Business Context and Reporting Period
Company: Marriott International, Inc.
Filing Type: Form 10-Q (Quarterly Report)
Reporting Period: Three and six months ended June 30, 2026
Business Model: Worldwide franchisor, operator, and licensor of hotel and lodging properties under an asset-light model.
Key Financial Metrics
| Metric | Q2 2026 | Q2 2025 | YTD 2026 | YTD 2025 |
|---|---|---|---|---|
| Total Revenues | $7,071 million | $6,744 million | $13,725 million | $13,007 million |
| Net Fee Revenues | $1,547 million | $1,371 million | $2,945 million | $2,618 million |
| Operating Income | $1,229 million | $1,236 million | $2,293 million | $2,184 million |
| Net Income | $766 million | $763 million | $1,414 million | $1,428 million |
| Diluted EPS | $2.90 | $2.78 | $5.32 | $5.17 |
| Operating Cash Flow (YTD) | $1,806 million (vs. $1,290 million YTD 2025) | |||
| Total Debt (Current + Long-term) | $16,915 million (as of June 30, 2026) | |||
| Cash and Equivalents | $462 million (as of June 30, 2026) |
Material Changes vs. Prior Period
- Revenue Growth: Total revenues increased 4.8% in Q2 2026 and 5.5% YTD 2026 compared to the prior year. Net fee revenues grew 13% in Q2 and 12% YTD, driven by higher franchise fees (up 19% in Q2) and incentive management fees.
- Operating Income: Q2 operating income remained flat ($1,229 million vs. $1,236 million) despite revenue growth, primarily due to a $68 million impairment charge on a U.S. & Canada hotel and a $27 million property-related litigation accrual.
- Net Income: Q2 net income increased slightly to $766 million from $763 million. YTD net income decreased slightly to $1,414 million from $1,428 million.
- Expense Increases: Depreciation, amortization, and other expenses rose 117% in Q2 and 63% YTD, largely attributable to the aforementioned impairment charge. Interest expense increased 9% in Q2 and 10% YTD due to higher debt balances from new Senior Notes issuances.
- Segment Performance: U.S. & Canada segment profit decreased 2% in Q2 and 1% YTD due to the impairment and litigation charges. EMEA segment profit declined 8% in Q2 and 6% YTD, impacted by the conflict in the Middle East which caused a sharp RevPAR decline in the region.
Guidance, Outlook, and Risks
- RevPAR Trends: Worldwide systemwide RevPAR increased 3.4% in Q2 2026 and 3.8% YTD, driven by Average Daily Rate (ADR) growth. U.S. & Canada RevPAR grew 5.0% in Q2, aided by World Cup demand. International RevPAR declined 0.5% in Q2 due to Middle East conflict impacts.
- System Growth: The company added roughly 33,800 net rooms in the first half of 2026. Full-year 2026 net rooms growth is expected to be at the low end of the 4.5% to 5.0% range.
- Capital Allocation: The company repurchased 3.0 million shares for $1.1 billion in Q2 2026. Year-to-date repurchases totaled $2.2 billion. Dividends paid were $0.73 per share in Q2. Full-year capital expenditures are expected to be $1.25 billion to $1.35 billion.
- Risks and Contingencies:
- Starwood Data Security Incident: Ongoing litigation and government investigations related to the 2018 breach. The company believes it is probable it will incur losses but cannot reasonably estimate the range of total possible financial impact in excess of recorded accruals.
- Geopolitical Conflict: The conflict in the Middle East has negatively impacted RevPAR in the Middle East & Africa region, with effects expected to continue into the third quarter.
- Legal Proceedings: A $27 million litigation accrual was recorded for property-related matters.
Investor Verification Checklist
- Impairment Charge: Verify the details and tax impact of the $68 million impairment charge on the U.S. & Canada hotel (Note 7).
- Debt Structure: Review the new $1.425 billion debt issuance (Series WW and XX Notes) and its impact on future interest expense (Note 6).
- Legal Accruals: Assess the sufficiency of the accrual for the Starwood Data Security Incident and the $27 million property litigation charge (Note 5).
- Revenue Quality: Analyze the composition of the 19% increase in franchise fees, specifically the $73 million contribution from co-branded credit card fees.
- Geopolitical Exposure: Monitor the duration and financial impact of the Middle East conflict on the EMEA segment's RevPAR and profitability.