MARRIOTT INTERNATIONAL INC /MD/ 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Cautionary Statement All statements in this report are made as of the date this Form 10-Q is filed with the U.S. Securities and Exchange Commission (the “SEC”). We undertake no obligation to publicly update or revise these statements, whether as a result of new information, future events or otherwise. We make forward-looking statements in Management’s Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this report based on the beliefs and assumptions of our management and on information available to us through the date this Form 10-Q is filed with the SEC. Forward-looking statements include information related to future demand trends and expectations; our expectations regarding rooms growth; our expectations regarding our ability to meet our liquidity requirements; our capital expenditures and other investment spending expectations; our expectations regarding future dividends and share repurchases; and other statements that are preceded by, followed by, or include the words “believes,” “expects,” “anticipates,” “intends,” “plans,” “estimates,” “foresees,” or similar expressions; and similar statements concerning anticipated future events and expectations that are not historical facts. 15 Table of Contents We caution you that these statements are not guarantees of future performance and are subject to numerous evolving risks and uncertainties that we may not be able to accurately predict or assess, including the risks and uncertainties we describe in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (“2022 Form 10-K”), Part II, Item 1A of this report, and other factors we describe from time to time in our periodic filings with the SEC. BUSINESS AND OVERVIEW Overview We are a worldwide operator, franchisor, and licensor of hotel, residential, timeshare, and other lodging properties under more than 30 brand names. Under our asset-light business model, we typically manage or franchise hotels, rather than own them . We discuss our operations in the following reportable business segments: (1) U.S. & Canada and (2) International. Terms of our management agreements vary, but our management fees generally consist of base management fees and incentive management fees. Base management fees are typically calculated as a percentage of property-level revenue. Incentive management fees are typically calculated as a percentage of a hotel profitability measure, and, in many cases (particularly in our U.S. & Canada, Europe, and Caribbean & Latin America regions), are subject to a specified owner return. Under our franchise agreements, franchise fees are typically calculated as a percentage of property-level revenue or a portion thereof. Additionally, we earn franchise fees for the use of our intellectual property, such as fees from our co-branded credit card, timeshare, and residential programs. Performance Measures We believe Revenue per Available Room (“RevPAR”), which we calculate by dividing room sales for comparable properties by room nights available for the period, is a meaningful indicator of our performance because it measures the period-over-period change in room revenues for comparable properties. RevPAR may not be comparable to similarly titled measures, such as revenues, and should not be viewed as necessarily correlating with our fee revenue. We also believe occupancy and average daily rate (“ADR”), which are components of calculating RevPAR, are meaningful indicators of our performance. Occupancy, which we calculate by dividing occupied rooms by total rooms available, measures the utilization of a property’s available capacity. ADR, which we calculate by dividing property room revenue by total rooms sold, measures average room price and is useful in assessing pricing levels. RevPAR, occupancy, and ADR statistics are on a systemwide basis for comparable properties, unless otherwise stated. Comparisons to prior periods are on a constant U.S. dollar basis. We calculate constant dollar statistics by applying exchange rates for the current period to the prior comparable period. We define our comparable properties as our properties that were open and operating under one of our brands since the beginning of the last full calendar year (since January 1, 2022 for the current period) and have not, in either the current or previous year: (1) undergone significant room or public space renovations or expansions, (2) been converted between company-operated and franchised, or (3) sustained substantial property damage or business interruption. Business Trends We saw strong global RevPAR improvement during the 2023 third quarter and 2023 first three quarters compared to the same periods in 2022. For the 2023 third quarter, worldwide RevPAR increased 8.8 percent compared to the 2022 third quarter, reflecting ADR growth of 4.1 percent and occupancy improvement of 3.2 percentage points. For the 2023 first three quarters, worldwide RevPAR increased 17.5 percent compared to the 2022 first three quarters, reflecting ADR growth of 6.7 percent and occupancy improvement of 6.4 percentage points. The increases in RevPAR were driven by improvement in all customer segments, including robust leisure demand as well as strengthening group and business transient demand as compared to the same periods in 2022. In the U.S. & Canada, RevPAR improved 4.3 percent in the 2023 third quarter compared to the 2022 third quarter, driven by ADR growth of 2.7 percent and occupancy improvement of 1.1 percentage points. In the 2023 first three quarters, U.S. & Canada RevPAR improved 10.8 percent compared to the 2022 first three quarters, driven 16 Table of Contents by ADR growth of 5.2 percent and occupancy improvement of 3.5 percentage points. While demand continued to be strong in the 2023 third quarter, the year-over-year growth in RevPAR continued to stabilize. Internationally, RevPAR improved 21.8 percent in the 2023 third quarter and 38.7 percent in the 2023 first three quarters compared to the same periods in 2022. The improvement in RevPAR compared to 2022 was driven by strengthening demand, particularly in Greater China and Asia Pacific excluding China, where various geographic markets were impacted by COVID-19 and government-imposed travel restrictions during the 2022 comparable periods. Our business is subject to the effects of changes in global and regional economic, geopolitical and other conditions and these conditions can change rapidly. We continue to monitor these conditions, and although we are not currently seeing signs of a slowdown in lodging demand in most markets, the lodging booking window is short and trends can change quickly. Starwood Data Security Incident On November 30, 2018, we announced a data security incident involving unauthorized access to the Starwood reservations database (the “Data Security Incident”). We discontinued use of t he Starwood reservations database for business operations at the end of 2018 . We are currently unable to reasonably estimate the range of total possible financial impact to the Company from the Data Security Incident in excess of the expenses already recorded. However, we do not believe this incident will impact our long-term financial health. Although our insurance program includes coverage designed to limit our exposure to losses such as those related to the Data Security Incident, that insurance may not be sufficient or available to cover all of our expenses or other losses (including monetary payments to regulators and/or litigants) related to the Data Security Incident. In addition, certain expenses by their nature (such as, for example, expenses related to enhancing our cybersecurity program) are not covered by our insurance program. We expect to incur ongoing legal and other expenses associated with the Data Security Incident in future periods, and we believe it is reasonably possible that we may incur additional monetary payments to regulators and/or litigants in excess of the amounts already recorded and costs in connection with compliance with any settlements or resolutions of matters. See Note 5 for additional information related to legal proceedings and governmental investigations related to the Data Security Incident. System Growth and Pipeline At the end of the 2023 third quarter, our system had 8,675 properties (1,581,002 rooms), compared to 8,288 properties (1,525,407 rooms) at year-end 2022 and 8,162 properties (1,507,350 rooms) at the end of the 2022 third quarter. The increase compared to year-end 2022 reflected gross additions of 430 properties (61,304 rooms), including 149 properties (17,300 rooms) from the City Express acquisition, and deletions of 42 properties (5,840 rooms). Our 2023 first three quarters gross room additions included approximately 47,300 rooms located outside U.S. & Canada and approximately 10,500 rooms converted from competitor brands. At the end of the 2023 third quarter, we had nearly 557,000 hotel rooms in our development pipeline, which includes roughly 40,300 hotel rooms approved for development but not yet under signed contracts. Approximately 238,000 hotel rooms in the pipeline, including approximately 37,000 rooms from the exclusive, long-term strategic licensing agreement with MGM Resorts International that we announced in July 2023, were under construction as of the end of the 2023 third quarter. Over half of the rooms in our development pipeline are outside U.S. & Canada. We currently expect full-year 2023 net rooms growth of approximately 4.2 to 4.5 percent. This estimate excludes the anticipated addition of rooms to our system under our agreement with MGM Resorts International discussed above, which we now expect to be added in early 2024. 17 Table of Contents Properties and Rooms At September 30, 2023, we operated, franchised, and licensed the following properties and rooms: Managed Franchised/Licensed Owned/Leased Residential Total Properties Rooms Properties Rooms Properties Rooms Properties Rooms Properties Rooms U.S. & Canada 629 215,952 5,217 747,617 14 4,656 67 7,166 5,927 975,391 International 1,410 358,039 1,155 210,458 37 8,776 52 5,444 2,654 582,717 Timeshare — — 93 22,745 — — — — 93 22,745 Yacht — — 1 149 — — — — 1 149 Total 2,039 573,991 6,466 980,969 51 13,432 119 12,610 8,675 1,581,002 Lodging Statistics The following tables present RevPAR, occupancy, and ADR statistics for comparable properties. Systemwide statistics include data from our franchised properties, in addition to our company-operated properties. Three Months Ended September 30, 2023 and Change vs. Three Months Ended September 30, 2022 RevPAR Occupancy Average Daily Rate 2023 vs. 2022 2023 vs. 2022 2023 vs. 2022 Comparable Company-Operated Properties U.S. & Canada $ 169.46 4.4 % 70.8 % 1.3 % pts. $ 239.40 2.5 % Greater China $ 93.41 48.6 % 72.5 % 14.5 % pts. $ 128.93 18.9 % Asia Pacific excluding China $ 116.21 35.2 % 70.7 % 9.3 % pts. $ 164.45 17.5 % Caribbean & Latin America $ 138.64 2.4 % 61.1 % 2.4 % pts. $ 226.76 (1.6) % Europe $ 226.46 10.6 % 75.5 % 3.2 % pts. $ 300.01 6.0 % Middle East & Africa $ 101.11 18.1 % 65.4 % 4.2 % pts. $ 154.50 10.5 % International - All (1) $ 121.93 25.8 % 70.5 % 9.0 % pts. $ 172.91 9.7 % Worldwide (2) $ 142.51 13.8 % 70.6 % 5.7 % pts. $ 201.76 4.6 % Comparable Systemwide Properties U.S. & Canada $ 133.92 4.3 % 73.1 % 1.1 % pts. $ 183.28 2.7 % Greater China $ 87.31 47.4 % 71.3 % 14.5 % pts. $ 122.40 17.4 % Asia Pacific excluding China $ 117.73 36.4 % 70.4 % 8.6 % pts. $ 167.12 19.7 % Caribbean & Latin America $ 121.87 2.8 % 62.4 % 2.5 % pts. $ 195.43 (1.4) % Europe $ 175.50 9.8 % 74.7 % 3.2 % pts. $ 235.04 5.0 % Middle East & Africa $ 98.24 20.2 % 65.3 % 3.5 % pts. $ 150.50 13.8 % International - All (1) $ 120.43 21.8 % 70.1 % 7.6 % pts. $ 171.85 8.5 % Worldwide (2) $ 129.73 8.8 % 72.1 % 3.2 % pts. $ 179.84 4.1 % 18 Table of Contents Nine Months Ended September 30, 2023 and Change vs. Nine Months Ended September 30, 2022 RevPAR Occupancy Average Daily Rate 2023 vs. 2022 2023 vs. 2022 2023 vs. 2022 Comparable Company-Operated Properties U.S. & Canada $ 173.39 12.4 % 69.9 % 4.8 % pts. $ 248.07 4.7 % Greater China $ 89.14 78.2 % 68.9 % 22.0 % pts. $ 129.41 21.2 % Asia Pacific excluding China $ 114.87 58.1 % 68.5 % 14.3 % pts. $ 167.63 25.2 % Caribbean & Latin America $ 165.92 17.8 % 63.4 % 4.9 % pts. $ 261.59 8.7 % Europe $ 188.49 25.0 % 70.5 % 9.0 % pts. $ 267.38 9.0 % Middle East & Africa $ 118.53 17.8 % 66.2 % 4.0 % pts. $ 178.96 10.7 % International - All (1) $ 119.30 42.0 % 68.2 % 14.1 % pts. $ 174.86 12.7 % Worldwide (2) $ 142.74 24.7 % 68.9 % 10.1 % pts. $ 207.02 6.5 % Comparable Systemwide Properties U.S. & Canada $ 130.48 10.8 % 70.9 % 3.5 % pts. $ 183.93 5.2 % Greater China $ 83.53 77.9 % 67.8 % 22.2 % pts. $ 123.11 19.8 % Asia Pacific excluding China $ 115.15 58.7 % 68.4 % 13.6 % pts. $ 168.42 27.1 % Caribbean & Latin America $ 141.96 18.2 % 64.4 % 5.2 % pts. $ 220.49 8.6 % Europe $ 146.12 25.8 % 68.6 % 9.8 % pts. $ 212.87 7.9 % Middle East & Africa $ 111.67 20.3 % 65.3 % 3.7 % pts. $ 171.06 13.5 % International - All (1) $ 115.90 38.7 % 67.4 % 12.9 % pts. $ 171.93 12.3 % Worldwide (2) $ 125.96 17.5 % 69.8 % 6.4 % pts. $ 180.34 6.7 % (1) Includes Greater China, Asia Pacific excluding China, Caribbean & Latin America, Europe, and Middle East & Africa. (2) Includes U.S. & Canada and International - All. CONSOLIDATED RESULTS Our consolidated results in the 2023 third quarter and 2023 first three quarters improved compared to the 2022 third quarter and 2022 first three quarters due to the continued recovery in lodging demand from the impacts of COVID-19. The discussion below presents an additional analysis of our consolidated results of operations for the 2023 third quarter compared to the 2022 third quarter and for the 2023 first three quarters compared to the 2022 first three quarters. Fee Revenues Three Months Ended Nine Months Ended (in millions) September 30, 2023 September 30, 2022 Change 2023 vs. 2022 September 30, 2023 September 30, 2022 Change 2023 vs. 2022 Base management fees $ 306 $ 275 $ 31 11 % $ 917 $ 757 $ 160 21 % Franchise fees 748 678 70 10 % 2,126 1,847 279 15 % Incentive management fees 143 106 37 35 % 537 343 194 57 % Gross fee revenues 1,197 1,059 138 13 % 3,580 2,947 633 21 % Contract investment amortization (23) (22) (1) (5) % (66) (65) (1) (2) % Net fee revenues $ 1,174 $ 1,037 $ 137 13 % $ 3,514 $ 2,882 $ 632 22 % The increases in base management fees in the 2023 third quarter and 2023 first three quarters primarily reflected higher RevPAR. The increase in the 2023 first three quarters was also due to unit growth ($19 million), partially offset by net unfavorable foreign exchange rates ($18 million). The increases in franchise fees in the 2023 third quarter and 2023 first three quarters primarily reflected higher RevPAR, unit growth ($29 million and $73 million, respectively), and higher co-branded credit card fees ($15 million and $43 million, respectively). The increases in incentive management fees in the 2023 third quarter and 2023 first three quarters primarily reflected higher profits at many managed hotels. 19 Table of Contents Owned, Leased, and Other Three Months Ended Nine Months Ended (in millions) September 30, 2023 September 30, 2022 Change 2023 vs. 2022 September 30, 2023 September 30, 2022 Change 2023 vs. 2022 Owned, leased, and other revenue $ 363 $ 345 $ 18 5 % $ 1,109 $ 971 $ 138 14 % Owned, leased, and other - direct expenses 293 301 (8) (3) % 861 779 82 11 % Owned, leased, and other, net $ 70 $ 44 $ 26 59 % $ 248 $ 192 $ 56 29 % Owned, leased, and other revenue, net of direct expenses, increased in the 2023 third quarter primarily due to an estimated monetary payment of $19 million recorded in the 2022 third quarter related to a portfolio of 12 leased hotels in the U.S. & Canada. Owned, leased, and other revenue, net of direct expenses, increased in the 2023 first three quarters primarily due to stronger results at our owned and leased properties and an estimated monetary payment of $31 million recorded in the 2022 first three quarters related to a portfolio of 12 leased hotels in the U.S. & Canada, partially offset by $29 million of subsidies received for certain of our leased hotels in the 2022 first three quarters under German government COVID-19 assistance programs. Cost Reimbursements Three Months Ended Nine Months Ended (in millions) September 30, 2023 September 30, 2022 Change 2023 vs. 2022 September 30, 2023 September 30, 2022 Change 2023 vs. 2022 Cost reimbursement revenue $ 4,391 $ 3,931 $ 460 12 % $ 12,995 $ 10,997 $ 1,998 18 % Reimbursed expenses 4,238 3,786 452 12 % 12,740 10,792 1,948 18 % Cost reimbursements, net $ 153 $ 145 $ 8 6 % $ 255 $ 205 $ 50 24 % Cost reimbursements, net (cost reimbursement revenue, net of reimbursed expenses) varies due to timing differences between the costs we incur for centralized programs and services and the related rei mbursemen ts we receive from hotel owners and franchisees. Over the long term, our centralized programs and services are not designed to impact our economics, either positively or negatively. The increases in cost reimbursements, net in the 2023 third quarter and 2023 first three quarters primarily reflected Loyalty Program activity, primarily due to higher program revenues, and higher revenues, net of expenses, for our centralized programs and services. The increase in the 2023 first three quarters was partially offset by higher expenses related to our insurance program. Other Operating Expenses Three Months Ended Nine Months Ended (in millions) September 30, 2023 September 30, 2022 Change 2023 vs. 2022 September 30, 2023 September 30, 2022 Change 2023 vs. 2022 Depreciation, amortization, and other $ 46 $ 50 $ (4) (8) % $ 138 $ 147 $ (9) (6) % General, administrative, and other 239 216 23 11 % 681 655 26 4 % Merger-related charges and other 13 2 11 550 % 52 11 41 373 % Merger-related charges and other expenses increased in the 2023 first three quarters primarily due to the Data Security Incident discussed in Note 5. 20 Table of Contents Non-Operating Income (Expense) Three Months Ended Nine Months Ended (in millions) September 30, 2023 September 30, 2022 Change 2023 vs. 2022 September 30, 2023 September 30, 2022 Change 2023 vs. 2022 Gains and other income, net $ 28 $ 3 $ 25 833 % $ 33 $ 9 $ 24 267 % Interest expense (146) (100) (46) (46) % (412) (288) (124) (43) % Interest income 7 7 — — % 21 18 3 17 % Equity in earnings 1 1 — — % 9 18 (9) (50) % Gains and other income, net increased in the 2023 third quarter and 2023 first three quarters primarily due to a gain on the sale of a hotel in the Caribbean & Latin America region ($24 million). Interest expense increased in the 2023 third quarter and 2023 first three quarters primarily due to higher commercial paper borrowings and interest rates ($23 million and $57 million, respectively) and higher debt balances driven by Senior Notes issuances, net of maturities ($19 million and $48 million, respectively). The increase in the 2023 first three quarters was also due to higher interest rates on floating rate debt, including the effect of interest rate swaps ($17 million). Equity in earnings decreased in the 2023 first three quarters primarily due to gains recorded in the prior year on the sale of properties held by equity method investees ($23 million). Income Taxes Three Months Ended Nine Months Ended (in millions) September 30, 2023 September 30, 2022 Change 2023 vs. 2022 September 30, 2023 September 30, 2022 Change 2023 vs. 2022 Provision for income taxes $ (237) $ (239) $ 2 1 % $ (562) $ (538) $ (24) (4) % Provision for income taxes decreased by $2 million in the 2023 third quarter primarily due to the prior year tax expense from the completion of tax audits ($27 million), partially offset by the increase in operating income ($23 million). Provision for income taxes increased by $24 million in the 2023 first three quarters primarily due to the increase in operating income ($133 million) and a shift in earnings to jurisdictions with higher tax rates ($17 million), partially offset by the current year release of tax reserves ($103 million), which was mostly due to the completion of a prior year tax audit, and the prior year tax expense from the completion of tax audits ($27 million). BUSINESS SEGMENTS Our segment results in the 2023 third quarter and 2023 first three quarters improved compared to the 2022 third quarter and 2022 first three quarters due to the continued recovery in lodging demand from the impacts of COVID-19. The following discussion presents an additional analysis of the operating results of our reportable business segments for the 2023 third quarter compared to the 2022 third quarter and for the 2023 first three quarters compared to the 2022 first three quarters. Three Months Ended Nine Months Ended (in millions) September 30, 2023 September 30, 2022 Change 2023 vs. 2022 September 30, 2023 September 30, 2022 Change 2023 vs. 2022 U.S. & Canada Segment revenues $ 4,333 $ 4,000 $ 333 8 % $ 13,113 $ 11,388 $ 1,725 15 % Segment profit 707 652 55 8 % 2,120 1,833 287 16 % International Segment revenues 1,125 908 217 24 % 3,257 2,458 799 33 % Segment profit 318 227 91 40 % 865 568 297 52 % 21 Table of Contents Properties Rooms September 30, 2023 September 30, 2022 vs. September 30, 2022 September 30, 2023 September 30, 2022 vs. September 30, 2022 U.S. & Canada 5,927 5,818 109 2 % 975,391 961,765 13,626 1 % International 2,654 2,252 402 18 % 582,717 522,884 59,833 11 % U.S. & Canada Third Quarter U.S. & Canada 2023 third quarter segment profit increased primarily due to: • $41 million of higher gross fee revenues, primarily reflecting higher comparable systemwide RevPAR driven by increases in both ADR and occupancy, as well as unit growth; and • $13 million of higher owned, leased, and other revenue, net of direct expenses, primarily reflecting a $19 million estimated monetary payment recorded in the 2022 third quarter related to a portfolio of 12 leased hotels in the U.S. & Canada. First Three Quarters U.S. & Canada 2023 first three quarters segment profit increased primarily due to: • $292 million of higher gross fee revenues, primarily reflecting higher comparable systemwide RevPAR driven by increases in both ADR and occupancy, unit growth, and higher profits at certain managed hotels; and • $38 million of higher owned, leased, and other revenue, net of direct expenses, primarily reflecting a $31 million estimated monetary payment recorded in the 2022 first three quarters related to a portfolio of 12 leased hotels in the U.S. & Canada; partially offset by: • $26 million of lower cost reimbursement revenue, net of reimbursed expenses. International Third Quarter International 2023 third quarter segment profit increased primarily due to: • $78 million of higher gross fee revenues, primarily reflecting higher profits at certain managed hotels and higher comparable systemwide RevPAR driven by increases in both ADR and occupancy in nearly all regions; and • $25 million of higher gains and other income, net, primarily reflecting a gain on the sale of a hotel property in the Caribbean & Latin America region ($24 million). First Three Quarters International 2023 first three quarters segment profit increased primarily due to: • $294 million of higher gross fee revenues, primarily reflecting higher comparable systemwide RevPAR driven by increases in both ADR and occupancy in all regions, higher profits at certain managed hotels, and unit growth, partially offset by net unfavorable foreign exchange rates; and • $22 million of higher gains and other income, net, primarily reflecting a gain on the sale of a hotel in the Caribbean & Latin America region ($24 million); partially offset by: 22 Table of Contents • $28 million of lower cost reimbursement revenue, net of reimbursed expenses; and • $2 million of lower owned, leased, and other revenue, net of direct expenses, primarily reflecting subsidies received for certain of our leased hotels in the 2022 first three quarters under German government COVID-19 assistance programs, partially offset by stronger results at our owned and leased properties. LIQUIDITY AND CAPITAL RESOURCES Our long-term financial objectives include maintaining diversified financing sources, optimizing the mix and maturity of our long-term debt, and reducing our working capital. At the end of the 2023 third quarter, our long-term debt had a weighted average interest rate of 4.4 percent and a weighted average maturity of approximately 5.2 years. Including the effect of interest rate swaps, the ratio of our fixed-rate long-term debt to our total long-term debt was 0.9 to 1.0 at the end of the 2023 third quarter. Sources of Liquidity Our Credit Facility We are party to a $4.5 billion multicurrency revolving credit agreement (the “Credit Facility”). Available borrowings under the Credit Facility support our commercial paper program and general corporate needs. Borrowings under the Credit Facility generally bear interest at SOFR (the Secured Overnight Financing Rate) plus a spread based on our public debt rating. We also pay quarterly fees on the Credit Facility at a rate based on our public debt rating. We classify outstanding borrowings under the Credit Facility and outstanding commercial paper borrowings as long-term based on our ability and intent to refinance the outstanding borrowings on a long-term basis. The Credit Facility expires on December 14, 2027. The Credit Facility contains certain covenants, including a single financial covenant that limits our maximum leverage (consisting of the ratio of Adjusted Total Debt to EBITDA, each as defined in the Credit Facility) to not more than 4.5 to 1.0. Our outstanding public debt does not contain a corresponding financial covenant or a requirement that we maintain certain financial ratios. We currently satisfy the covenants in our Credit Facility and public debt instruments, including the leverage covenant under the Credit Facility, and do not expect the covenants will restrict our ability to meet our anticipated borrowing and liquidity needs. We monitor the status of the capital markets and regularly evaluate the effect that changes in capital market conditions may have on our ability to fund our liquidity needs. We believe the Credit Facility, and our access to capital markets, together with cash we expect to generate from operations, remain adequate to meet our liquidity requirements. Commercial Paper We issue commercial paper in the U.S. Because we do not have purchase commitments from buyers for our commercial paper, our ability to issue commercial paper is subject to market demand. We do not expect that fluctuations in the demand for commercial paper will affect our liquidity, given our borrowing capacity under the Credit Facility and access to capital markets. Uses of Cash Cash, cash equivalents, and restricted cash totaled $743 million at September 30, 2023, an increase of $218 million from year-end 2022, primarily due to net cash provided by operating activities ($2,419 million), Senior Notes issuances, net of repayments ($1,627 million), net commercial paper borrowings ($100 million), and the sale of a hotel in the Caribbean & Latin America region ($61 million), partially offset by share repurchases ($2,988 million), dividends paid ($435 million), capital and technology expenditures ($318 million), financing outflows for 23 Table of Contents employee stock-based compensation withholding taxes ($105 million), and the City Express asset acquisition ($102 million). Net cash provided by operating activities increased by $497 million in the 2023 first three quarters compared to the 2022 first three quarters, primarily due to higher net income (adjusted for non-cash items), working capital changes driven by accounts receivable timing, and higher cash generated by our Loyalty Program, partially offset by higher cash paid for income taxes. Cash inflow from our Loyalty Program in 2020 included $920 million of cash received from the prepayment of certain future revenues under the 2020 amendments to our existing U.S.-issued co-branded credit card agreements, which reduced in both the 2023 first three quarters and 2022 first three quarters, and will in the future reduce, the amount of cash we receive from these card issuers. We expect such reductions to end by year-end 2023. Our ratio of current assets to current liabilities was 0.5 to 1.0 at the end of the 2023 third quarter. We have significant borrowing capacity under our Credit Facility should we need additional working capital. Capital Expenditures and Other Investments We made capital and technology expenditures of $318 million in the 2023 first three quarters and $192 million in the 2022 first three quarters. Capital and technology expenditures in the 2023 first three quarters increased by $126 million compared to the 2022 first three quarters, primarily reflecting higher spending on improvements to our worldwide technology systems, the overwhelming portion of which is expected to be reimbursed over time. We expect capital expenditures and other investments will total approximately $900 million to $950 million for the 2023 full year, including capital and technology expenditures, the completed City Express acquisition, loan advances, contract acquisition costs, and other investing activities (including approximately $200 million for maintenance capital spending). Share Repurchases and Dividends We repurchased 4.8 million shares of our common stock for $950 million in the 2023 third quarter. Year-to-date through October 31, 2023, we repurchased 18.3 million shares for $3.3 billion. For additional information, see “Issuer Purchases of Equity Securities” in Part II, Item 2. Our Board of Directors declared the following quarterly cash dividends in 2023 to date: (1) $0.40 per share declared on February 10, 2023 and paid on March 31, 2023 to stockholders of record on February 24, 2023; (2) $0.52 per share declared on May 12, 2023 and paid on June 30, 2023 to stockholders of record on May 26, 2023; and (3) $0.52 per share declared on August 3, 2023 and paid on September 29, 2023 to stockholders of record on August 17, 2023. We expect to continue to return cash to stockholders through a combination of share repurchases and cash dividends. Material Cash Requirements As of the end of the 2023 third quarter, there have been no material changes to our cash requirements as disclosed in our 2022 Form 10-K. See Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of our 2022 Form 10-K for more information about our cash requirements. Also, see Note 6 for information on our long-term debt. At September 30, 2023, projected Deemed Repatriation Transition Tax payments under the U.S. tax legislation enacted on December 22, 2017, commonly referred to as the 2017 Tax Cuts and Jobs Act, totaled $243 million, of which $108 million is payable within the next 12 months from September 30, 2023. CRITICAL ACCOUNTING POLICIES AND ESTIMATES Our preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect reported amounts and related disclosures. We have discussed those policies and estimates that we believe are critical and require the use of complex judgment in their application in our 2022 Form 10-K. We 24 Table of Contents have made no material changes to our critical accounting policies or the methodologies or assumptions that we apply under them. Item 3. Quantitative and Qualitative Disclosures About Market Risk Our exposure to market risk has not materially changed since December 31, 2022. See Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” in our 2022 Form 10-K for more information on our exposure to market risk.