What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-13 compared with 2023-02-14 · 150 added, 160 removed, 893 unchanged (26% of the section changed)

Financial Statements and Supplementary Data.

Financial Statements.

The following financial information is included on the pages indicated:

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Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Consolidated Statements of Income (Loss)

Consolidated Statements of Comprehensive Income (Loss)

Report of Independent Registered Public Accounting Firm

Consolidated Statements of Income

Consolidated Statements of Comprehensive Income

Consolidated Balance Sheets

Consolidated Statements of Cash Flows

Consolidated Statements of Stockholders’ Equity

Consolidated Statements of Stockholders’ (Deficit) Equity

Notes to Consolidated Financial Statements

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generally accepted accounting principles.

Ernst & Young LLP, the independent registered public accounting firm that audited the Company’s consolidated financial statements included in this report, has issued an attestation report on the effectiveness of the Company’s internal control over financial reporting, a copy of which appears on the following page.

Ernst & Young LLP (PCAOB ID:

42 ), the independent registered public accounting firm that audited the Company’s consolidated financial statements included in this report, has issued an attestation report on the effectiveness of the Company’s internal control over financial reporting, a copy of which appears on the following page.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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(the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, and the related consolidated statements of income (loss), comprehensive income (loss), stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes, and our report dated February 14, 2023 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, and the related consolidated statements of income, comprehensive income, stockholders’ (deficit) equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes, and our report dated February 13, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

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We have audited the accompanying consolidated balance sheets of Marriott International, Inc.

(the Company) as of December 31, 2022 and 2021, the related consolidated statements of income (loss), comprehensive income (loss), stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”).

(the Company) as of December 31, 2023, and 2022, the related consolidated statements of income, comprehensive income, stockholders’ (deficit) equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S.

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Auditing Loyalty Program results is complex due to:

(1) the complexity of models and high volume of data used to monitor and account for Loyalty Program results, (2) the complexity in accounting for the amendments to the Company’s domestic co-branded credit card agreements, as well as the judgment in estimating the relative standalone selling price of the related performance obligations, and (3) the complexity and judgment of estimating the standalone selling price per Loyalty Program point, including both the estimate of variable consideration under the Company’s co-branded credit card agreements which has significant estimation uncertainty associated with projecting future cardholder spending and redemption activity, and the estimated breakage of Loyalty Program points which requires the use of specialists.

(1) the complexity of models and high volume of data used to monitor and account for Loyalty Program results and (2) the complexity and judgment of estimating the standalone selling price per Loyalty Program point, including both the estimate of variable consideration under the Company’s co-branded credit card agreements which has significant estimation uncertainty associated with projecting future cardholder spending and redemption activity, and the estimated breakage of Loyalty Program points which requires the use of specialists.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process of accounting for the Loyalty Program.

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To test the recognition of revenues and costs associated with the Loyalty Program, we performed audit procedures that included, among others, testing the clerical accuracy and consistency with US GAAP of the accounting model developed by the Company to recognize revenue and costs associated with the Loyalty Program, and testing significant inputs into the accounting model, including the estimated standalone selling price and recognition of points earned and redeemed during the period.

We involved our valuation specialists to assist in our testing procedures with respect to the estimate of relative standalone selling price of the performance obligations associated with the amendments to the domestic co-branded credit card agreements.

We involved our actuarial professionals to assist in our testing procedures with respect to the estimate of the breakage of Loyalty Program points.

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Auditing the classification of general and administrative expenses and reimbursed expenses is complex due to:

(1) judgment associated with testing management’s conclusions regarding the allocation of costs between reimbursable and non-reimbursable expenses, (2) the complexity associated with allocating above-property expenses to hotel owners and franchisees due to the high volume of data used to monitor and account for reimbursed expenses and (3) incentives within management’s compensation structure designed to achieve certain financial targets that exclude the impact of reimbursed expenses.

(1) judgment associated with testing management’s conclusions regarding the allocation of costs between reimbursable and non-reimbursable expenses and (2) incentives within management’s compensation structure designed to achieve certain financial targets that exclude the impact of reimbursed expenses.

For example, we tested management’s controls over the review of the allocation of certain costs to determine if they were reasonably classified.

To test the recognition of reimbursed expenses for appropriate classification, we performed audit procedures that included, among others, (1) testing a sample of transactions that were classified within reimbursed expenses in order to evaluate the appropriate accounting treatment and financial statement classification pursuant to the terms of the management and franchise agreements, (2) performed analytical procedures over total reimbursed expenses and general and administrative expenses in order to identify any trends or indicators of material errors in the classification of expenses, (3) tested manual journal entries made to reimbursed expenses and general and administrative expenses and (4) evaluated the methodology of cost allocations, including any material changes to allocations during the period.

To test the recognition of reimbursed expenses for appropriate classification, we performed audit procedures that included, among others, (1) testing manual journal entries made to reimbursed expenses and general and administrative expenses and (2) performing analytical procedures over total reimbursed expenses and general and administrative expenses in order to identify any trends or indicators of material errors in the classification of expenses.

/s/ Ernst & Young LLP

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MARRIOTT INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

CONSOLIDATED STATEMENTS OF INCOME

Fiscal Years 2023, 2022, and 2021

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Owned, leased, and other - direct

1,165 1,074 734

Depreciation, amortization, and other 189 193 220

General, administrative, and other 1,011 891 823

Restructuring, merger-related charges, and other 12 8 267

Merger-related charges and other

Reimbursed expenses (1)

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Equity in earnings (losses) (1)

INCOME BEFORE INCOME TAXES 3,378 3,114 1,180

Provision for income taxes

( 295 ) ( 756 ) ( 81 )

INCOME (LOSS) BEFORE INCOME TAXES 3,114 1,180 ( 466 )

(Provision) benefit for income taxes ( 756 ) ( 81 ) 199

NET INCOME (LOSS) $ 2,358 $ 1,099 $ ( 267 )

EARNINGS (LOSS) PER SHARE

Earnings (loss) per share – basic $ 7.27 $ 3.36 $ ( 0.82 )

Earnings (loss) per share – diluted $ 7.24 $ 3.34 $ ( 0.82 )

NET INCOME $ 3,083 $ 2,358 $ 1,099

EARNINGS PER SHARE

Earnings per share – basic $ 10.23 $ 7.27 $ 3.36

Earnings per share – diluted $ 10.18 $ 7.24 $ 3.34

(1) See Note 15 for disclosure of related party amounts.

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MARRIOTT INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Fiscal Years 2023, 2022, and 2021

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2023 2022 2021

Net income (loss) $ 2,358 $ 1,099 $ ( 267 )

Net income $ 3,083 $ 2,358 $ 1,099

Other comprehensive income (loss)

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Total other comprehensive income (loss), net of tax 82 ( 387 ) ( 207 )

Comprehensive income (loss) $ 1,971 $ 892 $ ( 41 )

Comprehensive income $ 3,165 $ 1,971 $ 892

See Notes to Consolidated Financial Statements.

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$ 25,674 $ 24,815

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY

Current liabilities

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Other noncurrent liabilities 1,482 1,842

Stockholders’ equity

Stockholders’ (deficit) equity

Class A Common Stock 5 5

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OPERATING ACTIVITIES

Net income (loss) $ 2,358 $ 1,099 $ ( 267 )

Net income $ 3,083 $ 2,358 $ 1,099

Adjustments to reconcile to cash provided by operating activities:

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Contract acquisition costs ( 221 ) ( 149 ) ( 210 )

Restructuring, merger-related charges, and other ( 8 ) ( 10 ) 200

Merger-related charges and other 47 ( 8 ) ( 10 )

Working capital changes 69 ( 542 ) 110

Loss on extinguishment of debt — — 164

Deferred revenue changes and other 69 ( 144 ) 1,140

21 69 ( 144 )

Net cash provided by operating activities 3,170 2,363 1,177

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Capital and technology expenditures ( 452 ) ( 332 ) ( 183 )

Asset acquisition ( 101 ) — —

Dispositions 71 1 12

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Other 33 31 ( 43 )

Net cash (used in) provided by investing activities ( 297 ) ( 187 ) 35

Net cash used in investing activities

( 465 ) ( 297 ) ( 187 )

FINANCING ACTIVITIES

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(DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

( 159 ) ( 896 ) 527

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period (1)

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MARRIOTT INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY

Fiscal Years 2023, 2022, and 2021

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324.4 Balance at December 31, 2020 $ 430 $ 5 $ 5,851 $ 9,206 $ ( 14,497 ) $ ( 135 )

— Adoption of ASU 2016-13 ( 15 ) — — ( 15 ) — —

— Net loss ( 267 ) — — ( 267 ) — —

— Other comprehensive income 226 — — — — 226

— Dividends ($ 0.48 per share)

( 156 ) — — ( 156 ) — —

— Net income 1,099 — — 1,099 — —

— Other comprehensive loss ( 207 ) — — — — ( 207 )

1.9 Stock-based compensation plans 92 — 41 — 51 —

( 1.0 ) Purchase of treasury stock ( 150 ) — — — ( 150 ) —

326.3 Balance at December 31, 2021 1,414 5 5,892 10,305 ( 14,446 ) ( 342 )

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— Other comprehensive loss ( 387 ) — — — — ( 387 )

— Dividends ($ 1.00 per share)

( 321 ) — — ( 321 ) — —

1.1 Stock-based compensation plans 104 — 73 — 31 —

( 16.8 ) Purchase of treasury stock ( 2,600 ) — — — ( 2,600 ) —

310.6 Balance at December 31, 2022 568 5 5,965 12,342 ( 17,015 ) ( 729 )

— Net income 3,083 — — 3,083 — —

— Other comprehensive loss ( 387 ) — — — — ( 387 )

— Other comprehensive income 82 — — — — 82

— Dividends ($ 1.96 per share)

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Balance at December 31, 2023 $ ( 682 ) $ 5 $ 6,051 $ 14,838 $ ( 20,929 ) $ ( 647 )

(1) Our restated certificate of incorporation authorizes 800 million shares of our common stock, with a par value of $ 0.01 per share and 10 million shares of preferred stock, without par value.

At year-end 2022, we had 310.6 million of these authorized shares of our common stock and no preferred stock outstanding.

(1) Our restated certificate of incorporation authorizes 800,000,000 shares of our common stock, with a par value of $ 0.01 per share and 10,000,000 shares of preferred stock, without par value.

At year-end 2023, we had 290,539,975 of these authorized shares of our common stock and no preferred stock outstanding.

See Notes to Consolidated Financial Statements.

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and subsidiaries (referred to in this report as “we,” “us,” “Marriott,” or the “Company”).

In order to make this report easier to read, we also refer throughout to (1) our Consolidated Financial Statements as our “Financial Statements,” (2) our Consolidated Statements of Income (Loss) as our “Income Statements,” (3) our Consolidated Balance Sheets as our “Balance Sheets,” (4) our Consolidated Statements of Cash Flows as our “Statements of Cash Flows,” (5) our properties, brands, or markets in the United States and Canada as “U.S.

In order to make this report easier to read, we also refer throughout to (1) our Consolidated Financial Statements as our “Financial Statements,” (2) our Consolidated Statements of Income as our “Income Statements,” (3) our Consolidated Balance Sheets as our “Balance Sheets,” (4) our Consolidated Statements of Cash Flows as our “Statements of Cash Flows,” (5) our properties, brands, or markets in the United States and Canada as “U.S.

& Canada,” and (6) our properties, brands, or markets in our Caribbean and Latin America, Europe, Middle East and Africa, Greater China, and Asia Pacific excluding China regions, as “International.” In addition, references throughout to numbered “Notes” refer to these Notes to Consolidated Financial Statements, unless otherwise stated.

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Base Management and Incentive Management Fees :

For our managed hotels, we have performance obligations to provide hotel management services and a license to our intellectual property for the use of our brand names.

As compensation for such services, we are generally entitled to receive base fees, which are a percentage of the revenues of hotels, and incentive management fees, which are generally based on a measure of hotel profitability.

For our managed properties, we have performance obligations to provide hotel management services and a license to our intellectual property for the use of our brand names.

As compensation for such services, we are generally entitled to receive base fees, which are a percentage of the revenues of properties, and incentive management fees, which are generally based on a measure of hotel profitability.

Both the base and incentive management fees are variable consideration, as the transaction price is based on a percentage of revenue or profit, as defined in each contract.

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Franchise Fee and Royalty Fee Revenue :

For our franchised hotels, we have a performance obligation to provide franchisees and operators a license to our intellectual property for use of certain of our brand names.

For our franchised properties, we have a performance obligation to provide franchisees and operators a license to our intellectual property for use of certain of our brand names.

As compensation for such services, we are typically entitled to initial application fees and ongoing royalty fees.

Our ongoing royalty fees represent variable consideration, as the transaction price is based on a percentage of certain revenues of the hotels, as defined in each contract.

Our ongoing royalty fees represent variable consideration, as the transaction price is based on a percentage of certain revenues of the properties, as defined in each contract.

We recognize royalty fees on a monthly basis over the term of the agreement as those amounts become payable.

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We provide certain hotel design and construction review (“Global Design”) services to our managed and franchised hotel owners, generally during the period prior to a hotel’s opening or during the period a hotel is converting to a Marriott brand (the “pre-opening period”).

As compensation for such services, we may be entitled to receive a one-time fixed fee that is payable during the pre-opening period of the hotel.

As compensation for such services, we may be entitled to receive a fixed fee that is payable during the pre-opening period of the hotel.

As these services are not a distinct performance obligation, we recognize the fees on a straight-line basis over the initial term of the management or franchise agreement within the “Owned, leased, and other revenue” caption of our Income Statements.

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We operate our Loyalty Program as a cross-brand marketing program to participating properties.

Our management and franchise agreements require that properties reimburse us for a portion of the costs of operating the Loyalty Program, with no added mark-up, including costs related to the following activities, which we expense as incurred in our “Reimbursed expense” caption:

marketing, promotion, communication with, and performing member services for Loyalty Program members.

marketing, promotion, and communications and services provided to Loyalty Program members.

We generally receive monthly cash contributions from managed, franchised, owned, and leased properties based on a portion of qualified spend by Loyalty Program members (when the points are earned).

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We record deferred revenue when we receive payment, or have the unconditional right to receive payment, in advance of the satisfaction of our performance obligations related to franchise application and relicensing fees, Global Design fees, credit card branding license fees, and our Loyalty Program.

Current and noncurrent deferred revenue decreased by $ 196 million, to $ 1,331 million at December 31, 2022, from $ 1,527 million at December 31, 2021, primarily as a result of $ 330 million of revenue recognized in 2022 that was deferred as of December 31, 2021, as well as the reclassification from deferred revenue to the liability for guest loyalty program, which we discuss below.

The decrease was partially offset by revenue deferred in 2022 related to our co-branded credit cards, gift cards, certain centralized programs and services fees, and franchise application and relicensing fees.

Our current and noncurrent deferred revenue decreased by $ 108 million, to $ 1,223 million at December 31, 2023, from $ 1,331 million at December 31, 2022, primarily as a result of $ 274 million of revenue recognized in 2023 that was deferred as of December 31, 2022, as well as the reclassification from deferred revenue to the liability for guest loyalty program, which we discuss below.

The decrease was partially offset by revenue deferred in 2023 related to our gift cards, co-branded credit cards, franchise application and relicensing fees, and certain centralized programs and services fees.

Our current and noncurrent liability for guest loyalty program increased by $ 412 million, to $ 7,006 million at December 31, 2023, from $ 6,594 million at December 31, 2022, primarily reflecting an increase in points earned by members.

This includes a $ 241 million reclassification from deferred revenue to the liability for guest loyalty program as a result of points that were earned during the period by members using our U.S.-issued co-branded credit cards, which were prepaid by the financial institutions in 2020.

This includes a $ 112 million reclassification from deferred revenue to the liability for guest loyalty program primarily due to points that were earned during the period by members using our U.S.-issued co-branded credit cards, which were prepaid by the financial institutions in 2020.

The increase was partially offset by $ 2,798 million of revenue recognized in 2023, that was deferred as of December 31, 2022.

The current portion of our liability for guest loyalty program increased compared to December 31, 2021, due to higher estimated redemptions in the short-term.

At each reporting period, we evaluate the estimates used in the recognition of Loyalty Program revenues, including estimates of the breakage of points that members will never redeem and the amount of funding we expect to receive over the life of the agreements with various third parties.

In 2022, the updated estimates resulted in a net increase in revenue, and a corresponding reduction in the liability for guest loyalty program of approximately $ 106 million.

In 2023, the updated estimates resulted in a net decrease in revenue, and a corresponding increase in the liability for guest loyalty program of approximately $ 148 million.

Costs Incurred to Obtain and Fulfill Contracts with Customers

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We recognize an impairment loss for the amount by which the carrying amount exceeds the expected net future cash flows.

We classify certain direct costs to fulfill a contract with a customer in the “Other noncurrent assets” and “Prepaid expenses and other” captions of our Balance Sheets, and the related amortization in the “Owned, leased, and other - direct expenses” caption of our Income Statements.

We had capitalized costs to fulfill contracts with customers of $ 402 million at December 31, 2023 and $ 379 million at December 31, 2022.

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We recognize a gain or loss on real estate transactions when control of the asset transfers to the buyer, generally at the time the sale closes.

In sales transactions where we retain a management contract, the terms and conditions of the management contract are generally comparable to the terms and conditions of the management contracts obtained directly with third-party owners in competitive processes.

In sales transactions where we retain a management contract, the terms and conditions of the management

contract are generally comparable to the terms and conditions of the management contracts obtained directly with third-party owners in competitive processes.

Retirement Savings Plan

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Advertising Costs

We expense costs to produce advertising as they are incurred and to communicate advertising as the communication occurs and record such amounts in our “ Reimbursed expenses ” caption to the extent undertaken on behalf of our owners and franchisees.

We expense costs to produce advertising as they are incurred and to communicate advertising as the communication occurs and record such amounts in our “Reimbursed expenses” caption of our Income Statements to the extent undertaken on behalf of our owners and franchisees.

We recognized advertising costs of $ 794 million in 2023, $ 635 million in 2022, and $ 470 million in 2021.

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Our accounting for deferred tax consequences represents management’s best estimate of future events that can be appropriately reflected in the accounting estimates.

For tax positions we have taken or expect to take in a tax return, we apply a more likely than not threshold (that is, a likelihood of more than 50 percent), under which we must conclude a tax position is more likely than not to be sustained, assuming that the position will be examined by the appropriate taxing authority that has full knowledge of all relevant information, to continue to recognize the benefit.

In determining our provision for income taxes, we use judgment, reflecting our estimates and assumptions, in applying the more likely than not threshold.

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We calculate the estimated fair value of an intangible asset or asset group using the income approach or the market approach.

We utilize the same assumptions and methodology for the income approach that we describe in the “Goodwill” caption.

We utilize the same assumptions and methodology for the income approach that we describe in the “Goodwill” caption of our Balance Sheets.

For the market approach, we use internal analyses based primarily on market comparables and assumptions about market capitalization rates, growth rates, and inflation.

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A derivative qualifies for hedge accounting if, at inception, we expect the derivative will be highly effective in offsetting the underlying hedged cash flows or fair value and we fulfill the hedge documentation standards at the time we enter into the derivative contract.

We designate a hedge as a cash flow hedge, fair value hedge, or a hedge of the net investment in non-U.S.

We designate a hedge as a cash flow hedge, a fair value hedge, or a hedge of the net investment in non-U.S.

operations based on the exposure we are hedging.

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Such untimely transactions require us to immediately recognize in earnings the gains and/or losses that we previously recorded in AOCI.

Changes in interest rates, currency exchange rates, and equity securities expose us to market risk.

Changes in interest rates and currency exchange rates expose us to market risk.

We manage our exposure to these risks by monitoring available financing alternatives, as well as through development and application of credit granting policies.

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Loan Loss Reserves

We may make senior, mezzanine, and other loans to owners of hotels that we operate or franchise, generally to facilitate the development or renovation of a hotel and sometimes to facilitate brand programs or initiatives.

We may make mezzanine and other loans to owners of hotels that we operate or franchise, generally to facilitate the development or renovation of a hotel and sometimes to facilitate brand programs or initiatives.

We expect the owners to repay the loans in accordance with the loan agreements, or earlier as the performance of the hotels and capital markets permit.

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We calculate the present value of expected future cash flows discounted at the loan’s original effective interest rate or the estimated fair value of the collateral.

If the present value and the estimated collateral are less than the carrying value of the loan receivable, we establish a specific impairment reserve for the difference.

If the present value or the estimated collateral are less than the carrying value of the loan receivable, we establish a specific impairment reserve for the difference.

We determine if an arrangement is a lease or contains a lease at the inception of the contract.

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Goodwill is not recognized in an asset acquisition.

In the 2022 fourth quarter, we announced that we reached an agreement with Hoteles City Express, S.A.B.

to acquire the City Express brand portfolio for $ 100 million.

As of October 19, 2022, the portfolio included 152 mid-scale hotels ( 17,356 rooms) located in Mexico, Costa Rica, Colombia, and Chile.

Upon closing of the transaction, which is subject to regulatory approval and other customary closing conditions, City Express will become part of our franchise system.

We expect the transaction could close in the first half of 2023.

On May 1, 2023, we completed the acquisition of the City Express brand portfolio from Hoteles City Express, S.A.B.

for $ 100 million.

As a result of the transaction, we added 149 properties located in Mexico, Costa Rica, Colombia, and Chile to our franchise portfolio.

We accounted for the transaction as an asset acquisition and allocated the cost of the acquisition, including direct and incremental transaction costs, to an indefinite-lived brand asset of approximately $ 85 million and franchise contract assets, with a weighted-average term of 20 years, totaling $ 21 million.

EARNINGS PER SHARE

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Computation of Basic Earnings Per Share

Net income (loss) $ 2,358 $ 1,099 $ ( 267 )

Net income $ 3,083 $ 2,358 $ 1,099

Shares for basic earnings per share 301.5 324.4 327.2

Basic earnings (loss) per share $ 7.27 $ 3.36 $ ( 0.82 )

Basic earnings per share $ 10.23 $ 7.27 $ 3.36

Computation of Diluted Earnings Per Share

Net income (loss) $ 2,358 $ 1,099 $ ( 267 )

Net income $ 3,083 $ 2,358 $ 1,099

Shares for basic earnings per share 301.5 324.4 327.2

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Shares for diluted earnings per share 302.9 325.8 329.3

Diluted earnings (loss) per share $ 7.24 $ 3.34 $ ( 0.82 )

(1) For the calculation of diluted loss per share for 2020, we excluded share-based compensation securities of 1.4 million because the effect was anti-dilutive.

Diluted earnings per share

$ 10.18 $ 7.24 $ 3.34

STOCK-BASED COMPENSATION

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Other Information

At year-end 2022, we had 24 million remaining shares authorized under the Marriott and Starwood Hotels & Resorts Worldwide, LLC, formerly known as Starwood Hotels & Resorts Worldwide, Inc.

(“Starwood”), stock plans.

The components of our earnings (losses) before income taxes for the last three fiscal years consisted of:

No further shares are authorized for grant under the Marriott International, Inc.

Stock and Cash Incentive Plan or the Starwood Hotels & Resorts Worldwide, LLC, formerly known as Starwood Hotels & Resorts Worldwide, Inc., stock plans.

Beginning May 2023, awards are granted under the 2023 Marriott International, Inc.

Stock and Cash Incentive Plan (“2023 Plan”).

At year-end 2023, we had approximately 12 million remaining shares authorized for grant under the 2023 Plan.

The components of our earnings before income taxes for the last three fiscal years consisted of:

(in millions) 2023 2022 2021

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(in millions)

2023 2022 2021

Current -U.S.

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Unrecognized tax benefit at year-end 2023

Our unrecognized tax benefit balances included $ 241 million at year-end 2022, $ 266 million at year-end 2021, and $ 410 million at year-end 2020 of tax positions that, if recognized, would impact our effective tax rate.

Our unrecognized tax benefit balance included $ 161 million at year-end 2023, $ 241 million at year-end 2022, and $ 266 million at year-end 2021 of tax positions that, if recognized, would impact our effective tax rate.

It is reasonably possible that within the next 12 months we will reach resolution of income tax examinations in one or more jurisdictions.

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We file income tax returns, including returns for our subsidiaries, in various jurisdictions around the world.

Internal Revenue Service (“IRS”) has examined our federal income tax returns, and as of year-end 2022, we have settled all issues for tax years through 2016 and for tax years 2018 and 2019.

Our 2017 and 2020 through 2022 tax year audits are

currently ongoing.

Internal Revenue Service has examined our federal income tax returns, and as of year-end 2023, we have settled all issues for

tax years through 2021.

Our 2022 and 2023 tax year audits are currently ongoing.

Various foreign, state, and local income tax returns are also under examination by the applicable taxing authorities.

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Accrued expenses and other reserves 219 181

Receivables, net 12 11

Tax credits 64 55

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Deferred Tax Liabilities

Equity method investments ( 32 ) ( 40 )

Property and equipment ( 62 ) ( 58 )

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net operating loss carry-forwards.

During 2022, our net operating loss carry-forwards increased with an offsetting increase in our valuation allowance primarily due to net operating losses in an international subsidiary.

During 2023, our valuation allowance decreased primarily due to the release of certain non-U.S.

tax benefits ($ 223 million) as the Company concluded that it is more likely than not to recognize those tax benefits.

In addition, during 2023, our intangibles deferred tax liability decreased primarily due to intellectual property restructuring transactions, resulting in non-U.S.

tax benefits ($ 228 million).

At year-end 2023, we had approximately $ 47 million of tax credits that will expire through 2033 and $ 17 million of tax credits that do not expire.

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Change in uncertain tax positions ( 2.3 ) 0.3 ( 12.0 )

Permanent items ( 0.2 ) ( 0.5 ) 9.4

Tax on asset dispositions 0.0 ( 0.7 ) 0.0

Excess tax benefits related to equity awards ( 0.8 ) ( 0.7 ) ( 2.8 )

tax on foreign earnings 1.1 0.2 0.4

Intellectual property restructuring

( 7.9 ) 0.0 0.0

Other, net 0.3 0.8 ( 1.3 )

Effective rate 8.7 % 24.3 % 6.8 %

income tax benefit presented in the table above includes tax-exempt income in Hong Kong and Singapore, and a tax deduction in Switzerland, which collectively represented 2.5 % in 2022, 3.2 % in 2021, and 12.9 % in 2020.

We included the impact of these items in the non-U.S.

income line above because we consider them to be equivalent to a reduction of the statutory tax rates in these jurisdictions.

income tax benefit also includes U.S.

income tax expense on non-U.S.

operations, which represents 0.6 % in 2022, ( 0.5 )% in 2021, and 0.8 % in 2020.

We included the impact of this tax in the non-U.S.

income line above because we consider this tax to be an integral part of the foreign taxes.

Other Information

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In the 2021 third quarter, we entered into an amendment with the owner to move the exercise period of the put option from the 2022 first half to the 2024 first half.

If the owner exercises the put option, the closing is expected to occur in the 2024 fourth quarter, and we have the option to purchase, at the same time the put transaction closes, the fee simple interest in the underlying land for an additional $ 200 million in cash.

In January 2024, the owner exercised the put option, and we exercised our option to purchase, at the same time the put transaction closes, the fee

simple interest in the underlying land for an additional $ 200 million in cash, resulting in an expected total cash payment of approximately $ 500 million.

The closing is expected to occur in the 2024 fourth quarter.

We account for the put option as a guarantee, and our recorded liability was $ 300 million at year-end 2023 and 2022.

The liability is reflected in our Balance Sheets as “Accrued expenses and other” at year-end 2023 and as “Other noncurrent liabilities” at year-end 2022.

We concluded that the entity that owns the Sheraton Grand Chicago hotel is a variable interest entity.

We did not consolidate the entity because we do not have the power to direct the activities that most significantly impact the entity’s economic performance.

Our maximum exposure to loss related to the entity is equal to the difference between the purchase price and the fair value of the hotel at the time that the put option is exercised, plus the maximum funding amount of an operating profit guarantee that we provided for the hotel.

Our maximum exposure to loss related to the entity is equal to the difference between the purchase price and the fair value of the hotel at the time of closing, plus the maximum funding amount of an operating profit guarantee that we provided for the hotel.

At year-end 2023, we had various purchase commitments for goods and services in the normal course of business, primarily for programs and services for which we are reimbursed by third-party owners, totaling $ 735 million.

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Working with leading security experts, we determined that there was unauthorized access to the Starwood network since 2014 and that an unauthorized party had copied information from the Starwood reservations database and taken steps towards removing it.

The Starwood reservations database is no longer used for business operations.

We discontinued use of t he Starwood reservations database for business operations at the end of 2018 .

Litigation, Claims, and Government Investigations

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Judicial Panel on Multidistrict Litigation (the “MDL”).

On May 3, 2022, the District Court granted in part and denied in part class certification of various U.S.

The District Court granted in part and denied in part class certification of various U.S.

groups of consumers.

On July 14, 2022, the U.S.

Court of Appeals for the Fourth Circuit granted our petition to appeal the District Court’s decision, which appeal remains pending.

On September 8, 2022, the District Court held that the City of Chicago (which brought claims against us that are consolidated in the MDL proceeding) could not pursue injunctive claims but could pursue monetary claims.

In August 2023, the U.S.

Court of Appeals for the Fourth Circuit (the “Fourth Circuit”) vacated the District Court’s class certification decision because the District Court failed to first consider the effect of a class-action waiver signed by all putative class members.

On remand, after briefing, the District Court issued an order reinstating the same classes that had previously been certified.

We promptly petitioned the Fourth Circuit, seeking leave to appeal that ruling.

On January 18, 2024, the Fourth Circuit granted that petition, and we are preparing to file such appeal.

A case brought by the City of Chicago (which is consolidated in the MDL proceeding) also remains pending.

The Canadian cases have effectively been consolidated into a single case in the province of Ontario.

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We are in discussions with the Attorney General offices from 49 states and the District of Columbia and the Federal Trade Commission.

Based on the ongoing

discussions, we believe it is probable that we will incur losses, and we recorded an accrual in 2022 for an estimated loss contingency;

the amount of this accrual is not material to our Financial Statements.

While we believe it is reasonably possible that we may incur losses in excess of the amounts recorded associated with the above described MDL proceedings and regulatory investigations related to the Data Security Incident, it is not possible to reasonably estimate the amount of such losses or range of loss that might result from adverse judgments, settlements, fines, penalties or other resolution of these proceedings and investigations based on:

Based on the ongoing discussions, we believe it is probable that we will incur losses, and as of December 31, 2023, we have an accrual for an estimated loss contingency, which is not material to our Financial Statements.

penalties or other resolution of these proceedings and investigations based on:

(1) in the case of the above described MDL proceedings, the current stage of these proceedings, the absence of specific allegations as to alleged damages, the uncertainty as to the certification of a class or classes and the size of any certified class, and the lack of resolution of significant factual and legal issues;

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Variable lease cost 128 90 51

We recorded impairment charges of $ 116 million in 2020 in the “Depreciation, amortization, and other” caption of our Income Statements to reduce the carrying amount of certain U.S.

& Canada hotel leases right-of-use assets and property and equipment, including leasehold improvements.

The impairment charges recorded in 2020 were due to the impact of COVID-19.

We determined that we may not be able to fully recover the carrying amount of these U.S.

& Canada hotel leases after evaluating the assets for recovery due to declines in market performance and future cash flow projections.

We estimated the fair value using an income approach reflecting internally developed Level 3 discounted cash flows that included, among other things, our expectations of future cash flows based on historical experience and projected growth rates, usage estimates and demand trends.

The following table presents our future minimum lease payments at year-end 2023:

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Senior Notes:

Series L Notes, interest rate of 3.3 %, face amount of $ 173 , redeemed June 15, 2022

(effective interest rate of 3.4 %)

Series P Notes, interest rate of 3.8 %, face amount of $ 350 , maturing October 1, 2025

(effective interest rate of 4.0 %)

Series Q Notes, interest rate of 2.3 %, face amount of $ 399 , matured January 15, 2022

(effective interest rate of 2.5 %)

Series R Notes, interest rate of 3.1 %, face amount of $ 750 , maturing June 15, 2026

(effective interest rate of 3.3 %)

Series U Notes, interest rate of 3.1 %, face amount of $ 291 , maturing February 15, 2023

Series U Notes, interest rate of 3.1 %, face amount of $ 291 , matured February 15, 2023

(effective interest rate of 3.1 %)

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(effective interest rate of 4.2 %)

Series Z Notes, interest rate of 4.2 %, face amount of $ 350 , maturing December 1, 2023

Series Z Notes, interest rate of 4.2 %, face amount of $ 350 , matured December 1, 2023

(effective interest rate of 4.4 %)

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(effective interest rate of 3.9 %)

Series DD Notes, interest rate of 2.1 %, face amount of $ 224 , matured October 3, 2022

(effective interest rate of 1.2 %)

Series EE Notes, interest rate of 5.8 %, face amount of $ 600 , maturing May 1, 2025

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(effective interest rate of 5.4 %)

Series KK Notes, interest rate of 4.9 %, face amount of $ 800 , maturing April 15, 2029

(effective interest rate of 5.3 %)

Series LL Notes, interest rate of 5.5 %, face amount of $ 450 , maturing September 15, 2026

(effective interest rate of 5.9 %)

Series MM Notes, interest rate of 5.6 %, face amount of $ 700 , maturing October 15, 2028

(effective interest rate of 5.9 %)

Commercial paper 1,421 871

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We may redeem some or all of each series of the Senior Notes before maturity under the terms provided in the applicable form of Senior Note.

In September 2022, we issued $ 1.0 billion aggregate principal amount of 5.000 percent Series JJ Notes due October 15, 2027 (the “Series JJ Notes”).

We will pay interest on the Series JJ Notes in April and October of each year, commencing in April 2023.

We received net proceeds of approximately $ 983 million from the offering of the Series JJ Notes, after deducting

the underwriting discount and estimated expenses, which were made available for general corporate purposes, including working capital, capital expenditures, acquisitions, stock repurchases or repayment of outstanding indebtedness.

In June 2022, we redeemed all $ 173 million aggregate principal amount of our outstanding Series L Notes due in September 2022.

In December 2022, we amended and restated our $ 4.5 billion multicurrency revolving credit agreement (the “Credit Facility”).

In September 2023, we issued $ 450 million aggregate principal amount of 5.45 percent Series LL Notes due September 15, 2026 (the “Series LL Notes”) and $ 700 million aggregate principal amount of 5.55 percent Series MM Notes due October 15, 2028 (the “Series MM Notes”).

We will pay interest on the Series LL Notes in March and September of each year, commencing in March 2024, and we will pay interest on the Series MM Notes in April and October of each year, commencing

in April 2024.

We received net proceeds of approximately $ 1.135 billion from the offering of the Series LL Notes and Series MM Notes, after deducting the underwriting discount and expenses, which were made available for general corporate purposes, including working capital, capital expenditures, acquisitions, stock repurchases, or repayment of outstanding indebtedness.

In March 2023, we issued $ 800 million aggregate principal amount of 4.90 percent Series KK Notes due April 15, 2029 (the “Series KK Notes”).

We pay interest on the Series KK Notes in April and October of each year.

We received net proceeds of approximately $ 783 million from the offering of the Series KK Notes, after deducting the underwriting discount and expenses, which were made available for general corporate purposes, including working capital, capital expenditures, acquisitions, stock repurchases, or repayment of outstanding indebtedness.

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.

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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.

We classify outstanding borrowings under the Credit Facility and outstanding commercial paper borrowings (which generally have short-term maturities of 45 days or less) 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.

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We capitalize direct costs that we incur to obtain management, franchise, and license agreements.

We amortize these costs on a straight-line basis over the initial term of the agreements, ranging from 15 to 30 years.

In 2020, we recorded impairment charges totaling $ 64 million in the “Contract investment amortization” caption of our Income Statements to reduce the carrying amount of certain capitalized costs incurred to obtain contracts with customers, primarily due to the impact of COVID-19, most of which we recorded in our U.S.

& Canada business segment.

For contracts acquired in business combinations and other intangible assets, we recorded amortization expense of $ 197 million in 2022, $ 165 million in 2021, and $ 97 million in 2020 (of which $ 83 million in 2022, $ 62 million in 2021, and none in 2020 was included in the “Reimbursed expenses” caption of our Income Statements).

We amortize these costs on a straight-line basis over the initial term of the agreements, generally ranging from 15 to 30 years.

For contracts acquired in business combinations and other intangible assets, we recorded amortization expense of $ 226 million in 2023, $ 197 million in 2022, and $ 165 million in 2021 (of which $ 122 million in 2023, $ 83 million in 2022, and $ 62 million in 2021 was included in the “Reimbursed expenses” caption of our Income Statements).

For these assets, we estimate that our aggregate amortization expense will be $ 206 million in 2024, $ 178 million in 2025, $ 148 million in 2026, $ 126 million in 2027, and $ 94 million in 2028.

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were $ 552 million at year-end 2023 and $ 592 million at year-end 2022.

Our gross depreciation expense included impairment charges for property and equipment, including leasehold improvements, and right-of-use assets on several U.S.

& Canada leased hotels in 2020, which we discussed in Note 8.

FAIR VALUE OF FINANCIAL INSTRUMENTS

We believe that the fair values of our current assets and current liabilities approximate their reported carrying amounts.

We present the carrying amounts and the fair values of noncurrent financial assets and liabilities that qualify as financial instruments, determined under current guidance for disclosures on the fair value of financial instruments, in the following table:

We present the carrying amounts and the fair values of noncurrent financial assets and liabilities that qualify as financial instruments in the following table:

At Year-End 2023 At Year-End 2022

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Amount Fair Value

Senior, mezzanine, and other loans $ 152 $ 142 $ 144 $ 131

Mezzanine and other loans

$ 138 $ 131 $ 152 $ 142

Total noncurrent financial assets $ 138 $ 131 $ 152 $ 142

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Commercial paper ( 1,421 ) ( 1,421 ) ( 871 ) ( 871 )

Credit Facility — — ( 1,050 ) ( 1,050 )

Other long-term debt ( 56 ) ( 52 ) ( 56 ) ( 49 )

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Total noncurrent financial liabilities $ ( 11,277 ) $ ( 10,946 ) $ ( 9,643 ) $ ( 8,941 )

We estimate the fair value of our senior, mezzanine, and other loans by discounting cash flows using risk-adjusted rates, both of which are Level 3 inputs.

We estimate the fair value of our mezzanine and other loans by discounting cash flows using risk-adjusted rates, both of which are Level 3 inputs.

We determine the fair value of our Senior Notes using quoted market prices, which are directly observable Level 1 inputs.

Even though our commercial paper borrowings generally have short-term maturities of 45 days or less, we classify outstanding

commercial paper borrowings as long-term based on our ability and intent to refinance them on a long-term basis.

The carrying amount of our commercial paper and Credit Facility borrowings approximate fair value due to their short maturity and because they bear interest at a market rate.

The carrying amount of our commercial paper borrowings approximate fair value due to their short maturity and because they bear interest at a market rate.

We estimate the fair value of our other long-term debt, excluding leases, using quoted market prices, which are directly observable Level 1 inputs.

Our other noncurrent liabilities consist of guarantees.

As we note in the “Guarantees” caption of Note 2, we measure our liability for guarantees at fair value on a nonrecurring basis, which is when we issue or modify a guarantee using Level 3 internally developed inputs.

As we note in the

“Guarantees” caption of Note 2, we measure our liability for guarantees at fair value on a nonrecurring basis, which is when we issue or modify a guarantee using Level 3 internally developed inputs.

At year-end 2023 and year-end 2022, we determined that the carrying amounts of our guarantee liabilities approximated their fair values based on Level 3 inputs.

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Balance at year-end 2020 $ ( 139 ) $ 4 $ ( 135 )

Other comprehensive income before reclassifications (1)

Reclassification adjustments — ( 10 ) ( 10 )

Net other comprehensive income (loss) 229 ( 3 ) 226

Balance at year-end 2020 $ ( 139 ) $ 4 $ ( 135 )

Other comprehensive (loss) income before reclassifications (1)

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Balance at year-end 2022 $ ( 740 ) $ 11 $ ( 729 )

(1) Other comprehensive (loss) income before reclassifications for foreign currency translation adjustments includes intra-entity foreign currency transactions that are of a long-term investment nature, which resulted in gains (losses) of $ 32 million for 2022, $ 40 million for 2021, and $( 44 ) million for 2020.

Other comprehensive income (loss) before reclassifications (1)

Reclassification adjustments ( 3 ) — ( 3 )

Net other comprehensive income (loss) 86 ( 4 ) 82

Balance at year-end 2023 $ ( 654 ) $ 7 $ ( 647 )

(1) Other comprehensive income (loss) before reclassifications for foreign currency translation adjustments includes intra-entity foreign currency transactions that are of a long-term investment nature, which resulted in (losses)/gains of $( 28 ) million for 2023, $ 32 million for 2022, and $ 40 million for 2021.

BUSINESS SEGMENTS

We discuss our operations in the following two operating segments, both of which meet the applicable accounting criteria for separate disclosure as a reportable business segment:

(1) United States and Canada (“U.S.

We discuss our operations in the following two operating segments, both of which meet the applicable criteria for separate disclosure as a reportable business segment:

& Canada and (2) International.

We evaluate the performance of our operating segments using “segment profits/loss” which is based largely on the results of the segment without allocating corporate expenses, income taxes, indirect general, administrative, and other expenses, merger-related costs, or most above-property restructuring charges.

We assign gains and losses, equity in earnings or losses, direct general, administrative, and other expenses, and other restructuring charges to each of our segments.

“Unallocated corporate and other” includes a portion of our revenues (such as fees we receive from our credit card programs and vacation ownership licensing agreements), revenues and expenses for our Loyalty Program, general, administrative, and other expenses, restructuring, merger-related charges, and other expenses, equity in earnings or losses, and other gains or losses that we do not allocate to our segments.

In January 2024, we modified our segment structure as a result of a change in the way management intends to evaluate results and allocate resources within the Company.

Beginning with the 2024 first quarter, we will report the following four operating segments:

& Canada, (2) Europe, Middle East, and Africa, (3) Asia Pacific excluding China, and (4) Greater China.

Our Caribbean and Latin America operating segment will not meet the applicable criteria for separate disclosure as a reportable business segment, and as such, we will include its results in “Unallocated corporate and other.”

We evaluate the performance of our operating segments using “segment profits,” which is based largely on the results of the segment without allocating corporate expenses, income taxes, indirect general, administrative, and other expenses, or merger-related costs.

We assign gains and losses, equity in earnings or losses, and direct general, administrative, and other expenses to each of our segments.

“Unallocated corporate and other” includes a portion of our revenues (such as fees we receive from our credit card programs and vacation ownership licensing agreements), revenues and expenses for our Loyalty Program, general, administrative, and other expenses, merger-related charges and other expenses, equity in earnings or losses, and other gains or losses that we do not allocate to our segments.

Our chief operating decision maker monitors assets for the consolidated Company but does not use assets by operating segment when assessing performance or making operating segment resource allocations.

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of $ 2,806 million in 2023, $ 2,231 million in 2022, and $ 1,553 million in 2021.

Segment Profits and Losses

Segment Profits

(in millions) 2023 2022 2021

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Interest expense, net of interest income ( 535 ) ( 377 ) ( 392 )

(Provision) benefit for income taxes ( 756 ) ( 81 ) 199

Net income (loss) $ 2,358 $ 1,099 $ ( 267 )

Provision for income taxes ( 295 ) ( 756 ) ( 81 )

Net income $ 3,083 $ 2,358 $ 1,099

(1) Includes cost reimbursements, net of $ 57 million in 2023, $ 134 million in 2022, and $ 51 million in 2021.

(2) Includes cost reimbursements, net of $ 17 million in 2023, $ 49 million in 2022, and $ 14 million in 2021.

Segment profits (losses) attributed to operations located outside the U.S.

Segment profits attributed to operations located outside the U.S.

were $ 1,258 million in 2023, $ 898 million in 2022, and $ 297 million in 2021, including cost reimbursements, net (cost reimbursement revenue, net of reimbursed expenses) outside the U.S.

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$ 189 $ 193 $ 220

Capital Expenditures

($ in millions) 2022 2021 2020

$ 24 $ 13 $ 12

International

Unallocated corporate and other

$ 332 $ 183 $ 135

RELATED PARTY TRANSACTIONS

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This value exceeded our share of the book value of the investees’ net assets by $ 231 million at year-end 2023 and $ 238 million at year-end 2022, primarily due to the value that we assigned to land, contracts, and buildings owned by the investees.

In 2020, we recorded impairment charges of $ 77 million in the “Equity in earnings (losses)” caption of our Income Statements to reduce the carrying amount of certain investments, primarily due to the impact of COVID-19, most of which we recorded in our U.S.

& Canada business segment.

Other Related Parties

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Marriott, and other members of the Marriott family, indirectly holds varying percentages of ownership.

We earned gross fee revenues of approximately $ 4 million in 2022 and $ 1 million in 2021, plus reimbursement of certain expenses, and no revenues in 2020 from managed and franchised properties in which other members of the Marriott family hold varying interests.

We earned gross fee revenues of approximately $ 4 million in 2023, $ 4 million in 2022, and $ 1 million in 2021, plus reimbursement of certain expenses, from managed and franchised properties in which other members of the Marriott family hold varying interests.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data