Washington DC - July 12, 2001 - Marriott International (NYSE: MAR) today reported diluted earnings per share of $0.50 for the second quarter ended June 15, 2001, unchanged from the 2000 second quarter.  Net income increased three percent to $130 million from a year ago.  Systemwide sales, which include sales at managed, franchised, leased and owned properties, were $4.8 billion for the quarter, unchanged from the prior year.

J.W. Marriott, Jr., chairman and chief executive officer of Marriott International, said "We are pleased with our second quarter earnings in light of the significant drop in industry-wide lodging demand.  As the economy slowed, the company took immediate and comprehensive steps to generate revenues and contain costs at our properties, while also sustaining customer service levels.  Our efforts paid off.  In the second quarter, we  maintained our substantial REVPAR premiums built up over the past few years, and held the profit margin decline at our hotels to less than one percentage point.
     
"With more than 22,000 new hotel rooms and timesharing villas so far this year, we are well on our way to meeting our goal of 35,000 new rooms in 2001.  Our expanding market share, through both new units and conversions from other lodging brands, is an important element of our profit growth strategy, especially in a softer economic climate." Mr. Marriott continued.
     
Mr. Marriott also noted that the company plans to open 175,000 rooms across its lodging brands over the five-year period from 1999-2003, and at quarter-end, 95 percent of the planned rooms had opened or were under development.  At the end of the second quarter, the company's pipeline of properties under construction or approved for development remained at about 70,000 rooms.
     
MARRIOTT LODGING reported a five percent decrease in operating profit and roughly flat sales in the 2001 second quarter.  Results generally reflected lower REVPAR for comparable units and fewer owned hotels, somewhat offset by new unit additions worldwide and growth in the timeshare business.

Across all of Marriott's lodging brands, REVPAR for comparable company-operated U.S. properties decreased 4.4 percent in the 2001 second quarter, largely reflecting lower transient (non-group or non-contract) demand.  Among the company's full-service lodging brands (Marriott, Renaissance and Ritz-Carlton), REVPAR declined 5.1 percent. Full-service occupancy decreased nearly six percentage points to 75.3 percent, while average room rates for these hotels rose over two percent.   REVPAR for limited service properties decreased 2.9 percent, resulting from a five-percentage-point lower occupancy rate.  This was offset by a 3.5 percent increase in average room rates.
     
Marriott Vacation Club International's (MVCI) contract sales increased 17 percent in the second quarter relative to a year ago, reflecting continued strong demand for timeshares, particularly at Marriott Vacation Club resorts in Hawaii, California and Florida.  Strong contract sales reflect continued consumer interest in all three of the division's timeshare brands, Marriott Vacation Club International, Horizons, and The Ritz-Carlton Club.   During the second quarter, the MVCI flagship brand added a new dimension to its product line through the acquisition of the Grand Summit property in Lake Tahoe, California, which has a fractional interval ownership structure.
     
The company added 278 hotels and timeshare resorts (48,800 rooms) to its worldwide lodging portfolio over the past 12 months, while 12 properties (4,000 rooms) exited the system. A net total of 65 hotels and timeshare resorts (10,500 rooms) were added in the 2001 second quarter.  At quarter-end, the Marriott lodging group encompassed 2,228 hotels and timeshare resorts (412,000 rooms), and approximately 7,400 furnished corporate apartments managed by the company's ExecuStay by Marriott brand.
     
During the quarter, Marriott completed asset sales of approximately $200 million, including an agreement to sell four hotels for $101.5 million, while retaining long-term management agreements. Year-to-date, the company has sold hotels, senior living service communities and other properties for an aggregate sales price of $471 million.
     
MARRIOTT SENIOR LIVING SERVICES posted 9 percent sales growth in the 2001 second quarter, reflecting the continued ramp-up of communities opened in the last three years.  The division posted stronger operating profits of $5 million versus a loss of $3 million a year ago, largely as a result of improved occupancy rates and lower pre-opening costs.  Occupancy for comparable communities increased to 85 percent in the quarter.
     
MARRIOTT DISTRIBUTION SERVICES reported a 4 percent increase in sales in the 2001 second quarter, while profits declined to $3 million from $6 million in the prior year, largely related to the loss of a portion of the Sodexho business and inefficiencies associated with several new accounts.
     
CORPORATE EXPENSES increased 16 percent in the 2001 second quarter, primarily due to lower non-cash foreign exchange gains than the year ago quarter.  Corporate expenses also included two offsetting nonrecurring items: a $7 million pre-tax gain from the sale of two affordable housing tax credit investments and the $7 million pre-tax write-off of a technology-related joint venture investment.  Interest income for the 2001 second quarter was $20 million, up $15 million from a year ago as a result of the Courtyard joint venture loan and other mezzanine loan investments.  The company's effective income tax rate decreased to 36 percent in the second quarter of 2001, compared to 37 percent in the 2000 second quarter, largely as a result of modifications related to the company's deferred compensation plan and a higher proportion of non-U.S. income.
     
Marriott International acquired 672,000 shares of its common stock during the 2001 second quarter and is authorized to repurchase an additional 17.7 million shares.  Long-term debt at the end of the quarter was approximately $2.3 billion, up approximately $300 million from year end 2000, offset by a corresponding increase in cash balances.
     
For the remainder of 2001, the company expects the economic environment to remain challenging.  Based on the assumption that second quarter REVPAR and margin trends continue through the balance of 2001, the company expects earnings per share to be between $1.98 and $2.03 per share in 2001.
     

MARRIOTT INTERNATIONAL, INC. (NYSE: MAR) is a leading worldwide hospitality company with nearly 2,400 operating units in the United States and 59 other countries and territories.  

This press release contains "forward-looking statements" within the meaning of federal securities law, including statements concerning the number of lodging properties expected to be added in future years; REVPAR, house profit and earning trends; business strategies and their intended results, and similar statements concerning anticipated future events and expectations that are not historical facts.