Item 1. Business
Item 1. Business.
Corporate Structure and Business
We are a worldwide operator, franchisor, and licensor of hotel, residential, timeshare, and other lodging properties under numerous brand names at different price and service points. Consistent with our focus on management, franchising, and licensing, we own or lease very few of our lodging properties (less than one percent of our system).
The following table shows our portfolio of brands at year-end 2023.
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: (1) U.S. & Canada and (2) International. 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: (1) U.S. & 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.” See Note 14 for more information.
Company-Operated Properties
At year-end 2023, we had 2,096 company-operated properties (589,078 rooms), which included properties under long-term management or lease agreements with property owners (management and lease agreements together, the “Operating Agreements”) and properties that we own.
Terms of our management agreements vary, but we earn a management fee that is typically composed of a base management fee, which is a percentage of the revenues of the hotel, and an incentive management fee, which is based on the profits of the hotel. Our management agreements also typically include reimbursement of costs of operations (both direct and indirect). Such agreements are generally for initial periods of 20 to 30 years, with options for us to renew for up to 10 or more additional years. Our lease agreements also vary, but may include fixed annual rentals plus additional rentals based on a specified percentage of annual revenues that exceed a fixed amount. In many jurisdictions, our Operating Agreements may be subordinated to mortgages or other liens securing indebtedness of the owners. Many of our Operating Agreements also permit the owners to terminate the agreement if we do not meet certain performance metrics, financial returns fail to meet defined levels for a period of time, and we have not cured those deficiencies. In certain circumstances, some of our management agreements allow owners to convert company-operated properties to franchised properties under our brands.
For the lodging properties we operate, we generally are responsible for hiring, training, and supervising the employees needed to operate the properties and for incurring operational and administrative costs related to the operation of the properties, and owners are required to reimburse us for those costs. We provide centralized programs and services, such as our Marriott Bonvoy loyalty program, reservations, and marketing, as well as various accounting and data processing services, and owners are required to reimburse us for those costs as well.
Franchised and Licensed Properties
We have franchising and licensing arrangements that permit property owners and operators to use many of our lodging brand names and systems. Under our hotel franchising arrangements, we generally receive an initial application fee and
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continuing royalty fees, which typically range from four to seven percent of room revenues for all brands, plus up to four percent of food and beverage revenues for certain full-service brands. Franchisees contribute to our centralized programs and services, such as our Marriott Bonvoy loyalty program, reservations, and marketing.
We also receive royalty fees under license agreements with Marriott Vacations Worldwide Corporation, our former timeshare subsidiary that we spun off in 2011, and its affiliates (collectively, “MVW”), for certain brands. The license fees we receive from MVW consist of a fixed annual fee, adjusted for inflation, plus certain variable fees based on sales volumes.
Finally, we receive royalty fees under agreements for The Ritz-Carlton Yacht Collection ® .
At year-end 2023, we had 6,563 franchised and licensed properties (994,354 rooms and timeshare units).
Residential
We use or license certain of our trademarks for the sale of residential real estate, often in conjunction with hotel development. We receive one-time branding fees upon the sale of each branded residential unit by the third-party developers who construct and sell the residences, with limited amounts, if any, of our capital at risk. We also typically receive continuing management fees for managing the related homeowners’ association. At year-end 2023, we had 126 branded residential communities (13,948 residential units).
Intellectual Property
We operate in a highly competitive industry and our brand names, trademarks, service marks, trade names, and logos are very important to the development, sales and marketing of our properties and services. We believe that our brand names and other intellectual property have come to represent outstanding quality, care, service, and value to our customers, guests, and the traveling public. Accordingly, we register and protect our intellectual property where we deem appropriate and otherwise protect against its unauthorized use.
Brand Portfolio
We believe that our brand portfolio offers the most compelling range of brands and hotels in hospitality. Our brands are categorized by style of offering - Classic and Distinctive. Our Classic brands offer time-honored hospitality for the modern traveler, and our Distinctive brands offer memorable experiences with a unique perspective - each of which we group into four quality tiers: Luxury, Premium, Select, and Midscale.
Luxury offers bespoke and superb amenities and services. Our Classic Luxury brands include JW Marriott, The Ritz-Carlton, and St. Regis. Distinctive Luxury brands in our portfolio include The Luxury Collection, W Hotels, EDITION, and Bvlgari.
Premium offers sophisticated and thoughtful amenities and services. Our Classic Premium brands include Marriott Hotels, Sheraton, Delta Hotels by Marriott, Marriott Executive Apartments, and Marriott Vacation Club. Our Distinctive Premium brands include Westin, Autograph Collection Hotels, Renaissance Hotels, Le Méridien, Tribute Portfolio, Gaylord Hotels, Design Hotels, and Apartments by Marriott Bonvoy.
Select offers smart and easy amenities and services, with our longer stay brands offering amenities that mirror the comforts of home. Our Classic Select hotel brands include Courtyard, Fairfield, Residence Inn, SpringHill Suites, Four Points, TownePlace Suites, and Protea Hotels. Our Distinctive Select hotel brands include Aloft Hotels, AC Hotels by Marriott, Moxy Hotels, and Element Hotels.
Midscale offers limited services and essential amenities at a more affordable price point. Our Midscale brands, which are Classic brands, include City Express by Marriott and Four Points Express by Sheraton, which opened its first hotel in the 2024 first quarter .
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The following table shows the geographic distribution of our brands at year-end 2023:
U.S. & Canada
Europe Middle East & Africa Asia Pacific Excluding China Greater China
Caribbean & Latin America Total
Luxury
JW Marriott ®
Properties 35 8 11 28 23 16 121
Rooms 19,261 2,523 4,299 8,832 9,219 4,296 48,430
The Ritz-Carlton ®
Properties 42 12 15 23 18 9 119
Rooms 12,787 2,703 3,979 4,544 5,159 2,007 31,179
The Luxury Collection ®
Properties 17 40 13 28 5 10 113
Rooms 5,408 5,756 2,493 6,822 1,488 1,461 23,428
W ® Hotels
Properties 25 10 7 11 11 7 71
Rooms 7,295 2,122 2,316 2,754 3,905 1,752 20,144
St. Regis ®
Properties 11 6 13 10 13 5 58
Rooms 2,169 768 3,222 2,068 3,462 693 12,382
EDITION ®
Properties 5 5 3 3 2 1 19
Rooms 1,379 819 638 496 646 180 4,158
Bvlgari ®
Properties — 4 1 2 2 — 9
Rooms — 332 121 157 201 — 811
Premium
Marriott ® Hotels
Properties 337 77 29 47 65 32 587
Rooms 132,856 21,990 9,083 14,893 22,781 8,461 210,064
Sheraton ®
Properties 168 51 32 56 99 30 436
Rooms 64,923 14,279 9,234 16,525 38,791 8,442 152,194
Westin ®
Properties 134 17 8 38 31 15 243
Rooms 54,820 5,787 2,030 10,813 10,360 4,347 88,157
Autograph Collection ®
Properties 153 77 15 19 3 37 304
Rooms 31,321 10,010 2,402 4,277 426 12,448 60,884
Renaissance ® Hotels
Properties 88 28 5 15 30 9 175
Rooms 28,041 6,491 1,476 3,801 10,704 2,745 53,258
Le Méridien ®
Properties 25 16 23 33 19 3 119
Rooms 5,489 5,156 6,841 7,756 5,225 562 31,029
Delta Hotels by Marriott ® (Delta Hotels ® )
Properties 92 31 6 — 4 2 135
Rooms 21,730 5,446 1,443 — 1,529 366 30,514
Tribute Portfolio ®
Properties 66 25 5 11 4 7 118
Rooms 10,725 3,096 584 1,096 986 640 17,127
Gaylord ® Hotels
Properties 6 — — — — — 6
Rooms 10,220 — — — — — 10,220
Design Hotels ®
Properties 11 65 8 6 4 17 111
Rooms 1,605 4,782 750 389 783 393 8,702
Marriott Executive Apartments ®
Properties — 3 13 9 11 2 38
Rooms — 212 1,841 1,297 1,735 240 5,325
Apartments by Marriott Bonvoy TM
Properties — — — — — 1 1
Rooms — — — — — 107 107
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U.S. & Canada Europe Middle East & Africa Asia Pacific Excluding China Greater China Caribbean & Latin America Total
Select
Courtyard by Marriott ® (Courtyard ® )
Properties 1,066 75 11 60 53 47 1,312
Rooms 147,091 13,984 2,304 12,107 13,865 7,609 196,960
Fairfield by Marriott ® (Fairfield ® )
Properties 1,153 — — 71 48 18 1,290
Rooms 109,445 — — 9,527 7,834 2,576 129,382
Residence Inn by Marriott ® (Residence Inn ® )
Properties 861 27 7 — — 8 903
Rooms 105,911 3,205 1,117 — — 1,213 111,446
SpringHill Suites by Marriott ® (SpringHill Suites ® )
Properties 547 — — — — — 547
Rooms 64,774 — — — — — 64,774
Four Points by Sheraton ® (Four Points ® )
Properties 154 20 21 46 50 18 309
Rooms 22,965 3,284 5,136 10,796 14,459 2,332 58,972
TownePlace Suites by Marriott ® (TownePlace Suites ® )
Properties 503 — — — — — 503
Rooms 51,063 — — — — — 51,063
Aloft ® Hotels
Properties 162 10 12 17 14 17 232
Rooms 23,457 1,669 2,744 4,301 3,230 2,769 38,170
AC Hotels by Marriott ®
Properties 117 92 2 6 1 18 236
Rooms 19,386 12,529 286 1,775 135 2,867 36,978
Moxy ® Hotels
Properties 35 87 — 8 8 — 138
Rooms 6,572 16,416 — 1,561 1,495 — 26,044
Element ® Hotels
Properties 83 1 7 3 5 — 99
Rooms 11,522 160 1,189 572 1,151 — 14,594
Protea Hotels ® by Marriott
Properties — 1 62 — — — 63
Rooms — 72 6,539 — — — 6,611
Midscale
City Express by Marriott TM
Properties — — — — — 150 150
Rooms — — — — — 17,431 17,431
Residences
Residences Properties 69 11 14 17 2 13 126
Rooms 7,416 540 1,969 2,999 302 722 13,948
Subtotal Properties 5,965 799 343 567 525 492 8,691
Subtotal Rooms 979,631 144,131 74,036 130,158 159,871 86,659 1,574,486
Timeshare (1)
Properties 93
Rooms 22,745
Yacht (1)
Properties 1
Rooms 149
Total Properties 8,785
Total Rooms 1,597,380
(1) We exclude geographical data for Timeshare and Yacht as these offerings are captured within “Unallocated corporate and other.”
In the above table, The Luxury Collection, Autograph Collection, and Tribute Portfolio include seven total properties that we acquired when we purchased Elegant Hotels Group plc in December 2019, which we currently intend to re-brand under such brands after the completion of planned renovations.
Loyalty and Credit Card Programs
Marriott Bonvoy ® is our travel loyalty program and marketplace through which members have access to our diverse brand portfolio, rich benefits, and travel experiences. Members can earn points for stays at our hotels and other lodging offerings, such as Homes & Villas by Marriott Bonvoy TM , a global offering focusing on the premium and luxury tiers of rental homes, as well as through purchases with co-branded credit cards and our travel partners. Members can redeem their points for stays at most of our properties, airline tickets, airline frequent flyer program miles, rental cars, products from Marriott Bonvoy Boutiques ® , and a variety of other awards, including experiences from Marriott Bonvoy Moments ® . We refer to our Marriott Bonvoy loyalty program throughout this report as “Marriott Bonvoy” or our “Loyalty Program.”
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We believe that Marriott Bonvoy generates substantial repeat business that might otherwise go to competing hotels. In 2023, over 60% of our global room nights were booked by Marriott Bonvoy members. We strategically market to this large and growing guest base to generate revenue.
We have co-branded credit cards associated with Marriott Bonvoy in 11 countries. In the U.S., we have multi-year agreements with JPMorgan Chase and American Express. We also license credit card programs internationally in Japan, Canada, the United Kingdom, United Arab Emirates, Saudi Arabia, South Korea, Mexico, China, India, and Qatar. We generally earn fixed amounts that are payable at contract inception and variable amounts that are paid to us monthly over the term of the agreements primarily based on card usage. We believe that our co-branded credit cards create a diverse revenue stream for the Company, reflect the quality and value of our portfolio of brands, and contribute to the strength of Marriott Bonvoy by creating value for our customers and property owners and franchisees. Payments received under our co-branded credit card agreements represent a significant funding source for the Loyalty Program.
See the “Loyalty Program” caption in Note 2 for more information about our Loyalty Program and co-branded credit cards.
Sales and Marketing and Reservation Systems
Marriott.com, the Marriott Bonvoy mobile app, and our other digital direct channels offer seamless digital experiences that complement the experience our customers enjoy at Marriott’s extensive portfolio of properties. We deliver customer-minded enhancements, including powerful in-stay capabilities through our mobile app, such as contactless check-in and check-out, Mobile Key, chat, service requests, mobile dining, and more. In addition, we are focused on strengthening the Loyalty Program by attracting more members and localizing our experiences to reach new customers around the world. Our focus on creating frictionless experiences throughout our digital direct channels is foundational to our long-term digital and technology transformation, which aims to grow our loyal customer base and drive more direct bookings and more business to our hotels.
At year-end 2023, we operated 19 customer engagement centers, seven in the U.S. and 12 in other countries and territories. We own two of the U.S. facilities and either lease the others or share space with a company-operated property.
We believe our global sales and revenue management organizations are a key competitive advantage due to our focus on optimizing our investment in people, processes, and systems. Our above-property sales deployment strategy is designed around the way the customer wants to buy and the strategic priorities of our hotels globally. Our strategy is focused on driving efficiencies, profitable revenue, and customer loyalty by leveraging customer relationships and reducing duplication of efforts at the hotel level. We also utilize innovative and sophisticated revenue management systems, many of which are proprietary, which we believe provide a competitive advantage in pricing decisions, increasing efficiency and optimizing property-level revenue for hotels in our portfolio. Most of the hotels in our portfolio utilize web-based programs to effectively manage the rate set-up and modification processes. The use of these web-based programs provides for greater pricing flexibility, reduces time spent on rate program creation and maintenance, and increases the speed to market of new products and services.
Competition
We encounter strong competition in the short-term lodging market from large national and international chains that operate hotels or franchise their brands, unaffiliated hotels, and online platforms, including Airbnb and Vrbo, that allow travelers to book short-term rentals of homes and apartments as an alternative to hotel rooms. We compete for guests in many areas, including brand recognition and reputation, location, guest satisfaction, room rates, quality of service, amenities, quality of accommodations, safety and security, and the ability to earn and redeem loyalty program points.
Our direct digital channels also compete for guests with online travel services platforms, such as Expedia.com, Priceline.com, Booking.com, Travelocity.com, Orbitz.com, and Ctrip.com, and search engines such as Google, Bing, Yahoo, and Baidu.
Affiliation with a brand is common in the U.S. lodging industry. In 2023, approximately 72 percent of U.S. hotel rooms were brand-affiliated. Although we believe that our strong brand recognition assists us in attracting and retaining guests, owners, and franchisees, we compete against many other companies with strong brands and guest appeal, including Hilton, IHG Hotels & Resorts, Hyatt, Wyndham Hotels & Resorts, Accor, Choice Hotels, Best Western Hotels & Resorts, and others.
Outside the U.S., branding is less prevalent, and many markets are served primarily by independent operators, although branding is more common for new hotel development compared to the past. We believe that chain affiliation will continue to become more attractive in many overseas markets as local economies grow, trade barriers decline, international travel accelerates, and hotel owners seek the benefits of centralized reservation systems, marketing programs, and loyalty programs.
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Based on lodging industry data, we have an approximately 16 percent share of the U.S. hotel market and a four percent share of the hotel market outside the U.S. (based on number of rooms). We believe that our hotel brands are attractive to hotel owners seeking a management company or franchise or other licensing affiliation because our hotels typically generate higher RevPAR than our direct competitors in most market areas. We attribute this performance premium to our success in achieving and maintaining strong guest preference. We believe that the location and quality of our lodging facilities, our marketing programs, our reservation systems, our Loyalty Program, and our emphasis on guest service and guest and associate satisfaction contribute to guest preference across all our brands.
Seasonality
In general, business at our properties fluctuates moderately with the seasons. Business at some resort properties may be more seasonal depending on location.
Human Capital Management
Marriott’s long history of service, innovation, and growth is built on a culture of putting people first. We are committed to investing in our associates , with a focus on leadership development, competitive compensation, and creating a sense of well-being and belonging for all.
At year-end 2023, Marriott managed the employment of approximately 411,000 associates. This number includes 148,000 associates employed by Marriott at properties, customer care centers, and above-property operations, as well as 263,000 associates who are employed by our property owners but whose employment is managed by Marriott (which is common outside the U.S.). Approximately 117,000 of the associates employed by Marriott are located in the U.S., of which approximately 19,000 belong to labor unions. Outside the U.S., some of our associates are represented by trade unions, works councils, or employee associations. These numbers do not include hotel personnel employed by our franchisees or management companies hired by our franchisees. Marriott is committed to conducting its business in accordance with high ethical and legal standards and expects our independent franchisees to develop responsible human capital management practices.
We are focused on maintaining Marriott’s position as an employer of choice both for job seekers and our existing associates. To attract talent, we are targeting new labor pools, optimizing our recruiting practices, and sharing our story of long-term career potential. At our headquarters in Bethesda, Maryland, we utilize a hybrid work model to allow for flexibility and choice to meet the needs of our corporate workforce. For hotel-based associates, we are innovating the way hotel jobs are structured, introducing more flexibility and choice through our integrated jobs program, which allows associates to have more cross-training and engaging roles.
We encourage continual feedback from our associates at all levels. We measure associate satisfaction through our Associate Engagement Survey, which gives all associates the opportunity to provide feedback about their work experience, providing valuable insights to drive improvements in our culture. Our associate engagement scores exceeded the “Best Employer” external benchmark in 2023, and we were recognized as a top 10 company on the Fortune Best Companies to Work for in 2023, a list we have been on for 26 consecutive years.
Our human capital strategy is based on three signature elements – Growing Great Leaders, Investing in Associates, and Access to Opportunity.
Growing Great Leaders
We believe that associates at every level can inspire others through great leadership. In 2023, we launched our new Leadership Framework, designed to help us grow great leaders. It starts with leadership essentials that clearly define what great leadership means at Marriott, at all levels of the organization. We have also refreshed our leadership competencies, which have been integrated into our performance management process and leadership development programs. Our talent development strategy is designed to provide opportunities for our associates to develop and grow their careers with Marriott for the long term while driving the performance of our business.
Investing in Associates
We are focused on providing our associates with the tools, resources, and support they need to thrive – both personally and professionally. We provide our eligible U.S. associates and their families with access to comprehensive compensation and benefits offerings, such as health care coverage, work/life support benefits, and other offerings, such as a retirement savings and employee stock purchase plan. Outside the U.S., we also offer comprehensive compensation and benefit programs that vary based on the geographic market and we regularly evaluate these programs for competitiveness against the external talent market. Our TakeCare program provides associates with tools and resources to support their physical, mental, and financial
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well-being. In addition, pay equity is foundational to our compensation structures and practices. In the U.S., we conduct pay equity audits at least annually and make adjustments as needed.
Access to Opportunity
Our company-wide diversity, equity, and inclusion efforts include a range of initiatives and programs to support our goal to make all stakeholders (including associates, guests, owners, and suppliers) feel welcome and valued. The Inclusion and Social Impact Committee (“ISIC”) of our Board of Directors (“Board”), established over 20 years ago, helps drive accountability for these efforts across the Company. The ISIC assists the Board in providing oversight of the Company’s strategy, efforts, and commitments related to our people-first culture, associate well-being, inclusion, and other environmental, social and governance matters.
Sustainability and Social Impact
Guided by our 2025 sustainability and social impact goals, as well as the United Nations Sustainable Development Goals, we are focused on creating a positive and sustainable impact wherever we do business. Our sustainability and social impact platform, Serve 360: Doing Good in Every Direction, is built around four focus areas: Nurture Our World; Sustain Responsible Operations; Empower Through Opportunity; and Welcome All and Advance Human Rights – each with targets to drive our efforts through 2025. These targets reflect our goals to (1) support the resiliency and sustainable development of the communities and environments where we do business, (2) work to reduce our environmental impacts, design and operate sustainable hotels, and source responsibly, while mitigating climate-related risk, (3) facilitate workplace readiness and access to opportunity in our business, and (4) create a safe, welcoming world, including by working with organizations to educate and advocate on issues related to human rights throughout and beyond our business.
Our sustainability strategy and initiatives focus on a wide range of issues, including designing resource-efficient hotels, implementing technologies to track and reduce energy and water consumption, as well as waste and food waste, increasing the use of renewable energy, managing water-related risks, focusing on third-party sustainability certifications at the hotel-level, supporting innovative ecosystem restoration initiatives, focusing on responsible and local sourcing, and driving climate action.
Our climate action efforts include committing to set a near-term science-based emissions reduction target and a long-term science-based target to reach net-zero value chain greenhouse gas emissions by no later than 2050. In September 2023, we submitted our emissions reduction targets to the Science Based Targets initiative and are awaiting validation of the targets, which we expect later in 2024.
In response to humanitarian crises, like war and natural disasters, our hotels often look to support their local communities in need by donating funds, hotel stays, food, supplies, and volunteer hours. We also deploy our Marriott Disaster Relief Fund to support associates and their families impacted by crises, such as the earthquakes in Türkiye and Syria and fires in Maui, as well as charitable organizations providing relief on the ground. We also continue to focus on our efforts to advance human rights, and we have trained 1.2 million associates in human trafficking awareness between 2016 and year-end 2023. We have also donated our training program to the broader lodging industry, and the training has been completed 1.6 million times by non-Marriott individuals between 2020 and year-end 2023. Additionally, in 2023, Marriott became a member of the Internet Watch Foundation and deployed technology to block websites with illegal child sexual abuse material from guest network access in most of its U.S. & Canada hotels.
Government Regulations
As a company with global operations, we are subject to a wide variety of laws, regulations, and government policies in the U.S. and in jurisdictions around the world. Some of the regulations that most affect us include those related to employment practices; marketing and advertising efforts; trade and economic sanctions; anti-bribery, anti-corruption, and anti-money laundering; intellectual property; cybersecurity, data privacy, data localization, data transfers, and the handling of personally identifiable information; competition; climate and the environment; health and safety; liquor sales; and the offer and sale of franchises.
Internet Address and Company SEC Filings
Our primary Internet address is Marriott.com. On the investor relations portion of our website, Marriott.com/investor, we provide a link to our electronic filings with the SEC, including our annual report on Form 10-K, our quarterly reports on Form 10-Q, our current reports on Form 8-K, and any amendments to these reports. We make all such filings available free of charge as soon as reasonably practicable after filing. The information found on our website is not part of this or any other report we file with or furnish to the SEC.
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