31, 2003
                                                                 Average Daily
                               REVPAR           Occupancy            Rate
                               ------           ---------        -------------
    Region/Brand           2004 vs. 2003     2004 vs. 2003      2004 vs. 2003
    Caribbean & Latin
     America               $96.23  17.5%    73.6%  8.3% pts.   $130.81   4.2%
    Continental Europe     $91.59  14.5%    69.4%  7.4% pts.   $132.06   2.3%
    United Kingdom        $109.04  14.5%    75.9%  7.7% pts.   $143.74   2.9%
    Middle East & Africa   $79.23  45.0%    75.6% 19.2% pts.   $104.86   8.1%
    Asia Pacific(3)        $75.78  54.5%    76.3% 22.6% pts.    $99.35   8.8%

    Total International
     (4,5)                 $90.79  24.6%    73.9% 12.9% pts.   $122.78   2.8%
    Ritz-Carlton
     International        $154.24  37.6%    72.6% 21.4% pts.   $212.49  -3.0%
    Total International
     (4)                   $95.93  26.1%    73.8% 13.6% pts.   $129.93   2.9%

    (1) International financial results are reported on a period basis, while International statistics are reported on a monthly basis.
    (2) Statistics are in constant dollars and include results for March through May.  Excludes North America.
    (3) Excludes Hawaii.
    (4) Includes Hawaii.
    (5) Excludes Ritz-Carlton.
 
 

                         MARRIOTT INTERNATIONAL, INC.
                            KEY LODGING STATISTICS
          International Comparable Company-Operated Properties(1,2)
                             Five Months Ended May 31, 2004 and May 31, 2003
                                                               Average Daily
                                 REVPAR         Occupancy           Rate
                                 ------         ---------      -------------
    Region/Brand             2004  vs. 2003   2004  vs. 2003    2004  vs. 2003
    Caribbean & Latin
     America                 $105.92  14.1%  74.0%   6.4% pts.  $143.19   4.2%
    Continental Europe        $86.48   8.8%  66.8%   4.5% pts.  $129.39   1.4%
    United Kingdom           $134.20  19.1%  74.8%   8.4% pts.  $179.34   5.6%
    Middle East & Africa      $81.26  38.8%  74.8%  13.7% pts.  $108.62  13.3%
    Asia Pacific(3)           $68.83  39.0%  73.6%  16.0% pts.   $93.57   8.7%

    Total International(4,5)  $87.43  20.6%  72.0%  10.0% pts.  $121.40   3.8%

    Ritz-Carlton
     International           $145.65  25.8%  69.4%  14.5% pts.  $209.95  -0.5%

    Total International(4)    $93.79  21.5%  71.7%  10.5% pts.  $130.76   3.6%
 
 

             International Comparable Systemwide Properties(1,2)
                             Five Months Ended May 31, 2004 and May 31, 2003
                                                               Average Daily
                                 REVPAR         Occupancy           Rate
                                 ------         ---------      -------------
    Region/Brand             2004  vs. 2003   2004  vs. 2003    2004  vs. 2003
    Caribbean & Latin
     America                  $99.19  15.3%  72.6%   7.6% pts.  $136.63   3.3%
    Continental Europe        $83.54   9.9%  64.6%   5.6% pts.  $129.28   0.4%
    United Kingdom            $99.80  10.7%  70.5%   5.4% pts.  $141.52   2.2%
    Middle East & Africa      $81.26  38.8%  74.8%  13.7% pts.  $108.62  13.3%
    Asia Pacific(3)           $72.68  31.3%  74.7%  14.4% pts.   $97.27   6.1%

    Total International(4,5)  $86.72  17.6%  71.1%   9.1% pts.  $122.01   2.6%

    Ritz-Carlton
     International           $145.65  25.8%  69.4%  14.5% pts.  $209.95  -0.5%

    Total International(4)    $91.47  18.6%  70.9%   9.5% pts.  $128.94   2.7%
 
 

    (1)  International financial results are reported on a period basis, while International statistics are reported on a monthly basis.
    (2)  Statistics are in constant dollars and include results for January through May.  Excludes North America.
    (3)  Excludes Hawaii.
    (4)  Includes Hawaii.
    (5)  Excludes Ritz-Carlton.
 
 

                         MARRIOTT INTERNATIONAL, INC.
                  Non-GAAP Financial Measure Reconciliation (in millions, except per share amounts)
    We consider income from continuing operations excluding the impact of the synthetic fuel operations, earnings per share excluding the impact of the synthetic fuel operations, and the effective tax rate excluding the impact of the synthetic fuel operations, to be meaningful performance indicators because they reflect that portion of our income from continuing operations, earnings per share, and the effective tax rate that relates to our lodging business and enables investors to compare the results of our operations and effective tax rate to that of other lodging companies.  However, income from continuing operations excluding the impact of the synthetic fuel operations, earnings per share excluding the impact of the synthetic fuel operations, and the effective tax rate excluding the impact of the synthetic fuel operations are all non-GAAP financial measures, and are not alternatives to income from continuing operations, earnings per share, effective tax rate or any other operating measure prescribed by accounting principles generally accepted in the United States.
    The reconciliation of income from continuing operations, earnings per share, and the effective income tax rate as reported to income from continuing operations excluding the impact of the synthetic fuel operations, earnings per share excluding the impact of the synthetic fuel operations, and the effective income tax rate excluding the impact of the synthetic fuel operations is as follows:

                             Second Quarter 2004
                                                Continuing Operations
                                         Income from  Synthetic  Excluding
                                          Continuing     Fuel    Synthetic
                                          Operations    Impact     Fuel
                                         -----------  ---------  ---------
    Pre tax income (loss)                      $179       $(21)      $200

       Tax (Provision)/Benefit                  (68)         3        (71)
       Tax Credits                               35         35          -
                                         -----------  ---------  ---------
    Total Tax (Provision)/Benefit               (33)        38        (71)
                                         -----------  ---------  ---------
    Income from Continuing Operations
     before Minority Interest                   146         17        129

    Minority Interest                            14         14          -
                                         -----------  ---------  ---------
    Income from Continuing Operations          $160        $31       $129
                                         ===========  =========  =========
    Diluted Shares                            240.3      240.3      240.3

    Earnings per Share - Diluted              $0.67      $0.13      $0.54

    Tax Rate                                  18.4%                 35.4%
 
 

                             Second Quarter 2003
                                                Continuing Operations
                                         Income from  Synthetic  Excluding
                                          Continuing     Fuel    Synthetic
                                          Operations    Impact     Fuel
                                         -----------  ---------  ---------
    Pre tax income (loss)                      $110       $(42)      $152

       Tax (Provision)/Benefit                  (37)        15        (52)
       Tax Credits                               53         53          -
                                         -----------  ---------  ---------
    Total Tax Benefit/(Provision)                16         68        (52)
                                         -----------  ---------  ---------
    Income from Continuing Operations          $126        $26       $100
                                         ===========  =========  =========
    Diluted Shares                            244.3      244.3      244.3

    Earnings per Share - Diluted              $0.52      $0.11      $0.41

    Tax Rate                                 -14.7%                 33.8%
 
 

                         MARRIOTT INTERNATIONAL, INC.
                  Non-GAAP Financial Measure Reconciliation (in millions, except per share amounts)
    We consider income from continuing operations excluding the impact of the synthetic fuel operations, earnings per share excluding the impact of the synthetic fuel operations, and the effective tax rate excluding the impact of the synthetic fuel operations, to be meaningful performance indicators because they reflect that portion of our income from continuing operations, earnings per share, and the effective tax rate that relates to our lodging business and enables investors to compare the results of our operations and effective tax rate to that of other lodging companies.   However, income from continuing operations excluding the impact of the synthetic fuel operations, earnings per share excluding the impact of the synthetic fuel operations, and the effective tax rate excluding the impact of the synthetic fuel operations are all non-GAAP financial measures, and are not alternatives to income from continuing operations, earnings per share, effective tax rate or any other operating measure prescribed by accounting principles generally accepted in the United States.
    The reconciliation of income from continuing operations, earnings per share, and the effective income tax rate as reported to income from continuing operations excluding the impact of the synthetic fuel operations, earnings per share excluding the impact of the synthetic fuel operations, and the effective income tax rate excluding the impact of the synthetic fuel operations is as follows:

                           Second Quarter YTD 2004
                                                Continuing Operations
                                         Income from  Synthetic    Excluding
                                          Continuing     Fuel      Synthetic
                                          Operations    Impact       Fuel
                                         -----------  ---------   ----------
    Pre tax income (loss)                      $311       $(49)       $360

       Tax (Provision)/Benefit                 (115)        13        (128)
       Tax Credits                               64         64          -
                                         -----------  ---------   ----------
    Total Tax (Provision)/Benefit               (51)        77        (128)
                                         -----------  ---------   ----------
    Income from Continuing Operations
     before Minority Interest                   260         28         232

    Minority Interest                            14         14          -
                                         -----------  ---------   ----------
    Income from Continuing Operations          $274        $42        $232
                                         ===========  =========   ==========
    Diluted Shares                            241.5      241.5       241.5

    Earnings per Share - Diluted              $1.14      $0.17       $0.97

    Tax Rate                                  16.4%                  35.5%
 

                           Second Quarter YTD 2003
                                                Continuing Operations
                                         Income from  Synthetic    Excluding
                                          Continuing     Fuel      Synthetic
                                          Operations    Impact       Fuel
                                         -----------  ---------   ----------
    Pre tax income (loss)                      $157      $(101)       $258

       Tax (Provision)/Benefit                  (54)        36         (90)
       Tax Credits                              110        110          -
                                         -----------  ---------   ----------
    Total Tax Benefit/(Provision)                56        146         (90)
                                         -----------  ---------   ----------
    Income from Continuing Operations          $213        $45        $168
                                         ===========  =========   ==========
    Diluted Shares                            243.9      243.9       243.9

    Earnings per Share - Diluted              $0.87      $0.18       $0.69

    Tax Rate                                 -35.4%                  34.7%
 
 

                         MARRIOTT INTERNATIONAL, INC.
                  Non-GAAP Financial Measure Reconciliation
                               ($ in millions)
    We consider lodging operating income to be a meaningful indicator of our performance because it measures our growth in profitability as a lodging company and enables investors to compare the operating income related to our lodging segments to the operating income of other lodging companies.  However, lodging operating income is a non-GAAP financial measure and is not an alternative to operating income or any other operating measure prescribed by accounting principles generally accepted in the United States.
    The reconciliation of operating income to lodging operating income is as follows:

                                                  Fiscal Year 2003
                                      First   Second    Third   Fourth
                                     Quarter  Quarter  Quarter  Quarter  Total
                                     -------  -------  -------  -------  -----

    Operating income as reported        $58      $68      $90     $161    $377
     Less: Synthetic fuel operating
      loss                               59       42        3       -      104
                                     -------  -------  -------  -------  -----
    Lodging operating income           $117     $110      $93     $161    $481
                                     =======  =======  =======  =======  =====
 

                                                  Fiscal Year 2004
                                            First      Second      Second
                                           Quarter     Quarter   Quarter YTD
                                           -------     -------   -----------

    Operating income as reported             $151        $118         $269

     Less: Synthetic fuel operating
      loss                                     -           30           30
                                           -------     -------   -----------
    Lodging operating income                 $151        $148         $299
                                           =======     =======   ===========
 

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 we expect to add in future years; our expected investment spending; our anticipated results from synthetic fuel operations and the anticipated favorable resolution of the IRS's placed-in-service challenge; and similar statements concerning anticipated future events and expectations that are not historical facts. 

MARRIOTT INTERNATIONAL, INC. (NYSE: MAR) is a leading lodging company with nearly 2,800 lodging properties in the United States and 69 other countries and territories.  Marriott International operates and franchises hotels under the Marriott, JW Marriott, The Ritz-Carlton, Renaissance, Residence Inn, Courtyard, TownePlace Suites, Fairfield Inn, SpringHill Suites, Ramada International and Bulgari brand names; develops and operates vacation ownership resorts under the Marriott Vacation Club International, Horizons, The Ritz-Carlton Club and Marriott Grand Residence Club brands; operates Marriott Executive Apartments; provides furnished corporate housing through its Marriott ExecuStay division; and operates conference centers. Marriott is also in the synthetic fuel business.  The company is headquartered in Washington, D.C., and has approximately 128,000 employees.  In fiscal year 2003, Marriott International reported sales from continuing operations of $9 billion.

 

 
Contact:

Marriott International, Inc.
http://www.marriott.com
Also See: Marriott 1st Qtr 2004 Net Income Falls to $114 million from $116 million Prior Year; Timeshare Business Doubles, Adds 7,380 Hotel Rooms and Timeshare Units During the Quarter / Hotel Operating Statistics / April 2004
Marriott Reports 2003 Net Income Up 81% to $502 million from $277 million for 2002; Full-year Revpar for North American Properties Fell 1.3%, Expects 2004 Revpar to Increase 3% to 4%, Plans to Add 25,000 to 30,000 Rooms in 2004 / Hotel Operating Statistics / February 2004

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