Marriott International, Inc. — 2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021; results are compared mainly with 2020, with selected comparisons to 2019. Amounts are in U.S. dollars.
Business context
Marriott operates, franchises, and licenses hotels and related businesses under an asset-light model, with most properties owned by third parties. At year-end 2021, its system comprised 7,989 properties and 1.48 million rooms across 139 countries and territories. Reportable segments are U.S. & Canada and International.
Financial and operating performance
| Metric | 2021 | 2020 |
|---|---|---|
| Total revenue | $13.857 billion | $10.571 billion |
| Net fee revenue | $2.619 billion | $1.551 billion |
| Operating income | $1.750 billion | $84 million |
| Net income (loss) | $1.099 billion | $(267) million |
| Diluted EPS | $3.34 | $(0.82) |
| Cash from operating activities | $1.177 billion | $1.639 billion |
Reported revenue includes substantial reimbursed costs: $10.442 billion in 2021, offset by $10.322 billion of reimbursed expenses. This pass-through revenue makes margins based on total revenue less informative. The filing does not provide a single consolidated operating-margin measure that excludes these reimbursements.
- Gross fee revenue rose 60% to $2.694 billion. Base management fees were $669 million, franchise fees $1.790 billion, and incentive management fees $235 million.
- Segment profit was $1.394 billion for U.S. & Canada, up from $198 million, and $258 million for International, versus a $222 million loss.
- Comparable systemwide RevPAR rose 60.4% worldwide versus 2020, but remained 36.5% below 2019. In fourth-quarter 2021, worldwide RevPAR was 19% below fourth-quarter 2019.
- Cash and equivalents were $1.393 billion on the balance sheet; cash, cash equivalents, and restricted cash totaled $1.421 billion. The current ratio was 0.6, versus 0.5 a year earlier.
- Debt was $10.138 billion at year-end, down from $10.376 billion. Long-term debt had a 3.4% weighted-average interest rate and approximately 6.5-year weighted-average maturity. Credit Facility borrowings were $1.1 billion, with $3.4 billion of stated remaining capacity.
Changes, outlook, and management commentary
- Performance improved substantially from the pandemic-affected 2020, driven by recovering lodging demand, higher occupancy and ADR, unit growth, and stronger results at owned and leased hotels. Business transient and group demand remained meaningfully below pre-pandemic levels.
- Operating cash flow declined $462 million year over year, partly because 2020 included $920 million received through prepayment of future co-brand credit-card revenues.
- Marriott recorded a $164 million loss on extinguishment of debt following its 2021 tender offer for $1 billion of Series EE Notes. It issued $1.8 billion of senior notes during the year.
- Management expects 2022 gross room growth to approach 5.0% and net room growth of 3.5%–4.0%. It expects 2022 capital expenditures and other investments of approximately $600–$700 million. The filing provides no specific earnings or revenue guidance.
- Dividends and share repurchases remained suspended pending improvement in leverage. If the recovery does not materially falter, management said some capital returns could resume in the second half of 2022, with more meaningful levels in 2023 and beyond.
- COVID-19, including the emergence of variants and uneven regional recovery, remained a material source of uncertainty. Marriott reported $170 million of Employee Retention Tax Credit refunds received as of February 1, 2022, substantially all expected refunds based on applications submitted by that date.
Risks, contingencies, and unusual items
- The Starwood reservation-database incident remains subject to litigation and government investigations. Marriott said it could not estimate potential additional losses beyond amounts already incurred; future legal, regulatory, cybersecurity, and compliance costs are expected.
- A $300 million put option relating to the Sheraton Grand Chicago was extended to an exercise period in the first half of 2024. Marriott may also purchase the underlying land for an additional $200 million if the put is exercised.
- The Credit Facility leverage covenant, waived through fourth-quarter 2021, resumes with the quarter ending March 31, 2022; the initial required leverage threshold is 5.50:1, stepping down over subsequent quarters. Marriott reported that it then complied with the covenants.
- Other key risks include continuing pandemic disruption, labor shortages and wage pressure, owner or franchisee financial distress or contract termination, cybersecurity and privacy exposure, foreign-exchange movements, and climate-related risks.
Important facts for investors to verify
- Progress in RevPAR recovery, especially business transient and group demand, and the assumptions behind the 2022 room-growth outlook.
- Debt leverage, covenant headroom, upcoming maturities, and liquidity after resumption of the Credit Facility covenant.
- Potential additional costs or liabilities from the Starwood data incident and the timing and outcome of related proceedings.
- Whether capital returns resume as indicated, given recovery conditions and leverage targets.
- How much reported revenue and cash flow reflect reimbursed or timing-related items, including loyalty-program accounting and prior credit-card prepayments.