Business context and reporting period
Marriott International, Inc. filed this Form 10-K for the fiscal year ended December 31, 2022; it is an annual report, not a standalone fourth-quarter filing. Marriott primarily manages, franchises, and licenses lodging properties rather than owning them, and reports U.S. & Canada and International segments. At year-end, its system comprised 8,288 properties and 1,525,407 rooms across 138 countries and territories.
Financial and operating performance
| Metric | 2022 | 2021 |
|---|---|---|
| Total reported revenue | $20.773 billion | $13.857 billion |
| Net fee revenue | $3.989 billion | $2.619 billion |
| Operating income | $3.462 billion | $1.750 billion |
| Net income | $2.358 billion | $1.099 billion |
| Diluted EPS | $7.24 | $3.34 |
| Cash from operating activities | $2.363 billion | $1.177 billion |
| Capital and technology expenditures | $332 million | $183 million |
| Cash and equivalents at year-end | $507 million | $1.393 billion |
| Debt at year-end | $10.064 billion | $10.138 billion |
Total reported revenue includes substantial cost-reimbursement revenue and corresponding reimbursed expenses: $15.417 billion and $15.141 billion, respectively, in 2022. These largely pass-through amounts make total-revenue-based margins less informative. Net fee revenue increased 52%; gross fee revenue rose 51%, supported by demand recovery, unit growth, and higher co-branded credit-card fees.
Operating cash flow less capital and technology expenditures was approximately $2.031 billion, a simple derived cash-flow measure. The current-assets-to-current-liabilities ratio was 0.5 to 1.0, versus 0.6 to 1.0 in 2021. Marriott cited its $4.5 billion revolving credit facility, access to capital markets, and expected operating cash generation as sources of liquidity; the facility matures in December 2027. The company repurchased 16.8 million shares for $2.6 billion and paid $321 million in dividends during 2022.
Material changes versus the prior comparable period
- Net income more than doubled from 2021, reflecting continued lodging-demand recovery. Operating income increased by $1.712 billion.
- Worldwide systemwide RevPAR increased 51.0% from 2021. For the fourth quarter, worldwide RevPAR was 4.6% above 2019, with ADR up 12.8% and occupancy down 5.1 percentage points.
- For full-year 2022 versus 2019, worldwide RevPAR remained 4.0% lower. U.S. & Canada was down 0.8%; International was down 11.9%, with Greater China notably affected by COVID-related restrictions.
- The hotel system expanded from 7,989 properties and 1,479,179 rooms at year-end 2021 to 8,288 properties and 1,525,407 rooms at year-end 2022. Additions and deletions included the effect of Marriott’s decision to suspend operations in Russia.
- Cash and equivalents declined by $886 million year over year. Debt declined by $74 million, while 2022 financing included issuance of $983 million in net proceeds from Series JJ Notes and $871 million of commercial paper outstanding at year-end.
Outlook, commentary, risks and contingencies
Management expected 2023 gross rooms growth of approximately 5.5% and net rooms growth of 4.0%–4.5%, including approximately 1.1% from the anticipated City Express brand addition. The City Express acquisition, announced for $100 million for a portfolio of 152 hotels and 17,356 rooms, was subject to regulatory approval and other customary conditions and was expected to close in the first half of 2023. Marriott forecast 2023 capital expenditures and other investments of approximately $850 million to $1 billion, including the City Express investment and planned renovation spending.
Management said global demand improved materially but cautioned that booking windows are short and demand can change quickly. Risks include economic and geopolitical shocks, uneven regional recovery, competition and third-party booking channels, labor availability and costs, hotel-owner financing and project delays, foreign-exchange movements, climate and extreme-weather impacts, and technology, privacy, and cybersecurity threats.
The 2018 Starwood reservations database incident remains subject to litigation and regulatory investigations. Marriott recorded an estimated loss-contingency accrual in 2022 that it said was not material, but stated that additional losses were reasonably possible and could not be reasonably estimated. It also expects further related expenses; insurance may not cover all losses. Separately, the owner of the Sheraton Grand Chicago may exercise a $300 million purchase put option in the first half of 2024, with a possible additional $200 million land purchase option. The put-option liability was recorded at $300 million at year-end 2022.
Marriott reported $280 million of maximum potential future funding under certain guarantees and a $121 million recorded liability. The filing also reports $11.989 billion of debt including principal and future interest payments, of which $1.032 billion was payable within 12 months of year-end. Ernst & Young issued unqualified opinions on the financial statements and internal control over financial reporting.
Important facts for investors to verify
- Track RevPAR, occupancy, and ADR by region, particularly Greater China, and assess whether demand and pricing remain resilient.
- Compare fee-revenue growth and segment profits with reported total revenue, which includes large pass-through reimbursements.
- Review liquidity, debt maturities, commercial-paper access, interest costs, and the substantial 2022 share repurchases against cash generation.
- Monitor the City Express closing, integration and room-growth contribution, and whether planned 2023 investment spending meets guidance.
- Follow developments in the Starwood data-incident litigation and regulatory matters; the possible total exposure is not clearly quantifiable in the filing.
- Assess contingent obligations, including the Sheraton Grand Chicago put option, guarantees, and hotel-owner financing risks.