BETHESDA, MD - After leading the DiversityInc Top 50 Companies for Diversity list in 2020, Marriott International, Inc. was named to the DiversityInc Hall of Fame, as the first hospitality company joining previously number one ranked companies. DiversityInc announced this recognition on May 6 during their annual awards event.
The DiversityInc Hall of Fame list recognizes companies that are driven, based on company-submitted data, in six key areas to include leadership accountability, human capital diversity metrics, talent programs, workforce practices, supplier diversity, and philanthropy.
“Our commitment to diversity, equity and inclusion is a business imperative that has proven to be even more relevant in the most challenging times,” said Anthony Capuano, Chief Executive Officer, Marriott International. “It inspires a culture of engaged associates who live our core values and take care of our communities, our guests and each other. We are incredibly honored to join the DiversityInc Hall of Fame.”
Marriott has consistently championed diversity, equity and inclusion and has been recognized for its talent development programs with a long list of notable and lifetime achievement awards, including - Working Mother 100 Best Companies Quarter-Century Club and Hall of Fame, Black Enterprise Best Companies for Diversity, a repeat LATINA Style Company of the Year, Asia Society Best Companies for Asian Pacific Americans, National Association for Female Executives (NAFE) Top 10 Companies for Executive Women and Hall of Fame, National Organization on Disability (NOD) Leading Disability Employer, AAPD and Disability:IN DEI Best Places to Work for Disability Inclusion, a Fortune 100 Best Companies to Work For each year since inception of the list in 1998, and have received a 100 percent score on the Human Rights Campaign’s Corporate Equality Index for many years.
“Marriott International’s foundation is built upon the wellbeing of our associates, and embracing diversity, equity and inclusion is critical to keeping our legacy vibrant for future generations,” said Dr. David Rodriguez, EVP and Global Chief Human Resources Officer, Marriott International. “As we join the DiversityInc Hall of Fame, our work doesn’t end. Our commitment to ensure a culture of belonging and respect for all associates remains steadfast.”
Marriott has continually been recognized for its outstanding workplace programs. For a comprehensive list, please visit Awards and Recognition.
Marriott International Reports First Quarter 2021 Results
Marriott International, Inc. also reported first quarter 2021 results, which were materially impacted by the COVID-19 global pandemic and efforts to contain it (COVID-19).
Tony Capuano, Chief Executive Officer, said, “We were pleased to see demand improve meaningfully during the first quarter. We are welcoming more and more guests to our hotels as consumers are traveling again once they feel it is safe. While recovery trajectories vary from region to region, the resiliency of demand has been most keenly demonstrated in mainland China, where occupancy is near the pre-pandemic level. Occupancy reached 66 percent in mainland China in March, nearly the same as in March 2019, on strong demand from both leisure and business travelers.
“In our largest region, the U.S. & Canada, demand increased rapidly as vaccine rollouts accelerated. Occupancy started the year at 33 percent in January and reached 49 percent by March. Leisure demand gained momentum, particularly in ski and beach resort destinations. We are encouraged to see green shoots in special corporate and group bookings, which have been improving as companies slowly begin to return to their offices. The pickup in transient booking pace for the U.S. & Canada points toward continued improvement in consumer sentiment around travel.
“Our conversion signings were particularly strong in the quarter and included nearly 7,000 rooms that were part of an all-inclusive deal in our Caribbean and Latin America region. More than 23,500 rooms joined our system in the quarter. Consistent with our view a quarter ago, we expect gross rooms growth could accelerate to approximately 6 percent in 2021. Including deletions, we continue to estimate our rooms distribution could grow 3 to 3.5 percent, net, for the full year.
“Throughout the pandemic we have been proactive in connecting with our Marriott Bonvoy members, and we continue to focus on enhancing our valuable loyalty platform for our 150 million members. Over the last few weeks, we have announced several exciting new programs. We introduced new co-brand credits cards in South Korea and Mexico, and we rolled out a new collaboration with Uber, allowing members in the U.S. to earn points through ride sharing and food delivery.
“As vaccines roll out around the world and government restrictions ease, I am optimistic that demand will continue to strengthen. We have seen signs that there is a significant amount of pent-up demand, regardless of trip purpose, and we look forward to welcoming travelers in increasing numbers to our more than 7,600 properties around the world.”
First Quarter 2021 Results
Marriott’s reported operating income totaled $84 million in the 2021 first quarter, compared to 2020 first quarter reported operating income of $114 million. Reported net loss totaled $11 million in the 2021 first quarter, compared to 2020 first quarter reported net income of $31 million. Reported diluted loss per share totaled $0.03 in the quarter, compared to reported diluted earnings per share (EPS) of $0.09 in the year-ago quarter.
Adjusted operating income in the 2021 first quarter totaled $138 million, compared to 2020 first quarter adjusted operating income of $293 million. Adjusted operating income in the 2020 first quarter excluded impairment charges of $101 million.
First quarter 2021 adjusted net income totaled $34 million, compared to 2020 first quarter adjusted net income of $160 million. Adjusted diluted EPS in the 2021 first quarter totaled $0.10, compared to adjusted diluted EPS of $0.49 in the year-ago quarter. These adjusted 2021 first quarter results and adjusted 2020 first quarter results excluded impairment charges of $3 million after-tax ($0.01 per share) and $75 million after-tax ($0.23 per share), respectively.
Adjusted results also excluded restructuring and merger-related charges, cost reimbursement revenue, and reimbursed expenses. See pages A-2 and A-9 for the calculation of adjusted results and the manner in which the adjusted measures are determined in this press release.
Base management and franchise fees totaled $412 million in the 2021 first quarter, compared to base management and franchise fees of $629 million in the year-ago quarter. The year-over-year decline in these fees is primarily attributable to RevPAR declines related to COVID-19. Other non-RevPAR related franchise fees in the 2021 first quarter totaled $141 million compared to $139 million in the year-ago quarter, aided by $11 million of higher residential branding fees.
Incentive management fees totaled $33 million in the 2021 first quarter. The company recognized no incentive management fees in the first quarter of 2020. Roughly 45 percent of the incentive management fees recognized in the quarter were earned at hotels in the Asia Pacific region, largely in Greater China.
Contract investment amortization for the 2021 first quarter totaled $17 million, compared to $25 million in the year-ago quarter. The year-over-year change largely reflects impairments of investments in management and franchise contracts recorded in the 2020 first quarter.
Owned, leased, and other revenue, net of direct expenses, totaled a $27 million loss in the 2021 first quarter, compared to $8 million of profit in the year-ago quarter as a result of RevPAR declines related to COVID-19.
Depreciation, amortization, and other expenses for the 2021 first quarter totaled $52 million, compared to $150 million in the year-ago quarter. The year-over-year change largely reflects a $90 million impairment charge recorded in the 2020 first quarter.
General, administrative, and other expenses for the 2021 first quarter totaled $211 million, compared to $270 million in the year-ago quarter. The lower expenses in the 2021 first quarter largely reflect $50 million of lower bad debt expense and $14 million of lower guarantee reserves. Expenses in the 2021 quarter include $14 million of additional non-recurring executive compensation related to leadership changes.
Interest expense, net, totaled $100 million in the first quarter compared to $87 million in the year-ago quarter. The increase is largely due to higher interest expense associated with 2020 debt issuances.
Equity in losses for the first quarter totaled $12 million, compared to a $4 million loss in the year-ago quarter. The increase in losses largely reflects the negative impact on results at joint venture properties due to COVID-19.
Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) totaled $296 million in the 2021 first quarter, compared to first quarter 2020 adjusted EBITDA of $442 million. See page A-9 for the adjusted EBITDA calculation.
Selected Performance Information
The company added 134 new properties (23,567 rooms) to its worldwide lodging portfolio during the 2021 first quarter, including roughly 7,300 rooms converted from competitor brands and nearly 12,000 rooms in international markets. Additions in the 2021 first quarter included 11 all-inclusive conversion properties (3,700 rooms) in the company’s Caribbean and Latin America region. One hundred and fourteen properties (17,381 rooms) exited the system during the quarter, including 88 Service Properties Trust hotels (12,803 rooms). At quarter end, Marriott’s global lodging system totaled more than 7,600 properties, with over 1,429,000 rooms.
At quarter end, the company’s worldwide development pipeline totaled 2,825 properties with approximately 491,000 rooms, including 1,141 properties with more than 222,000 rooms under construction and 105 properties with roughly 18,000 rooms approved for development, but not yet subject to signed contracts.
In the 2021 first quarter, worldwide RevPAR declined 46.3 percent (a 45.9 percent decline using actual dollars) compared to the 2020 first quarter. RevPAR in the U.S. & Canada declined 46.3 percent (a 46.3 percent decline using actual dollars), and RevPAR in international markets declined 46.1 percent (a 44.8 percent decline using actual dollars).
Balance Sheet and Liquidity
At quarter end, Marriott’s net debt was $9.6 billion, representing total debt of $10.2 billion less cash and cash equivalents of $0.6 billion. At year-end 2020, the company’s net debt was $9.5 billion, representing total debt of $10.4 billion less cash and cash equivalents of $0.9 billion.
In the first quarter, the company issued $1.1 billion of Series HH Senior Notes due in 2031 with a 2.85 percent interest rate coupon.
The company’s net liquidity was approximately $4.7 billion at the end of the first quarter, representing $0.6 billion in available cash balances and $4.1 billion of unused borrowing capacity under its revolving credit facility.
The company halted share repurchases in February of 2020 and suspended its quarterly dividend beginning in the second quarter of 2020.
Due to the numerous uncertainties associated with COVID-19, Marriott cannot presently estimate the impact of this unprecedented situation on its future results, which is highly dependent on the severity and duration of the pandemic and its impacts, but expects that COVID-19 will continue to be material to the company’s results.
The company expects to provide additional information about the current impact of COVID-19 on its business on its call later this morning.