Please prepare the financial statement

Prepare the common-size financial statements (Income statement, Balance Sheet, and Statement of Cash Flow) for the most recent 4 years with available data. Use the same fiscal year period for all firms in your analysis.

Cover Page – USD ($)
Entity Information [Line Items]
Document Type
Document Annual Report
Document Period End Date
Document Transition Report
Entity File Number
Entity Registrant Name
Entity Incorporation, State or Country Code
Entity Tax Identification Number
Entity Address, Address Line One
Entity Address, City or Town
Entity Address, State or Province
Entity Address, Postal Zip Code
City Area Code
Local Phone Number
Entity Well-known Seasoned Issuer
Entity Voluntary Filers
Entity Current Reporting Status
Entity Interactive Data Current
Entity Filer Category
Entity Small Business
Entity Emerging Growth Company
Entity Shell Company
Entity Public Float
Entity Common Stock, Shares Outstanding
Documents Incorporated by Reference
Amendment Flag
Document Fiscal Year Focus
Document Fiscal Period Focus
Entity Central Index Key
Current Fiscal Year End Date
Nasdaq Global Select Market
Entity Information [Line Items]
Title of 12(b) Security
Trading Symbol
Security Exchange Name
Chicago Stock Exchange
Entity Information [Line Items]
Title of 12(b) Security
Trading Symbol
Security Exchange Name
12 Months Ended
Dec. 31, 2019
10-K
true
Dec. 31,
2019
false
1-13881
MARRIOTT INTERNATIONAL INC /MD/
DE
52-2055918
10400 Fernwood Road
Bethesda
MD
20817
301
380-3000
Yes
No
Yes
Yes
Large Accelerated Filer
false
false
false
Portions of the Proxy Statement prepared for the 2020 Annual Meeting of Shareholders are
incorporated by reference into Part III of this report.
false
2019
FY
0001048286
–12-31
Class A Common Stock, $0.01 par value
MAR
NASDAQ
Class A Common Stock, $0.01 par value
MAR
CHX
Feb. 20, 2020
Jun. 28, 2019
$ 38,730,375,024
324,214,545
CONSOLIDATED STATEMENTS OF INCOME – USD ($) $ in Millions
REVENUES
Total revenue
OPERATING COSTS AND EXPENSES
Depreciation, amortization, and other
General, administrative, and other
Merger-related costs and charges
Costs and Expenses, Total
OPERATING INCOME
Gains and other income, net
Interest expense (1)
Interest income
Equity in earnings
INCOME BEFORE INCOME TAXES
Provision for income taxes
NET INCOME
EARNINGS PER SHARE
Earnings per share – basic (in USD per share)
Earnings per share – diluted (in USD per share)
Base management fees
REVENUES
Gross fee revenues
Franchise fees
REVENUES
Gross fee revenues
Incentive management fees
REVENUES
Gross fee revenues
Net fee revenues
REVENUES
Gross fee revenues
Contract investment amortization
Total revenue
Owned, leased, and other
REVENUES
Total revenue
OPERATING COSTS AND EXPENSES
Cost of revenues
Reimbursements
REVENUES
Total revenue
OPERATING COSTS AND EXPENSES
Cost of revenues
[1]
MENTS OF INCOME – USD ($) $ in Millions
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
$ 20,972
$ 20,758
341
938
138
19,172
1,800
154
(394)
26
13
1,599
(326)
$ 1,273
226
927
155
18,392
2,366
194
(340)
22
103
2,345
(438)
$ 1,907
$ 3.83
$ 3.80
$ 5.45
$ 5.38
$ 1,180
$ 1,140
2,006
1,849
[1]
637
649
[1]
3,823
(62)
3,761
3,638
(58)
3,580
[1]
1,612
1,635
1,316
1,306
[1]
15,599
15,543
[1]
$ 16,439
$ 15,778
[1]
[1]
[1]
[1]
[1]
[1]
[1]
See Note 16 for disclosure of related party amounts.
nths Ended
Dec. 31, 2017
$ 20,452
229
921
159
17,948
2,504
688
(288)
38
40
2,982
(1,523)
$ 1,459
$ 3.89
$ 3.84
$ 1,102
1,586
607
3,295
(50)
3,245
1,752
1,411
15,455
$ 15,228
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME – USD ($) $ in Millions
Statement of Comprehensive Income [Abstract]
Net income
Other comprehensive (loss) income:
Foreign currency translation adjustments
Derivative instrument adjustments and other, net of tax
Reclassification of (gains) losses, net of tax
Total other comprehensive (loss) income, net of tax
Comprehensive income
12 Months End
Dec. 31, 2019
$ 1,273
35
2
(7)
30
$ 1,303
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
$ 1,907
$ 1,459
(391)
4
17
(370)
$ 1,537
478
(9)
11
480
$ 1,939
CONSOLIDATED BALANCE SHEETS – USD ($) $ in Millions
Current assets
Cash and equivalents
Accounts and notes receivable, net
Prepaid expenses and other
Assets held for sale
Assets, current, total
Property and equipment, net
Intangible assets
Intangible assets
Goodwill
Goodwill and intangible assets, net, total
Equity method investments
Notes receivable, net
Deferred tax assets
Operating lease assets
Other noncurrent assets
Total assets
Current liabilities
Current portion of long-term debt
Accounts payable
Accrued payroll and benefits
Accrued expenses and other
Liabilities, current, total
Long-term debt
Deferred tax liabilities
Operating lease liabilities
Other noncurrent liabilities
Shareholders’ equity
Class A Common Stock
Additional paid-in-capital
Retained earnings
Treasury stock, at cost
Accumulated other comprehensive loss
Shareholder’s equity (deficit)
Liabilities and deficit, total
Brands
Intangible assets
Intangible assets
Contract acquisition costs and other
Intangible assets
Intangible assets
Guest loyalty program
Current liabilities
Liability for guest loyalty program
Contract with customer
Deferred revenue
Current liabilities
Contract with customer
[1]
D BALANCE SHEETS – USD ($) $ in Millions
[1]
[1]
[1]
[1]
[1]
[1]
[1]
[1]
[1]
Dec. 31, 2019
Dec. 31, 2018
$ 225
2,395
252
255
3,127
1,904
$ 316
2,133
249
8
2,706
1,956
8,641
9,048
17,689
577
117
154
888
595
25,051
8,380
9,039
17,419
732
125
171
977
720
1,339
1,383
6,677
9,963
290
882
2,236
833
767
1,345
963
6,437
8,514
485
5
5,800
9,644
(14,385)
(361)
703
25,051
5
5,814
8,982
(12,185)
(391)
2,225
23,696
5,954
5,790
2,687
2,590
587
23,696
2,372
See Note 16 for disclosure of related party amounts.
2,258
3,460
2,529
2,932
$ 840
$ 731
CONSOLIDATED STATEMENTS OF CASH FLOWS $ in Millions
OPERATING ACTIVITIES
Net income
Adjustments to reconcile to cash provided by operating activities:
Depreciation, amortization, and other
Share-based compensation
Income taxes
Contract acquisition costs
Merger-related charges
Working capital changes
Gain on asset dispositions
Other
Net cash provided by operating activities
INVESTING ACTIVITIES
Capital expenditures
Dispositions
Loan advances
Loan collections
Other
Net cash (used in) provided by investing activities
FINANCING ACTIVITIES
Commercial paper/Credit Facility, net
Issuance of long-term debt
Repayment of long-term debt
Issuance of Class A Common Stock
Dividends paid
Purchase of treasury stock
Share-based compensation withholding taxes
Other
Net cash (used in) provided by financing activities
DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period
Restricted cash
Guest loyalty program
Adjustments to reconcile to cash provided by operating activities:
Liability for guest loyalty program
[1]
12 Months Ended
Dec. 31, 2019USD ($)
$ 1,273
403
187
(200)
(195)
86
(273)
(147)
294
1,685
(653)
395
(30)
51
(47)
(284)
951
1,397
(835)
7
(612)
(2,260)
(148)
(8)
(1,508)
(107)
360 [1]
253 [1]
28
$ 257
The 2019 amounts include beginning restricted cash of $44 million at December 31, 2018 , and ending restricted cash of $28
Dec. 31, 2018USD ($)
Dec. 31, 2017USD ($)
$ 1,907
$ 1,459
284
184
(239)
(152)
16
(76)
(194)
107
2,357
279
181
887
(185)
(124)
(30)
(687)
149
2,227
(556)
479
(13)
48
(10)
(52)
(240)
1,418
(93)
187
(61)
1,211
(129)
1,646
(397)
4
(543)
(2,850)
(105)
0
(2,374)
(69)
429
360 [1]
44
60
0
(310)
6
(482)
(3,013)
(157)
0
(3,896)
(458)
887
429
$ 520
$ 298
nd ending restricted cash of $28 million at December 31, 2019 , which
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY – USD ($) $ in Millions
Beginning balance at Dec. 31, 2016
Beginning balance (in shares) at Dec. 31, 2016
Increase (Decrease) in Stockholders’ Equity [Roll Forward]
Net income
Other comprehensive income (loss)
Dividends ($1.29 per share)
Share-based compensation plans (in shares)
Share-based compensation plans
Purchase of treasury stock
Purchase of treasury stock (in shares)
Ending balance at Dec. 31, 2017
Ending balance (in shares) at Dec. 31, 2017
Increase (Decrease) in Stockholders’ Equity [Roll Forward]
Net income
Other comprehensive income (loss)
Dividends ($1.29 per share)
Share-based compensation plans (in shares)
Share-based compensation plans
Purchase of treasury stock
Purchase of treasury stock (in shares)
Ending balance at Dec. 31, 2018
Ending balance (in shares) at Dec. 31, 2018
Increase (Decrease) in Stockholders’ Equity [Roll Forward]
Net income
Other comprehensive income (loss)
Dividends ($1.29 per share)
Share-based compensation plans (in shares)
Share-based compensation plans
Purchase of treasury stock
Purchase of treasury stock (in shares)
Ending balance at Dec. 31, 2019
Ending balance (in shares) at Dec. 31, 2019
Increase (Decrease) in Stockholders’ Equity [Roll Forward]
Common stock, authorized (in shares)
Common stock, par value (in USD per share)
Preferred stock, authorized (in shares)
Preferred stock, outstanding (in shares)
[1]
Total
$ 5,121
1,459
480
(482)
29
(3,025)
3,582
1,907
(370)
(543)
86
(2,809)
2,225
1,273
30
(612)
46
(2,260)
$ 703
324,000,000
800,000,000
$ 0.01
10,000,000
0
Our restated certificate of incorporation authorizes 800 million shares of our common stock, with a par value of $.01 per sha
Class A Common StockClass A Common Stock
$5
386,100,000
Additional Paid-in- Capital
$ 5,808
2,200,000
(38)
(29,200,000)
$5
359,100,000
5,770
1,500,000
44
(21,500,000)
$5
339,100,000
5,814
2,200,000
(14)
(17,300,000)
$5
324,000,000 [1]
$ 5,800
tock, with a par value of $.01 per share and 10 million shares of preferred stock, without par value. At year-end 2019 , we had 324 million
Retained Earnings
$ 6,265
Treasury Stock, at Cost
Accumulated Other Comprehensive Loss
$ (6,460)
$ (497)
1,459
480
(482)
0
67
(3,025)
7,242
(9,418)
(17)
1,907
(370)
(543)
0
42
(2,809)
8,982
(12,185)
(391)
30
(612)
0
60
(2,260)
$ 9,644
$ (14,385)
r value. At year-end 2019 , we had 324 million of these authorized shares of our common stock and no
$ (361)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Parenthetical) – $ / shares
Statement of Stockholders’ Equity [Abstract]
Dividends declared (in USD per share)
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
$ 1.85
$ 1.56
Dec. 31, 2017
$ 1.29
BASIS OF PRESENTATION
Accounting Policies [Abstract]
BASIS OF PRESENTATION
12 Months Ended
Dec. 31, 2019
BASIS OF PRESENTATION The consolidated financial statements present the results of operations,
financial position, and cash flows of Marriott International, Inc. and subsidiaries (referred to in this
report as “we,” “us,” “Marriott,” or “the Company ”). In order to make this report easier to read,
we also refer throughout to (i) our Consolidated Financial Statements as our “Financial
Statements,” (ii) our Consolidated Statements of Income as our “Income Statements,” (iii) our
Consolidated Balance Sheets as our “Balance Sheets,” (iv) our Consolidated Statements of Cash
Flows as our “Statements of Cash Flows,” (v) our properties, brands, or markets in the United
States (“U.S.”) and Canada as “North America” or “North American,” and (vi) our properties,
brands, or markets in our Caribbean and Latin America, Europe, and Middle East and Africa regions
as “Other International,” and together with those in our Asia Pacific segment, as “International.” In
addition, references throughout to numbered “Notes” refer to these Notes to Consolidated
Financial Statements, unless otherwise stated. Preparation of financial statements that conform
with U.S. generally accepted accounting principles (“GAAP”) requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities as of the date
of the financial statements, the reported amounts of revenues and expenses during the reporting
periods, and the disclosures of contingent liabilities. Accordingly, ultimate results could differ from
those estimates. The accompanying Financial Statements reflect all normal and recurring
adjustments necessary to present fairly our financial position at fiscal year-end 2019 and fiscal yearend 2018 and the results of our operations and cash flows for fiscal years 2019 , 2018 , and 2017 .
We have eliminated all material intercompany transactions and balances between entities
consolidated in these Financial Statements. The accompanying Financial Statements also reflect our
adoption of ASU 2016-02. See the “New Accounting Standards Adopted” caption in Note 2 for
additional information.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Policies [Abstract]
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
12 Months Ended
Dec. 31, 2019
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Revenue Recognition Base Management and
Incentive Management Fees : For our managed hotels, we have performance obligations to provide
hotel management services and a license to our hotel system intellectual property for the use of
our brand names. As compensation for such services, we are generally entitled to receive base
fees, which are a percentage of the revenues of hotels, and incentives fees, which are generally
based on a measure of hotel profitability. Both the base and incentive management fees are
variable consideration, as the transaction price is based on a percentage of revenue or profit, as
defined in each contract. We recognize base management fees on a monthly basis over the term of
the agreement as those amounts become payable. We recognize incentive management fees on a
monthly basis over the term of the agreement based on each property’s financial results, as long as
we do not expect a significant reversal due to projected future hotel performance or cash flows in
future periods. Franchise Fee and Royalty Fee Revenue : For our franchised hotels, we have a
performance obligation to provide franchisees and operators a license to our hotel system
intellectual property for use of certain of our brand names. As compensation for such services, we
are typically entitled to initial application fees and ongoing royalty fees. Our ongoing royalty fees
represent variable consideration, as the transaction price is based on a percentage of certain
revenues of the hotels, as defined in each contract. We recognize royalty fees on a monthly basis
over the term of the agreement as those amounts become payable. Initial application and
relicensing fees are fixed consideration payable upon submission of a franchise application or
renewal and are recognized on a straight-line basis over the initial or renewal term of the franchise
agreements. Owned and Leased Hotel Revenue : At our owned and leased hotels, we have
performance obligations to provide accommodations and other ancillary services to hotel guests.
As compensation for such goods and services, we are typically entitled to a fixed nightly fee for an
agreed upon period and additional fixed fees for any ancillary services purchased. These fees are
generally payable at the time the hotel guest checks out of the hotel. We generally satisfy the
performance obligations over time, and we recognize the revenue from room sales and from other
ancillary guest services on a daily basis, as the rooms are occupied and we have rendered the
services. Cost Reimbursements : Under our management and franchise agreements, we are
ACQUISITIONS AND DISPOSITIONS
Business Combinations [Abstract]
ACQUISITIONS AND DISPOSITIONS
12 Months Ended
Dec. 31, 2019
ACQUISITIONS AND DISPOSITIONS Acquisitions In 2019, we completed the acquisition of Elegant
Hotels Group plc (“Elegant”) for $128 million in cash and assumed Elegant’s net debt outstanding of
$63 million , which we subsequently repaid in January 2020. As a result of the transaction, we
added seven hotels and a beachfront restaurant on the island of Barbados to our Caribbean and
Latin America owned and leased portfolio. In 2019, we purchased the W New York – Union Square,
a North American Full-Service property, for $206 million . In 2019, we accelerated our option to
acquire our partner’s remaining interests in two joint ventures. As a result of the transaction, we
recognized an indefinite-lived brand asset for AC Hotels by Marriott of $156 million and
management and franchise contract assets, with a weighted-average term of 24 years totaling $34
million . Dispositions In 2019, we sold The St. Regis New York and the Sheraton Gateway Hotel in
Toronto International Airport, two North American Full-Service properties, and recognized total
gains of $134 million in the “Gains and other income, net” caption of our Income Statements. We
will continue to operate the hotels under long-term management agreements. In 2018, we sold the
following properties and recognized total gains of $132 million in the “Gains and other income,
net” caption of our Income Statements: • The Tremont Chicago Hotel at Magnificent Mile and Le
Centre Sheraton Montreal Hotel, two North American Full-Service properties; • The Westin
Denarau Island Resort and The Sheraton Fiji Resort, two Asia Pacific properties; and • The Sheraton
Buenos Aires Hotel & Convention Center and Park Tower, A Luxury Collection Hotel, Buenos Aires,
two Caribbean and Latin America properties. In 2018, we sold our interest in three equity method
investments, whose assets included a plot of land in Italy, the W Hotel Mexico City, and the Royal
Orchid Sheraton Hotel & Towers in Bangkok, and we recognized total gains of $42 million in the
“Gains and other income, net” caption of our Income Statements. Also in 2018, a Caribbean and
Latin America investee sold the JW Marriott Mexico City, and a North American Full-Service
investee sold The Ritz-Carlton Toronto, and we recorded our share of the gains of $55 million and
$10 million , respectively, in the “Equity in earnings” caption of our Income Statements. In 2017,
we sold the following three North American Full-Service properties: • The Sheraton Centre Toronto
Hotel that was owned on a long-term ground lease; • The Westin Maui that was owned on a longterm ground lease; and • The Charlotte Marriott City Center and recognized a $24 million gain in
EARNINGS PER SHARE
Earnings Per Share [Abstract]
Earnings Per Share
12 Months Ended
Dec. 31, 2019
EARNINGS PER SHARE The table below illustrates the reconciliation of the earnings and number of
shares used in our calculations of basic and diluted earnings per share, the latter of which uses the
treasury stock method in order to calculate the dilutive effect of the Company’s potential common
stock: (in millions, except per share amounts) 2019 2018 2017 Computation of Basic Earnings Per
Share Net income $ 1,273 $ 1,907 $ 1,459 Shares for basic earnings per share 332.7 350.1 375.2
Basic earnings per share $ 3.83 $ 5.45 $ 3.89 Computation of Diluted Earnings Per Share Net
income $ 1,273 $ 1,907 $ 1,459 Shares for basic earnings per share 332.7 350.1 375.2 Effect of
dilutive securities Share-based compensation 2.8 4.1 4.7 Shares for diluted earnings per share
335.5 354.2 379.9 Diluted earnings per share $ 3.80 $ 5.38 $ 3.84
SHARE-BASED COMPENSATION
Share-based Payment Arrangement [Abstract]
SHARE-BASED COMPENSATION
12 Months Ended
Dec. 31, 2019
SHARE-BASED COMPENSATION RSUs and PSUs We granted RSUs in 2019 to certain officers and key
employees, and those units vest generally over four years in equal annual installments commencing
one year after the grant date. We also granted performance-based RSUs (“PSUs”) in 2019 to certain
executive officers, which are earned, subject to continued employment and the satisfaction of
certain performance conditions based on achievement of pre-established targets for gross room
openings, active Marriott Bonvoy loyalty member growth, and adjusted operating income growth
over, or at the end of, a three -year performance period. We had deferred compensation costs for
RSUs of approximately $176 million at year-end 2019 and $167 million at year-end 2018 . The
weighted average remaining term for RSUs outstanding at year-end 2019 was two years . The
following table provides additional information on RSUs for the last three fiscal years: 2019 2018
2017 Share-based compensation expense (in millions) $ 177 $ 170 $ 172 Weighted average grantdate fair value (per RSU) $ 117 $ 132 $ 85 Aggregate intrinsic value of distributed RSUs (in millions)
$ 276 $ 294 $ 322 The following table presents the changes in our outstanding RSUs, including
PSUs, during 2019 and the associated weighted average grant-date fair values: Number of RSUs (in
millions) Weighted Average Grant-Date Fair Value (per RSU) Outstanding at year-end 2018 4.8 $ 90
Granted 1.7 117 Distributed (2.3 ) 79 Forfeited (0.1 ) 112 Outstanding at year-end 2019 4.1 $ 106
Other Information At year-end 2019 , we had 29 million remaining shares authorized under the
Marriott and Starwood Hotels & Resorts Worldwide, LLC, formerly known as Starwood Hotels &
Resorts Worldwide, Inc. (“Starwood”) stock plans.
INCOME TAXES
Income Tax Disclosure [Abstract]
INCOME TAXES
12 Months Ended
Dec. 31, 2019
INCOME TAXES The components of our earnings before income taxes for the last three fiscal years
consisted of: ($ in millions) 2019 2018 2017 U.S. $ 549 $ 1,311 $ 2,153 Non-U.S. 1,050 1,034 829 $
1,599 $ 2,345 $ 2,982 Our provision for income taxes for the last three fiscal years consists of: ($ in
millions) 2019 2018 2017 Current -U.S. Federal $ (272 ) $ (169 ) $ (1,253 ) -U.S. State (57 ) (94 ) (152
) -Non-U.S. (161 ) (284 ) (178 ) (490 ) (547 ) (1,583 ) Deferred -U.S. Federal 141 10 61 -U.S. State 39
(6 ) (33 ) -Non-U.S. (16 ) 105 32 164 109 60 $ (326 ) $ (438 ) $ (1,523 ) Unrecognized Tax Benefits
The following table reconciles our unrecognized tax benefit balance for each year from the
beginning of 2017 to the end of 2019 : ($ in millions) Amount Unrecognized tax benefit at beginning
of 2017 $ 421 Change attributable to tax positions taken in prior years 12 Change attributable to
tax positions taken during the current period 87 Decrease attributable to settlements with taxing
authorities (28 ) Decrease attributable to lapse of statute of limitations (1 ) Unrecognized tax
benefit at year-end 2017 491 Change attributable to tax positions taken in prior years 37 Change
attributable to tax positions taken during the current period 148 Decrease attributable to
settlements with taxing authorities (53 ) Unrecognized tax benefit at year-end 2018 623 Change
attributable to tax positions taken in prior years (13 ) Change attributable to tax positions taken
during the current period 13 Decrease attributable to settlements with taxing authorities (54 )
Unrecognized tax benefit at year-end 2019 $ 569 Our unrecognized tax benefit balances included
$498 million at year-end 2019 , $497 million at year-end 2018 , and $385 million at year-end 2017
of tax positions that, if recognized, would impact our effective tax rate. It is reasonably possible
that we will settle $207 million of unrecognized tax benefits within the next twelve months. This
includes $179 million related to U.S. federal issues that are currently in appeals and $28 million
related to state and non-U.S. audits we expect to resolve in 2020 . We recognize accrued interest
and penalties for our unrecognized tax benefits as a component of tax expense. Related interest
totaled $28 million in 2019 , $3 million in 2018 , and $24 million in 2017 . We file income tax
returns, including returns for our subsidiaries, in various jurisdictions around the world. The U.S.
Internal Revenue Service (“IRS”) has examined our federal income tax returns, and as of year-end
2019 , we have settled all issues for tax years through 2013 for Marriott and through 2009 for
Starwood. Our Marriott 2014 and 2015 tax year audits are substantially complete, and our Marriott
COMMITMENTS AND CONTINGENCIES
Commitments and Contingencies Disclosure [Abstract]
COMMITMENTS AND CONTINGENCIES
12 Months Ended
Dec. 31, 2019
COMMITMENTS AND CONTINGENCIES Guarantees We issue guarantees to certain lenders and
hotel owners, chiefly to obtain long-term management and franchise contracts. The guarantees
generally have a stated maximum funding amount and a term of three to ten years . The terms of
guarantees to lenders generally require us to fund if cash flows from hotel operations are
inadequate to cover annual debt service or to repay the loan at maturity. The terms of the
guarantees to hotel owners generally require us to fund if the hotels do not attain specified levels
of operating profit. Guarantee fundings to lenders and hotel owners are generally recoverable out
of future hotel cash flows and/or proceeds from the sale or refinancing of hotels. We also enter
into project completion guarantees with certain lenders in conjunction with hotels that we or our
joint venture partners are building. We present the maximum potential amount of our future
guarantee fundings and the carrying amount of our liability for our debt service, operating profit,
and other guarantees (excluding contingent purchase obligations) for which we are the primary
obligor at year-end 2019 in the following table: ($ in millions) Guarantee Type Maximum Potential
Amount of Future Fundings Recorded Liability for Guarantees Debt service $ 53 $ 6 Operating profit
231 142 Other 15 3 $ 299 $ 151 Our liability at year-end 2019 for guarantees for which we are the
primary obligor is reflected in our Balance Sheets as $16 million of “Accrued expenses and other”
and $135 million of “Other noncurrent liabilities.” Our guarantees listed in the preceding table
include $3 million of debt service guarantees, $114 million of operating profit guarantees, and $5
million of other guarantees that will not be in effect until the underlying properties open and we
begin to operate the properties or certain other events occur. In conjunction with financing
obtained for specific projects or properties owned by us or joint ventures in which we are a party,
we may provide industry standard indemnifications to the lender for loss, liability, or damage
occurring as a result of the actions of the other joint venture owner or our own actions. Contingent
Purchase Obligation Sheraton Grand Chicago . We granted the owner a one-time right, exercisable
in 2022, to require us to purchase the leasehold interest in the land and the hotel for $300 million
in cash (the “put option”). If the owner exercises the put option, we have the option to purchase,
at the same time the put transaction closes, the fee simple interest in the underlying land for an
additional $200 million in cash. We account for the put option as a guarantee, and our recorded
LEASES
Leases [Abstract]
LEASES
LEASES
12 Months Ended
Dec. 31, 2019
LEASES We enter into operating and finance leases primarily for hotels, offices, and equipment.
Most leases have initial terms of up to 20 years , and contain one or more renewals at our option,
generally for five- or 10 -year periods. We have generally not included these renewal periods in the
lease term as it is not reasonably certain that we will exercise the renewal option. The following
table details the composition of lease expense at year-end 2019 : ($ in millions) 2019 Operating
lease cost $ 185 Variable lease cost 113 In the 2019 fourth quarter, we recorded impairment
charges of $78 million and $21 million in the “Depreciation, amortization, and other” caption of our
Income Statements to reduce the carrying amount of the Renaissance New York Times Square
Hotel lease right-of-use asset and property and equipment, including leasehold improvements,
respectively. We determined that we may not be able to fully recover the carrying amount of this
North American Full-Service hotel lease after evaluating the assets for recovery due to declines in
market performance and future cash flow projections. We estimated the fair value using an income
approach reflecting internally developed Level 3 discounted cash flows that included, among other
things, our expectations of future cash flows based on historical experience and projected growth
rates, usage estimates and demand trends. Additionally, during the year ended 2019 , we recorded
an expense of $34 million in the “Merger-related costs and charges” caption of our Income
Statements due to the impairment of a legacy-Starwood office building accounted for as a finance
lease. The following table presents our future minimum lease payments at year-end 2019 : ($ in
millions) Operating Leases Finance Leases 2020 $ 173 $ 13 2021 171 13 2022 165 13 2023 115 13
2024 107 14 Thereafter 579 151 Total minimum lease payments $ 1,310 $ 217 Less: Amount
representing interest 298 60 Present value of minimum lease payments $ 1,012 $ 157 Current (1)
130 6 Noncurrent (2) 882 151 $ 1,012 $ 157 (1) Operating leases are recorded in the “Accrued
expenses and other” and finance leases are recorded in the “Current portion of long-term debt”
captions of our Balance Sheets. (2) Operating leases are recorded in the “Operating lease liabilities”
and finance leases are recorded in the “Long-term debt” captions of our Balance Sheets. At yearend 2019 , we had entered into an agreement that we expect to account for as an operating lease
with a 20 -year term for our new headquarters office, which is not reflected in our Balance Sheets
or in the table above as the lease has not commenced. The following table presents additional
LEASES We enter into operating and finance leases primarily for hotels, offices, and equipment.
Most leases have initial terms of up to 20 years , and contain one or more renewals at our option,
generally for five- or 10 -year periods. We have generally not included these renewal periods in the
lease term as it is not reasonably certain that we will exercise the renewal option. The following
table details the composition of lease expense at year-end 2019 : ($ in millions) 2019 Operating
lease cost $ 185 Variable lease cost 113 In the 2019 fourth quarter, we recorded impairment
charges of $78 million and $21 million in the “Depreciation, amortization, and other” caption of our
Income Statements to reduce the carrying amount of the Renaissance New York Times Square
Hotel lease right-of-use asset and property and equipment, including leasehold improvements,
respectively. We determined that we may not be able to fully recover the carrying amount of this
North American Full-Service hotel lease after evaluating the assets for recovery due to declines in
market performance and future cash flow projections. We estimated the fair value using an income
approach reflecting internally developed Level 3 discounted cash flows that included, among other
things, our expectations of future cash flows based on historical experience and projected growth
rates, usage estimates and demand trends. Additionally, during the year ended 2019 , we recorded
an expense of $34 million in the “Merger-related costs and charges” caption of our Income
Statements due to the impairment of a legacy-Starwood office building accounted for as a finance
lease. The following table presents our future minimum lease payments at year-end 2019 : ($ in
millions) Operating Leases Finance Leases 2020 $ 173 $ 13 2021 171 13 2022 165 13 2023 115 13
2024 107 14 Thereafter 579 151 Total minimum lease payments $ 1,310 $ 217 Less: Amount
representing interest 298 60 Present value of minimum lease payments $ 1,012 $ 157 Current (1)
130 6 Noncurrent (2) 882 151 $ 1,012 $ 157 (1) Operating leases are recorded in the “Accrued
expenses and other” and finance leases are recorded in the “Current portion of long-term debt”
captions of our Balance Sheets. (2) Operating leases are recorded in the “Operating lease liabilities”
and finance leases are recorded in the “Long-term debt” captions of our Balance Sheets. At yearend 2019 , we had entered into an agreement that we expect to account for as an operating lease
with a 20 -year term for our new headquarters office, which is not reflected in our Balance Sheets
or in the table above as the lease has not commenced. The following table presents additional
LONG-TERM DEBT
Debt Disclosure [Abstract]
LONG-TERM DEBT
12 Months Ended
Dec. 31, 2019
LONG-TERM DEBT We provide detail on our long-term debt balances, net of discounts, premiums,
and debt issuance costs, in the following table at year-end 2019 and 2018 : ($ in millions) At YearEnd 2019 At Year-End 2018 Senior Notes: Series K Notes, interest rate of 3.0%, face amount of
$600, matured March 1, 2019 $ — $ 600 Series L Notes, interest rate of 3.3%, face amount of $350,
maturing September 15, 2022 349 349 Series M Notes, interest rate of 3.4%, face amount of $350,
maturing October 15, 2020 349 349 Series N Notes, interest rate of 3.1%, face amount of $400,
maturing October 15, 2021 398 397 Series O Notes, interest rate of 2.9%, face amount of $450,
maturing March 1, 2021 449 448 Series P Notes, interest rate of 3.8%, face amount of $350,
maturing October 1, 2025 346 345 Series Q Notes, interest rate of 2.3%, face amount of $750,
maturing January 15, 2022 747 745 Series R Notes, interest rate of 3.1%, face amount of $750,
maturing June 15, 2026 744 743 Series T Notes, interest rate of 7.2%, face amount of $181,
matured December 1, 2019 — 188 Series U Notes, interest rate of 3.1%, face amount of $291,
maturing February 15, 2023 291 291 Series V Notes, interest rate of 3.8%, face amount of $318,
maturing March 15, 2025 332 335 Series W Notes, interest rate of 4.5%, face amount of $278,
maturing October 1, 2034 291 292 Series X Notes, interest rate of 4.0%, face amount of $450,
maturing April 15, 2028 444 443 Series Y Notes, floating rate, face amount of $550, maturing
December 1, 2020 549 547 Series Z Notes, interest rate of 4.2%, face amount of $350, maturing
December 1, 2023 347 347 Series AA Notes, interest rate of 4.7%, face amount of $300, maturing
December 1, 2028 297 297 Series BB Notes, floating rate, face amount of $300, maturing March 8,
2021 299 — Series CC Notes, interest rate of 3.6%, face amount of $550, maturing April 15, 2024
564 — Series DD Notes, interest rate of 2.1%, face amount of $550, maturing October 3, 2022 543
— Commercial paper 3,197 2,245 Credit Facility — — Finance lease obligations 157 163 Other 247
223 $ 10,940 $ 9,347 Less: Current portion of long-term debt (977 ) (833 ) $ 9,963 $ 8,514 All our
long-term debt is recourse to us but unsecured, other than debt assumed in our acquisition of
Elegant which we paid off in January 2020. All the Senior Notes shown in the table above are our
unsecured and unsubordinated obligations, which rank equally with our other Senior Notes and all
other unsecured and unsubordinated indebtedness that we have issued or will issue from time to
time, and are governed by the terms of an indenture, dated as of November 16, 1998, between us
INTANGIBLE ASSETS AND GOODWILL
Goodwill and Intangible Assets Disclosure [Abstract]
INTANGIBLE ASSETS AND GOODWILL
12 Months Ended
Dec. 31, 2019
INTANGIBLE ASSETS AND GOODWILL The following table details the composition of our intangible
assets at year-end 2019 and 2018 : ($ in millions) At Year-End 2019 At Year-End 2018 Definite-lived
Intangible Assets Costs incurred to obtain contracts with customers $ 1,588 $ 1,347 Contracts
acquired in business combinations and other 1,972 1,983 3,560 3,330 Accumulated amortization
(808 ) (674 ) 2,752 2,656 Indefinite-lived Intangible Brand Assets 5,889 5,724 $ 8,641 $ 8,380 We
capitalize direct costs that we incur to obtain management, franchise, and license agreements. We
amortize these costs on a straight-line basis over the initial term of the agreements, ranging from
15 to 30 years. For acquired definite-lived intangible assets, we recorded amortization expense of
$105 million in 2019 , $111 million in 2018 , and $116 million in 2017 in the “Depreciation,
amortization, and other” caption of our Income Statements. For these assets, we estimate that our
aggregate amortization expense will be $102 million for each of the next five fiscal years. The
following table details the carrying amount of our goodwill at year-end 2019 and 2018 : ($ in
millions) North American Full-Service North American Limited-Service Asia Pacific Other
International Total Goodwill Balance at year-end 2018 $ 3,566 $ 1,755 $ 1,862 $ 1,856 $ 9,039
Foreign currency translation 10 7 2 (10 ) 9 Balance at year-end 2019 $ 3,576 $ 1,762 $ 1,864 $
1,846 $ 9,048
PROPERTY AND EQUIPMENT
Property, Plant and Equipment [Abstract]
PROPERTY AND EQUIPMENT
12 Months Ended
Dec. 31, 2019
PROPERTY AND EQUIPMENT The following table presents the composition of our property and
equipment balances at year-end 2019 and 2018 : ($ in millions) At Year-End 2019 At Year-End 2018
Land $ 684 $ 591 Buildings and leasehold improvements 1,100 1,275 Furniture and equipment
1,225 1,439 Construction in progress 196 168 3,205 3,473 Accumulated depreciation (1,301 )
(1,517 ) $ 1,904 $ 1,956 We record property and equipment at cost, including interest and real
estate taxes we incur during development and construction. We capitalize the cost of
improvements that extend the useful life of property and equipment when we incur them. These
capitalized costs may include structural costs, equipment, fixtures, floor, and wall coverings. We
expense all repair and maintenance costs when we incur them. We compute depreciation using the
straight-line method over the estimated useful lives of the assets (generally three to 40 years), and
we amortize leasehold improvements over the shorter of the asset life or lease term. Our gross
depreciation expense totaled $346 million in 2019 , $256 million in 2018 , and $231 million in 2017
(of which $121 million in 2019 , $147 million in 2018 , and $126 million in 2017 was included in the
“Reimbursed expenses” caption of our Income Statements). Fixed assets attributed to operations
located outside the U.S. were $695 million in 2019 and $533 million in 2018 . In the 2019 fourth
quarter, we recorded impairment charges to reduce the carrying amount of the Renaissance New
York Times Square Hotel property and equipment, including leasehold improvements, and right-ofuse asset as discussed in Note 8
NOTES RECEIVABLE
Receivables [Abstract]
NOTES RECEIVABLE
12 Months Ended
Dec. 31, 2019
NOTES RECEIVABLE The following table presents the expected future principal payments, net of
reserves and unamortized discounts, as well as interest rates for our notes receivable at year-end
2019 : Notes Receivable Principal Payments ($ in millions) Amount 2020 $ 9 2021 32 2022 28 2023
2 2024 8 Thereafter 47 Balance at year-end 2019 $ 126 Weighted average interest rate at year-end
2019 5.6% Range of stated interest rates at year-end 2019 0-9% At year-end 2019 , our recorded
investment in impaired senior, mezzanine, and other loans was $20 million , and we had a $12
million allowance for credit losses, leaving $8 million of exposure to our investment in impaired
loans. At year-end 2018 , our recorded investment in impaired senior, mezzanine, and other loans
was $45 million , and we had a $25 million allowance for credit losses, leaving $20 million of
exposure to our investment in impaired loans. Our average investment in impaired senior,
mezzanine, and other loans totaled $33 million during 2019 , $70 million during 2018 , and $84
million during 2017 .
FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair Value Disclosures [Abstract]
FAIR VALUE OF FINANCIAL INSTRUMENTS
12 Months Ended
Dec. 31, 2019
FAIR VALUE OF FINANCIAL INSTRUMENTS We believe that the fair values of our current assets and
current liabilities approximate their reported carrying amounts. We present the carrying values and
the fair values of noncurrent financial assets and liabilities that qualify as financial instruments,
determined under current guidance for disclosures on the fair value of financial instruments, in the
following table: At Year-End 2019 At Year-End 2018 ($ in millions) Carrying Amount Fair Value
Carrying Amount Fair Value Senior, mezzanine, and other loans $ 117 $ 112 $ 125 $ 116 Total
noncurrent financial assets $ 117 $ 112 $ 125 $ 116 Senior Notes $ (6,441 ) $ (6,712 ) $ (5,928 ) $
(5,794 ) Commercial paper (3,197 ) (3,197 ) (2,245 ) (2,245 ) Other long-term debt (174 ) (179 ) (184
) (182 ) Other noncurrent liabilities (196 ) (196 ) (153 ) (153 ) Total noncurrent financial liabilities $
(10,008 ) $ (10,284 ) $ (8,510 ) $ (8,374 ) We estimate the fair value of our senior, mezzanine, and
other loans by discounting cash flows using risk-adjusted rates, both of which are Level 3 inputs.
We estimate the fair value of our other long-term debt, excluding leases, using expected future
payments discounted at risk-adjusted rates, which are Level 3 inputs. We determine the fair value
of our Senior Notes using quoted market prices, which are directly observable Level 1 inputs. As
discussed in Note 9 , even though our commercial paper borrowings generally have short-term
maturities of 30 days or less, we classify outstanding commercial paper borrowings as long-term
based on our ability and intent to refinance them on a long-term basis. As we are a frequent issuer
of commercial paper, we use pricing from recent transactions as Level 2 inputs in estimating fair
value. At year-end 2019 and year-end 2018 , we determined that the carrying value of our
commercial paper approximated fair value due to the short maturity. Our other noncurrent
liabilities largely consist of guarantees. As we note in the “ Guarantees ” caption of Note 2 , we
measure our liability for guarantees at fair value on a nonrecurring basis, which is when we issue or
modify a guarantee using Level 3 internally developed inputs. At year-end 2019 and year-end 2018
, we determined that the carrying values of our guarantee liabilities approximated their fair values
based on Level 3 inputs. See the “ Fair Value Measurements ” caption of Note 2 for more
information on the input levels we use in determining fair value.
ACCUMULATED OTHER COMPREHENSIVE
LOSS
Equity [Abstract]
ACCUMULATED OTHER COMPREHENSIVE
LOSS
12 Months Ended
Dec. 31, 2019
ACCUMULATED OTHER COMPREHENSIVE LOSS The following table details the accumulated other
comprehensive loss activity for 2019 , 2018 , and 2017 : ($ in millions) Foreign Currency Translation
Adjustments Derivative Instrument and Other Adjustments Accumulated Other Comprehensive
Loss Balance at year-end 2016 $ (503 ) $ 6 $ (497 ) Other comprehensive (loss) income before
reclassifications (1) 478 (9 ) 469 Reclassification of losses (gains), net of tax 2 9 11 Net other
comprehensive (loss) income 480 — 480 Balance at year-end 2017 $ (23 ) $ 6 $ (17 ) Other
comprehensive (loss) income before reclassifications (1) (391 ) 4 (387 ) Reclassification of losses
(gains), net of tax 11 6 17 Net other comprehensive (loss) income (380 ) 10 (370 ) Adoption of ASU
2016-01 — (4 ) (4 ) Balance at year-end 2018 $ (403 ) $ 12 $ (391 ) Other comprehensive (loss)
income before reclassifications (1) 35 2 37 Reclassification of losses (gains), net of tax — (7 ) (7 )
Net other comprehensive (loss) income 35 (5 ) 30 Balance at year-end 2019 $ (368 ) $ 7 $ (361 ) (1)
Other comprehensive (loss) income before reclassifications for foreign currency translation
adjustments includes gains (losses) on intra-entity foreign currency transactions that are of a longterm investment nature of $6 million for 2019 , $14 million for 2018 , and $(147) million for 2017 .
BUSINESS SEGMENTS
Segment Reporting [Abstract]
BUSINESS SEGMENTS
12 Months Ended
Dec. 31, 2019
BUSINESS SEGMENTS We are a diversified global lodging company with operations in the following
reportable business segments: • North American Full-Service , which includes our Luxury and
Premium properties located in the U.S. and Canada; • North American Limited-Service , which
includes our Select properties located in the U.S. and Canada; and • Asia Pacific , which includes all
properties in our Asia Pacific region. The following operating segments do not meet the applicable
accounting criteria for separate disclosure as reportable business segments: Caribbean and Latin
America, Europe, and Middle East and Africa. We present these operating segments together as “
Other International ” in the tables below. We evaluate the performance of our operating segments
using “segment profits” which is based largely on the results of the segment without allocating
corporate expenses, income taxes, indirect general, administrative, and other expenses, or mergerrelated costs and charges. We assign gains and losses, equity in earnings or losses from our joint
ventures, and direct general, administrative, and other expenses to each of our segments. “
Unallocated corporate ” represents a portion of our revenues, including license fees we receive
from our credit card programs and fees from vacation ownership licensing agreements, revenues
and expenses for our Loyalty Program, general, administrative, and other expenses, merger-related
costs and charges, equity in earnings or losses, and other gains or losses that we do not allocate to
our segments. Our President and Chief Executive Officer, who is our “chief operating decision
maker”, monitors assets for the consolidated company, but does not use assets by operating
segment when assessing performance or making operating segment resource allocations. In
January 2020, we modified our reportable 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 first quarter of 2020, we will present the following three reportable business segments: •
North America , which includes all properties in our North America region; • Asia Pacific , which
includes all properties in our Asia Pacific region; and • Europe, Middle East, and Africa , which
includes all properties in these regions. Our Caribbean and Latin America segment will be combined
with the “Unallocated corporate” caption. Segment Revenues The following tables present our
revenues disaggregated by segment and major revenue stream for the last three fiscal years: 2019
($ in millions) North American Full-Service North American Limited-Service Asia Pacific Other
RELATED PARTY TRANSACTIONS
Related Party Transactions [Abstract]
RELATED PARTY TRANSACTIONS
12 Months Ended
Dec. 31, 2019
RELATED PARTY TRANSACTIONS Equity Method Investments We have equity method investments
in entities that own properties for which we provide management services and receive fees. In
addition, in some cases we provide loans, preferred equity, or guarantees to these entities. The
following tables present financial data resulting from transactions with these related parties:
Income Statement Data ($ in millions) 2019 2018 2017 Base management fees $ 21 $ 25 $ 28
Incentive management fees 8 12 15 Contract investment amortization (2 ) (2 ) (2 ) Owned, leased,
and other revenue — — 2 Cost reimbursement revenue 233 332 356 Depreciation, amortization,
and other (2 ) (2 ) (3 ) General, administrative, and other (2 ) — (1 ) Reimbursed expenses (236 )
(337 ) (356 ) Gains and other income, net 2 51 658 Interest expense 3 — — Interest income — — 4
Equity in earnings 13 103 40 Balance Sheet Data ($ in millions) At Year-End 2019 At Year-End 2018
Current assets Accounts and notes receivable, net $ 16 $ 31 Prepaid expenses and other 1 1
Intangible assets Contract acquisition costs and other 29 32 Equity method investments 577 732
Other noncurrent assets 3 10 Current liabilities Accounts payable (1 ) (4 ) Accrued expenses and
other (3 ) (16 ) Deferred tax liabilities (37 ) (20 ) Other noncurrent liabilities (3 ) (11 ) Undistributed
earnings attributable to our equity method investments represented approximately $11 million of
our consolidated retained earnings at year-end 2019 . Summarized Financial Information for
Investees The following tables present summarized financial information for the entities in which
we have equity method investments: ($ in millions) 2019 2018 2017 Sales $ 815 $ 932 $ 1,176 Net
income 80 221 222 ($ in millions) At Year-End 2019 At Year-End 2018 Assets (primarily composed
of hotel real estate managed by us) $ 2,555 $ 2,724 Liabilities 1,691 1,843 The carrying amount of
our equity method investments was $577 million at year-end 2019 and $732 million at year-end
2018 . This value exceeded our share of the book value of the investees’ net assets by $311 million
at year-end 2019 and $419 million at year-end 2018 , primarily due to the value that we assigned to
land, contracts, and buildings owned by the investees. Other Related Parties We received
management fees of approximately $12 million in 2019 , $13 million in 2018 , and $13 million in
2017 , plus reimbursement of certain expenses, from our operation of properties owned by JWM
Family Enterprises, L.P., which is beneficially owned and controlled by J.W. Marriott, Jr., Deborah
Marriott Harrison, and other members of the Marriott family.
RELATIONSHIP WITH MAJOR CUSTOMER
Relationship with Major Customer Disclosure [Abstract]
RELATIONSHIP WITH MAJOR CUSTOMER
12 Months Ended
Dec. 31, 2019
RELATIONSHIP WITH MAJOR CUSTOMER Host Hotels & Resorts, Inc., formerly known as Host
Marriott Corporation, and its affiliates (“Host”) owned or leased 60 lodging properties at year-end
2019 and 74 at year-end 2018 that we operated or franchised. Over the last three years, we
recognized revenues, including cost reimbursement revenue, of $2,406 million in 2019 , $2,542
million in 2018 , and $2,671 million in 2017 from those lodging properties, and included those
revenues in our North American Full-Service and North American Limited-Service reportable
business segments, and our Caribbean and Latin America and Europe operating segments. Host was
also a partner in certain unconsolidated partnerships that own lodging properties that we operate
under long-term agreements. We recognized revenues, including cost reimbursement revenue, of
$123 million in 2018 and $114 million in 2017 from those lodging properties, and included those
revenues in our North American Full-Service reportable business segment and our Europe
operating segment. We did not recognize any revenues in 2019 related to these lodging properties
as Host was not affiliated with these lodging properties during 2019.
SUPPLEMENTARY DATA QUARTERLY FINANCIAL DATA UNAUDITED
Quarterly Financial Information Disclosure [Abstract]
SUPPLEMENTARY DATA QUARTERLY FINANCIAL DATA – UNAUDITED
12 Months Ended
Dec. 31, 2019
SUPPLEMENTARY DATA QUARTERLY FINANCIAL DATA – UNAUDITED ($ in millions, except per share
data) 2019 First Quarter Second Quarter Third Quarter Fourth Quarter Fiscal Year Revenues $ 5,012
$ 5,305 $ 5,284 $ 5,371 $ 20,972 Operating income $ 510 $ 409 $ 607 $ 274 $ 1,800 Net income $
375 $ 232 $ 387 $ 279 $ 1,273 Basic earnings per share (1) $ 1.10 $ 0.70 $ 1.17 $ 0.85 $ 3.83
Diluted earnings per share (1) $ 1.09 $ 0.69 $ 1.16 $ 0.85 $ 3.80 ($ in millions, except per share
data) 2018 First Quarter Second Quarter Third Quarter Fourth Quarter Fiscal Year Revenues $ 5,009
$ 5,409 $ 5,051 $ 5,289 $ 20,758 Operating income $ 530 $ 818 $ 596 $ 422 $ 2,366 Net income $
420 $ 667 $ 503 $ 317 $ 1,907 Basic earnings per share (1) $ 1.17 $ 1.89 $ 1.45 $ 0.93 $ 5.45
Diluted earnings per share (1) $ 1.16 $ 1.87 $ 1.43 $ 0.92 $ 5.38 (1) The sum of the earnings per
share for the four quarters may differ from annual earnings per share due to the required method
of computing the weighted average shares in interim periods.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
Accounting Policies [Abstract]
Basis of Presentation
Revenue
Real Estate Sales
Retirement Savings Plan
Non-U.S. Operations
Share-Based Compensation
Advertising Costs
Income Taxes
Cash and Equivalents
Accounts Receivable
Assets Held for Sale
Goodwill
Intangibles and Long-Lived Assets
Investments
Fair Value Measurements
Derivative Instruments
Loan Loss Reserves
Leases
Guarantees
Self-Insurance Programs
Pension and Other Postretirement Benefits
Legal Contingencies
Business Combinations
Asset Acquisitions
New Accounting Standards
Intangible Assets
Property and Equipment, Capitalization and Useful Lives
12 Months Ended
Dec. 31, 2019
In order to make this report easier to read, we also refer throughout to (i) our Consolidated
Financial Statements as our “Financial Statements,” (ii) our Consolidated Statements of Income as
our “Income Statements,” (iii) our Consolidated Balance Sheets as our “Balance Sheets,” (iv) our
Consolidated Statements of Cash Flows as our “Statements of Cash Flows,” (v) our properties,
brands, or markets in the United States (“U.S.”) and Canada as “North America” or “North
American,” and (vi) our properties, brands, or markets in our Caribbean and Latin America, Europe,
and Middle East and Africa regions as “Other International,” and together with those in our Asia
Pacific segment, as “International.” In addition, references throughout to numbered “Notes” refer
to these Notes to Consolidated Financial Statements, unless otherwise stated. Preparation of
financial statements that conform with U.S. generally accepted accounting principles (“GAAP”)
requires management to make estimates and assumptions that affect the reported amounts of
assets and liabilities as of the date of the financial statements, the reported amounts of revenues
and expenses during the reporting periods, and the disclosures of contingent liabilities. Accordingly,
ultimate results could differ from those estimates. The accompanying Financial Statements reflect
all normal and recurring adjustments necessary to present fairly our financial position at fiscal yearend 2019 and fiscal year-end 2018 and the results of our operations and cash flows for fiscal years
2019 , 2018 , and 2017 . We have eliminated all material intercompany transactions and balances
between entities consolidated in these Financial Statements.
Loyalty Program members earn points based on the money they spend at our hotels; purchases of
timeshare interval, fractional ownership, and residential products; and through participation in
travel experiences and affiliated partners’ programs, such as those offered by credit card, car
rental, and airline companies. Members can redeem points, which we track on their behalf, for
stays at most of our hotels, airline tickets, airline frequent flyer program miles, rental cars, and a
variety of other awards. Points cannot be redeemed for cash. Under our Loyalty Program , we have
a performance obligation to provide or arrange for the provision of goods or services for free or at
a discount to Loyalty Program members in exchange for the redemption of points earned from past
activities. We operate our Loyalty Program as a cross-brand marketing program to participating
properties. Our management and franchise agreements require that properties reimburse us for a
portion of the costs of operating the Loyalty Program , including costs for marketing, promotion,
communication with, and performing member services for Loyalty Program members, with no
added mark-up. We receive contributions on a monthly basis from managed, franchised, owned,
and leased hotels based on a portion of qualified spend by Loyalty Program members. We
recognize these contributions into revenue as the points are redeemed and we provide the related
service. The amount of revenue we recognize upon point redemption is impacted by our estimate
of the “breakage” for points that members will never redeem. We estimate breakage based on our
historical experience and expectations of future member behavior. We recognize revenue net of
the redemption cost within our “Cost reimbursement revenue” caption on our Income Statements,
as our performance obligation is to facilitate the transaction between the Loyalty Program member
and the managed or franchised property or program partner. We recognize all other Loyalty
Program costs as incurred in our “Reimbursed expenses” caption. We have multi-year agreements
for our co-brand credit cards associated with our Loyalty Program . Under these agreements, we
have performance obligations to provide a license to the intellectual property associated with our
brands and marketing lists (“Licensed IP”) to the financial institution that issues the credit cards, to
arrange for the redemption of Loyalty Program points as discussed in the preceding paragraph, and
to arrange for the redemption of free night certificates provided to cardholders. We receive fees
from
these agreements,
including
amounts
that are
primarily
at contract
inception,
We recognize
a gain or loss
on realfixed
estate
transactions
when
controlpayable
of the asset
transfers
to the
buyer, generally at the time the sale closes. In sales transactions where we retain a management
contract, the terms and conditions of the management contract are generally comparable to the
terms and conditions of the management contracts obtained directly with third-party owners in
competitive processes.
We contribute to tax-qualified retirement plans for the benefit of U.S. employees who meet certain
eligibility requirements and choose to participate in the plans. Participating employees specify the
percentage or amount of salary they wish to contribute from their compensation, and the
Company typically makes discretionary and certain other matching or supplemental contributions.
The U.S. dollar is the functional currency of our consolidated and unconsolidated entities operating
in the U.S. The functional currency of our consolidated and unconsolidated entities operating
outside of the U.S. is generally the principal currency of the economic environment in which the
entity primarily generates and expends cash. We translate the financial statements of consolidated
entities whose functional currency is not the U.S. dollar into U.S. dollars, and we do the same, as
needed, for unconsolidated entities whose functional currency is not the U.S. dollar. We translate
assets and liabilities at the exchange rate in effect as of the financial statement date and translate
income statement accounts using the weighted average exchange rate for the period. We include
translation adjustments from currency exchange and the effect of exchange rate changes on
intercompany transactions of a long-term investment nature as a separate component of
shareholders’ equity. We report gains and losses from currency exchange rate changes for
intercompany receivables and payables that are not of a long-term investment nature, as well as
for third-party transactions, currently in operating costs and expenses.
Our share-based compensation awards primarily consist of restricted stock units (“RSUs”). We
measure compensation costs for our share-based payment transactions at fair value on the grant
date, and we recognize those costs in our Financial Statements over the vesting period during
which the employee provides service in exchange for the award.
We expense costs to produce advertising as they are incurred and to communicate advertising as
the communication occurs and record such amounts in reimbursed expenses to the extent
undertaken on behalf of our owners and franchisees.
We record the amounts of taxes payable or refundable for the current year, as well as deferred tax
liabilities and assets for the future tax consequences of events we have recognized in our Financial
Statements or tax returns, using judgment in assessing future profitability and the likely future tax
consequences of those events. We base our estimates of deferred tax assets and liabilities on
current tax laws, rates and interpretations, and, in certain cases, business plans and other
expectations about future outcomes. We develop our estimates of future profitability based on our
historical data and experience, industry projections, micro and macro general economic condition
projections, and our expectations. We generally recognize the effect of the tax law changes in the
period of enactment. Changes in existing tax laws and rates, their related interpretations, and the
uncertainty generated by the current economic environment may affect the amounts of our
deferred tax liabilities or the valuations of our deferred tax assets over time. Our accounting for
deferred tax consequences represents management’s best estimate of future events that can be
appropriately reflected in the accounting estimates. Deferred income tax balances reflect the
effects of temporary differences between the carrying amounts of assets and liabilities and their
tax bases, as well as from net operating loss and tax credit carry-forwards. We state those balances
at the enacted tax rates we expect will be in effect when we pay or recover the taxes. Deferred
income tax assets represent amounts available to reduce income taxes we will pay on taxable
income in future years. We evaluate our ability to realize these future tax deductions and credits by
assessing whether we expect to have sufficient future taxable income from all sources, including
reversal of taxable temporary differences, forecasted operating earnings, and available tax planning
strategies to utilize these future deductions and credits. We establish a valuation allowance when
we no longer consider it more likely than not that a deferred tax asset will be realized.
We consider all highly liquid investments with an initial maturity of three months or less at date of
purchase to be cash equivalents.
Our accounts receivable primarily consist of amounts due from hotel owners with whom we have
management and franchise agreements and include reimbursements of costs we incurred on
behalf of managed and franchised properties. We generally collect these receivables within 30
We consider properties to be assets held for sale when (1) management commits to a plan to sell
the property; (2) it is unlikely that the disposal plan will be significantly modified or discontinued;
(3) the property is available for immediate sale in its present condition; (4) actions required to
complete the sale of the property have been initiated; (5) sale of the property is probable and we
expect the completed sale will occur within one year; and (6) the property is actively being
marketed for sale at a price that is reasonable given our estimate of current market value. Upon
designation of a property as an asset held for sale, we record the property’s value at the lower of
its carrying value or its estimated fair value, less estimated costs to sell, and we cease depreciation.
We test goodwill for potential impairment at least annually in the fourth quarter, or more
frequently if an event or other circumstance indicates that we may not be able to recover the
carrying amount of the net assets of the reporting unit. In evaluating goodwill for impairment, we
may assess qualitative factors to determine whether it is more likely than not (that is, a likelihood
of more than 50 percent) that the fair value of a reporting unit is less than its carrying amount. If
we bypass the qualitative assessment, or if we conclude that it is more likely than not that the fair
value of a reporting unit is less than its carrying value, then we perform a quantitative impairment
test by comparing the fair value of a reporting unit with its carrying amount. We calculate the
estimated fair value of a reporting unit using a combination of the income and market approaches.
For the income approach, we use internally developed discounted cash flow models that include
the following assumptions, among others: projections of revenues, expenses, and related cash
flows based on assumed long-term growth rates and demand trends; expected future investments
to grow new units; and estimated discount rates. For the market approach, we use internal
analyses based primarily on market comparables. We base these assumptions on our historical
data and experience, third-party appraisals, industry projections, micro and macro general
economic condition projections, and our expectations.
We assess indefinite-lived intangible assets for continued indefinite use and for potential
impairment annually, or more frequently if an event or other circumstance indicates that we may
not be able to recover the carrying amount of the asset. Like goodwill, we may first assess
qualitative factors to determine whether it is more likely than not that the fair value of the
indefinite-lived intangible is less than its carrying amount. If the carrying value of the asset exceeds
the fair value, we recognize an impairment loss in the amount of that excess. We test definite-lived
intangibles and long-lived asset groups for recoverability when changes in circumstances indicate
that we may not be able to recover the carrying value; for example, when there are material
adverse changes in projected revenues or expenses, significant underperformance relative to
historical or projected operating results, or significant negative industry or economic trends. We
also test recoverability when management has committed to a plan to sell or otherwise dispose of
an asset group and we expect to complete the plan within a year. We evaluate recoverability of an
asset group by comparing its carrying value, including right-of-use assets, to the future net
undiscounted cash flows that we expect the asset group will generate. If the comparison indicates
that we will not be able to recover the carrying value of an asset group, we recognize an
impairment loss for the amount by which the carrying value exceeds the estimated fair value.
When we recognize an impairment loss for assets to be held and used, we depreciate the adjusted
carrying amount of those assets over their remaining useful life. We calculate the estimated fair
value of an intangible asset or asset group using the income approach or the market approach. We
utilize the same assumptions and methodology for the income approach that we describe in the “
Goodwill
We hold equity interests in ventures established to develop or acquire and own hotel properties or
that otherwise support our hospitality operations. We account for these investments as either an
equity method investment, a financial asset, or a controlled subsidiary. We apply the equity
method of accounting if we have significant influence over the entity, typically when we hold 20
percent of the voting common stock (or equivalent) of an investee but do not have a controlling
financial interest. In certain circumstances, such as with investments in limited liability companies
or limited partnerships, we apply the equity method of accounting when we own as little as three
to five percent. We account for financial assets at fair value if it is readily determinable, or using the
fair value alternative method, whereby investments are measured at cost less impairment,
adjusted for observable price changes. We consolidate entities that we control. When we acquire
an investment that qualifies for the equity method of accounting, we determine the acquisition
date fair value of the identifiable assets and liabilities. If our carrying amount exceeds our
proportional share in the equity of the investee, we amortize the difference on a straight-line basis
over the underlying assets’ estimated useful lives when calculating equity method earnings
attributable to us, excluding the difference attributable to land, which we do not amortize. We
evaluate an investment for impairment when circumstances indicate that we may not be able to
recover the carrying value. When evaluating our ventures, we consider loan defaults, significant
underperformance relative to historical or projected operating performance, or significant negative
industry or economic trends. Additionally, a venture’s commitment to a plan to sell some or all of
its assets could cause us to evaluate the recoverability of the venture’s individual long-lived assets
and possibly the venture itself. We impair investments we account for using the equity method of
accounting when we determine that there has been an “other-than-temporary” decline in the
venture’s estimated fair value compared to its carrying value. We perform qualitative assessments
for investments we account for using the fair value alternative method and we record any
associated impairment when the fair value is less than the carrying value. Under the accounting
guidance for the consolidation of variable interest entities, we analyze our variable interests,
including equity investments, loans, and guarantees, to determine if an entity in which we have a
variable interest is a variable interest entity. Our analysis includes both quantitative and qualitative
We have various financial instruments we must measure at fair value on a recurring basis, including
certain marketable securities and derivatives. See Note 13 for further information. We also apply
the provisions of fair value measurement to various nonrecurring measurements for our financial
and nonfinancial assets and liabilities. Accounting standards define fair value as the price that
would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date (an exit price). We measure our assets and liabilities
using inputs from the following three levels of the fair value hierarchy: Level 1 inputs are
unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability
to access at the measurement date. Level 2 inputs include quoted prices for similar assets and
liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that
are not active, inputs other than quoted prices that are observable for the asset or liability (i.e.,
interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by
observable market data by correlation or other means (market corroborated inputs). Level 3
includes unobservable inputs that reflect our assumptions about what factors market participants
would use in pricing the asset or liability. We develop these inputs based on the best information
available, including our own data.
We record derivatives at fair value. The designation of a derivative instrument as a hedge and its
ability to meet the hedge accounting criteria determine how we reflect the change in fair value of
the derivative instrument in our Financial Statements. A derivative qualifies for hedge accounting if,
at inception, we expect the derivative will be highly effective in offsetting the underlying hedged
cash flows or fair value and we fulfill the hedge documentation standards at the time we enter into
the derivative contract. We designate a hedge as a cash flow hedge, fair value hedge, or a hedge of
the net investment in non-U.S. operations based on the exposure we are hedging. For the effective
portion of qualifying cash flow hedges, we record changes in fair value in accumulated other
comprehensive income (“AOCI”). We release the derivative’s gain or loss from AOCI to match the
timing of the underlying hedged items’ effect on earnings. The change in fair value of qualifying fair
value hedges as well as changes in fair value of the underlying hedged items to the hedged risks are
recorded concurrently in earnings. We review the effectiveness of our hedging instruments
quarterly, recognize current period hedge ineffectiveness immediately in earnings, and discontinue
hedge accounting for any hedge that we no longer consider to be highly effective. We recognize
changes in fair value for derivatives not designated as hedges or those not qualifying for hedge
accounting in current period earnings. Upon termination of cash flow hedges, we release gains and
losses from AOCI based on the timing of the underlying cash flows or revenue recognized, unless
the termination results from the failure of the intended transaction to occur in the expected time
frame. Such untimely transactions require us to immediately recognize in earnings the gains and/or
losses that we previously recorded in AOCI. Changes in interest rates, currency exchange rates, and
equity securities expose us to market risk. We manage our exposure to these risks by monitoring
available financing alternatives, as well as through development and application of credit granting
policies. We also use derivative instruments as part of our overall strategy to manage our exposure
to market risks. As a matter of policy, we only enter into transactions that we believe will be highly
effective at offsetting the underlying risk, and we do not use derivatives for trading or speculative
purposes.
We may make senior, mezzanine, and other loans to owners of hotels that we operate or franchise,
generally to facilitate the development of a hotel and sometimes to facilitate brand programs or
initiatives. We expect the owners to repay the loans in accordance with the loan agreements, or
earlier as the hotels mature and capital markets permit. We use metrics such as loan-to-value
ratios and debt service coverage, and other information about collateral and from third party rating
agencies to assess the credit quality of the loan receivable, both upon entering into the loan
agreement and on an ongoing basis as applicable. On a regular basis, we individually assess loans
for impairment. We use internally generated cash flow projections to determine if we expect the
loans will be repaid under the terms of the loan agreements. If we conclude that it is probable a
borrower will not repay a loan in accordance with its terms, we consider the loan impaired and
begin recognizing interest income on a cash basis. To measure impairment, we calculate the
present value of expected future cash flows discounted at the loan’s original effective interest rate
or the estimated fair value of the collateral. If the present value or the estimated collateral is less
than the carrying value of the loan receivable, we establish a specific impairment reserve for the
difference. If it is likely that a loan will not be collected based on financial or other business
indicators, including our historical experience, our policy is to charge off the loan in the quarter in
which we deem it uncollectible.
We determine if an arrangement is a lease or contains a lease at the inception of the contract. Our
leases generally contain fixed and variable components. The variable components of our leases are
primarily based on operating performance of the leased property. Our lease agreements may also
include non-lease components, such as common area maintenance, which we combine with the
lease component to account for both as a single lease component. Lease liabilities, which represent
our obligation to make lease payments arising from the lease, and corresponding right-of-use
assets, which represent our right to use an underlying asset for the lease term, are recognized at
the commencement date of the lease based on the present value of fixed future payments over the
lease term. We calculate the present value of future payments using the discount rate implicit in
the lease, if available, or our incremental borrowing rate. For operating leases, lease expense
relating to fixed payments is recognized on a straight-line basis over the lease term and lease
expense relating to variable payments is expensed as incurred. For finance leases, the amortization
of the asset is recognized over the shorter of the lease term or useful life of the underlying asset.
We measure and record our liability for the fair value of a guarantee on a nonrecurring basis, that is
when we issue or modify a guarantee, using Level 3 internally developed inputs, as described above
in this footnote under the caption “ Fair Value Measurements .” We base our calculation of the
estimated fair value of a guarantee on the income approach or the market approach, depending on
the type of guarantee. For the income approach, we use internally developed discounted cash flow
and Monte Carlo simulation models that include the following assumptions, among others:
projections of revenues and expenses and related cash flows based on assumed growth rates and
demand trends; historical volatility of projected performance; the guaranteed obligations; and
applicable discount rates. We base these assumptions on our historical data and experience,
industry projections, micro and macro general economic condition projections, and our
expectations. For the market approach, we use internal analyses based primarily on market
comparable data and our assumptions about market capitalization rates, credit spreads, growth
rates, and inflation. The offsetting entry for the guarantee liability depends on the circumstances in
which the guarantee was issued. Funding under the guarantee reduces the recorded liability. In
most cases, when we do not forecast any funding, we amortize the liability into income on a
straight-line basis over the remaining term of the guarantee. On a quarterly basis, we evaluate all
material estimated liabilities based on the operating results and the terms of the guarantee. If we
conclude that it is probable that we will be required to fund a greater amount than previously
estimated, we record a loss except to the extent that the applicable contracts provide that the
advance can be recovered as a loan.
We self-insure for certain levels of liability, workers’ compensation, property insurance and
employee medical coverage. We accrue estimated costs of these self-insurance programs at the
present value of projected settlements for known and incurred but not reported claims. We use a
discount rate of three
We sponsor numerous funded and unfunded domestic and international defined benefit pension
plans. All defined benefit plans covering U.S. employees are frozen, meaning that employees do not
accrue additional benefits. Certain plans covering non-U.S. employees remain active. We also
sponsor the Starwood Retiree Health and Welfare Program, which provides health care and life
insurance benefits for certain eligible retired employees.
We are subject to various legal proceedings and claims, the outcomes of which are uncertain. We
record an accrual for legal contingencies when we determine that it is probable that we have
incurred a liability and we can reasonably estimate the amount of the loss. In making such
determinations we evaluate, among other things, the probability of an unfavorable outcome and,
when we believe it probable that a liability has been incurred, our ability to make a reasonable
estimate of the loss. We review these accruals each reporting period and make revisions based on
changes in facts and circumstances.
We allocate the purchase price of an acquisition to the tangible and intangible assets acquired and
liabilities assumed based on their estimated fair values at the acquisition date. We recognize as
goodwill the amount by which the purchase price of an acquired entity exceeds the net of the fair
values assigned to the assets acquired and liabilities assumed. In determining the fair values of
assets acquired and liabilities assumed, we use various recognized valuation methods including the
income and market approaches. Further, we make assumptions within certain valuation
techniques, including discount rates, royalty rates, and the amount and timing of future cash flows.
We record the net assets and results of operations of an acquired entity in our Financial Statements
from the acquisition date. We initially perform these valuations based upon preliminary estimates
and assumptions by management or independent valuation specialists under our supervision,
where appropriate, and make revisions as estimates and assumptions are finalized. We expense
acquisition-related costs as we incur them.
Acquisitions that do not meet the definition of a business are accounted for as asset acquisitions.
We allocate the cost of the acquisition, including direct and incremental transaction costs, to the
individual assets acquired and liabilities assumed on a relative fair value basis. Goodwill is not
recognized in an asset acquisition.
New Accounting Standards Adopted Accounting Standards Update (“ASU”) No. 2016-02 – “Leases”
(Topic 842). ASU 2016-02 introduces a lessee model that brings substantially all leases onto the
balance sheet. Under the standard, a lessee recognizes on its balance sheet a lease liability and a
right-of-use asset for most leases, including operating leases. The new standard also distinguishes
leases as either finance leases or operating leases. This distinction affects how leases are measured
and presented in the income statement and statement of cash flows. We adopted ASU 2016-02 in
the 2019 first quarter using the modified retrospective transition method. Our accounting for
finance leases remained substantially unchanged. Adoption of the standard resulted in the
recording of $ 1,013 million of operating lease assets and $ 1,053 million of operating lease
liabilities, as of January 1, 2019. We did not adjust our prior period Balance Sheets. Adoption of the
standard did not impact our Income Statements or our Statements of Cash Flows. When we
adopted ASU 2016-02, we applied the package of practical expedients allowed by the standard, and
therefore, we did not reassess: • Whether any expired or existing contracts are or contain leases
under the new definition; • The lease classification for any expired or existing leases; or • Whether
previously capitalized costs continue to qualify as initial direct costs.
We capitalize direct costs that we incur to obtain management, franchise, and license agreements.
We amortize these costs on a straight-line basis over the initial term of the agreements, ranging
from 15 to 30
We record property and equipment at cost, including interest and real estate taxes we incur during
development and construction. We capitalize the cost of improvements that extend the useful life
of property and equipment when we incur them. These capitalized costs may include structural
costs, equipment, fixtures, floor, and wall coverings. We expense all repair and maintenance costs
when we incur them. We compute depreciation using the straight-line method over the estimated
useful lives of the assets (generally three to 40
EARNINGS PER SHARE (Tables)
Earnings Per Share [Abstract]
Reconciliation of the Earnings (Losses) and Number of Shares Used in Calculations of Basic and
Diluted Earnings Per Share
12 Months Ended
Dec. 31, 2019
The table below illustrates the reconciliation of the earnings and number of shares used in our
calculations of basic and diluted earnings per share, the latter of which uses the treasury stock
method in order to calculate the dilutive effect of the Company’s potential common stock: (in
millions, except per share amounts) 2019 2018 2017 Computation of Basic Earnings Per Share Net
income $ 1,273 $ 1,907 $ 1,459 Shares for basic earnings per share 332.7 350.1 375.2 Basic
earnings per share $ 3.83 $ 5.45 $ 3.89 Computation of Diluted Earnings Per Share Net income $
1,273 $ 1,907 $ 1,459 Shares for basic earnings per share 332.7 350.1 375.2 Effect of dilutive
securities Share-based compensation 2.8 4.1 4.7 Shares for diluted earnings per share 335.5 354.2
379.9 Diluted earnings per share $ 3.80 $ 5.38 $ 3.84
SHARE-BASED COMPENSATION (Tables)
Share-based Payment Arrangement [Abstract]
Additional Information on RSUs
Changes in Outstanding RSU Grants
12 Months Ended
Dec. 31, 2019
The following table provides additional information on RSUs for the last three fiscal years: 2019
2018 2017 Share-based compensation expense (in millions) $ 177 $ 170 $ 172 Weighted average
grant-date fair value (per RSU) $ 117 $ 132 $ 85 Aggregate intrinsic value of distributed RSUs (in
millions) $ 276 $ 294 $ 322
The following table presents the changes in our outstanding RSUs, including PSUs, during 2019 and
the associated weighted average grant-date fair values: Number of RSUs (in millions) Weighted
Average Grant-Date Fair Value (per RSU) Outstanding at year-end 2018 4.8 $ 90 Granted 1.7 117
Distributed (2.3 ) 79 Forfeited (0.1 ) 112 Outstanding at year-end 2019 4.1 $ 106
INCOME TAXES (Tables)
Income Tax Disclosure [Abstract]
Components of Earnings Before Income Taxes
Provision for Income Taxes
Unrecognized Tax Benefits Reconciliation
Schedule of Deferred Tax Assets and Liabilities
Reconciliation of the U.S. Statutory Tax Rate to Effective Income Tax Rate
12 Months Ended
Dec. 31, 2019
The components of our earnings before income taxes for the last three fiscal years consisted of: ($
in millions) 2019 2018 2017 U.S. $ 549 $ 1,311 $ 2,153 Non-U.S. 1,050 1,034 829 $ 1,599 $ 2,345 $
2,982
Our provision for income taxes for the last three fiscal years consists of: ($ in millions) 2019 2018
2017 Current -U.S. Federal $ (272 ) $ (169 ) $ (1,253 ) -U.S. State (57 ) (94 ) (152 ) -Non-U.S. (161 )
(284 ) (178 ) (490 ) (547 ) (1,583 ) Deferred -U.S. Federal 141 10 61 -U.S. State 39 (6 ) (33 ) -NonU.S. (16 ) 105 32 164 109 60 $ (326 ) $ (438 ) $ (1,523 )
The following table reconciles our unrecognized tax benefit balance for each year from the
beginning of 2017 to the end of 2019 : ($ in millions) Amount Unrecognized tax benefit at beginning
of 2017 $ 421 Change attributable to tax positions taken in prior years 12 Change attributable to
tax positions taken during the current period 87 Decrease attributable to settlements with taxing
authorities (28 ) Decrease attributable to lapse of statute of limitations (1 ) Unrecognized tax
benefit at year-end 2017 491 Change attributable to tax positions taken in prior years 37 Change
attributable to tax positions taken during the current period 148 Decrease attributable to
settlements with taxing authorities (53 ) Unrecognized tax benefit at year-end 2018 623 Change
attributable to tax positions taken in prior years (13 ) Change attributable to tax positions taken
during the current period 13 Decrease attributable to settlements with taxing authorities (54 )
Unrecognized tax benefit at year-end 2019 $ 569
The following table presents the tax effect of each type of temporary difference and carry-forward
that gave rise to significant portions of our deferred tax assets and liabilities as of year-end 2019
and year-end 2018 : ($ in millions) At Year-End 2019 At Year-End 2018 Deferred Tax Assets
Employee benefits $ 267 $ 261 Net operating loss carry-forwards 680 494 Accrued expenses and
other reserves 162 160 Receivables, net 11 12 Tax credits 41 24 Loyalty Program 249 133 Deferred
income 70 56 Lease liabilities 261 — Other 15 13 Deferred tax assets 1,756 1,153 Valuation
allowance (616 ) (428 ) Deferred tax assets after valuation allowance 1,140 725 Deferred Tax
Liabilities Joint venture interests (55 ) (59 ) Property and equipment (82 ) (85 ) Intangibles (895 )
(876 ) Right-of-use assets (229 ) — Self-insurance (15 ) (19 ) Deferred tax liabilities (1,276 ) (1,039 )
Net deferred taxes $ (136 ) $ (314 )
The following table reconciles the U.S. statutory tax rate to our effective income tax rate for the
last three fiscal years: 2019 2018 2017 U.S. statutory tax rate 21.0 % 21.0 % 35.0 % U.S. state
income taxes, net of U.S. federal tax benefit 1.6 2.5 3.1 Non-U.S. income (3.3 ) (1.0 ) (7.3 ) Change
in valuation allowance 3.4 2.6 2.0 Change in uncertain tax positions 1.9 1.0 2.2 Change in U.S. tax
rate 0.0 (1.7 ) (5.5 ) Transition Tax on foreign earnings (0.3 ) 0.1 22.8 Tax on asset dispositions (0.7 )
(2.9 ) (0.2 ) Excess tax benefits related to equity awards (3.2 ) (1.8 ) (2.4 ) Other, net 0.0 (1.1 ) 1.4
Effective rate 20.4 % 18.7 % 51.1 %
COMMITMENTS AND CONTINGENCIES (Tables)
Commitments and Contingencies Disclosure [Abstract]
Maximum Potential Amount of Future Fundings as the Primary Obligor for Guarantees and the
Liability for Expected Future Fundings
12 Months Ended
Dec. 31, 2019
We present the maximum potential amount of our future guarantee fundings and the carrying
amount of our liability for our debt service, operating profit, and other guarantees (excluding
contingent purchase obligations) for which we are the primary obligor at year-end 2019 in the
following table: ($ in millions) Guarantee Type Maximum Potential Amount of Future Fundings
Recorded Liability for Guarantees Debt service $ 53 $ 6 Operating profit 231 142 Other 15 3 $ 299 $
151
LEASES (Tables)
Leases [Abstract]
Composition of Lease Expense and Supplemental Cash Flows
Maturities of Finance Lease Liabilities
Maturities of Operating Lease Liabilities
Lease Terms and Discount Rate
12 Months Ended
Dec. 31, 2019
The following table details the composition of lease expense at year-end 2019 : ($ in millions) 2019
Operating lease cost $ 185 Variable lease cost 113 The following table presents supplemental cash
flow information for 2019 : ($ in millions) 2019 Cash paid for amounts included in the
measurement of lease liabilities: Operating cash outflows for operating leases $ 176 Operating cash
outflows for finance leases 7 Financing cash outflows for finance leases 6 Lease assets obtained in
exchange for lease obligations: Operating leases 89
The following table presents our future minimum lease payments at year-end 2019 : ($ in millions)
Operating Leases Finance Leases 2020 $ 173 $ 13 2021 171 13 2022 165 13 2023 115 13 2024 107
14 Thereafter 579 151 Total minimum lease payments $ 1,310 $ 217 Less: Amount representing
interest 298 60 Present value of minimum lease payments $ 1,012 $ 157 Current (1) 130 6
Noncurrent (2) 882 151 $ 1,012 $ 157 (1) Operating leases are recorded in the “Accrued expenses
and other” and finance leases are recorded in the “Current portion of long-term debt” captions of
our Balance Sheets. (2) Operating leases are recorded in the “Operating lease liabilities” and
finance leases are recorded in the “Long-term debt” captions of our Balance Sheets.
The following table presents our future minimum lease payments at year-end 2019 : ($ in millions)
Operating Leases Finance Leases 2020 $ 173 $ 13 2021 171 13 2022 165 13 2023 115 13 2024 107
14 Thereafter 579 151 Total minimum lease payments $ 1,310 $ 217 Less: Amount representing
interest 298 60 Present value of minimum lease payments $ 1,012 $ 157 Current (1) 130 6
Noncurrent (2) 882 151 $ 1,012 $ 157 (1) Operating leases are recorded in the “Accrued expenses
and other” and finance leases are recorded in the “Current portion of long-term debt” captions of
our Balance Sheets. (2) Operating leases are recorded in the “Operating lease liabilities” and
finance leases are recorded in the “Long-term debt” captions of our Balance Sheets.
The following table presents additional information about our lease obligations at year-end 2019 :
Operating leases Finance leases Weighted Average Remaining Lease Term (in years) 11 14
Weighted Average Discount Rate 4.8 % 4.4 %
LONG-TERM DEBT (Tables)
Debt Disclosure [Abstract]
Long-Term Debt
Future Principal Payments for Debt
12 Months Ended
Dec. 31, 2019
We provide detail on our long-term debt balances, net of discounts, premiums, and debt issuance
costs, in the following table at year-end 2019 and 2018 : ($ in millions) At Year-End 2019 At YearEnd 2018 Senior Notes: Series K Notes, interest rate of 3.0%, face amount of $600, matured March
1, 2019 $ — $ 600 Series L Notes, interest rate of 3.3%, face amount of $350, maturing September
15, 2022 349 349 Series M Notes, interest rate of 3.4%, face amount of $350, maturing October 15,
2020 349 349 Series N Notes, interest rate of 3.1%, face amount of $400, maturing October 15,
2021 398 397 Series O Notes, interest rate of 2.9%, face amount of $450, maturing March 1, 2021
449 448 Series P Notes, interest rate of 3.8%, face amount of $350, maturing October 1, 2025 346
345 Series Q Notes, interest rate of 2.3%, face amount of $750, maturing January 15, 2022 747 745
Series R Notes, interest rate of 3.1%, face amount of $750, maturing June 15, 2026 744 743 Series T
Notes, interest rate of 7.2%, face amount of $181, matured December 1, 2019 — 188 Series U
Notes, interest rate of 3.1%, face amount of $291, maturing February 15, 2023 291 291 Series V
Notes, interest rate of 3.8%, face amount of $318, maturing March 15, 2025 332 335 Series W
Notes, interest rate of 4.5%, face amount of $278, maturing October 1, 2034 291 292 Series X
Notes, interest rate of 4.0%, face amount of $450, maturing April 15, 2028 444 443 Series Y Notes,
floating rate, face amount of $550, maturing December 1, 2020 549 547 Series Z Notes, interest
rate of 4.2%, face amount of $350, maturing December 1, 2023 347 347 Series AA Notes, interest
rate of 4.7%, face amount of $300, maturing December 1, 2028 297 297 Series BB Notes, floating
rate, face amount of $300, maturing March 8, 2021 299 — Series CC Notes, interest rate of 3.6%,
face amount of $550, maturing April 15, 2024 564 — Series DD Notes, interest rate of 2.1%, face
amount of $550, maturing October 3, 2022 543 — Commercial paper 3,197 2,245 Credit Facility —
— Finance lease obligations 157 163 Other 247 223 $ 10,940 $ 9,347 Less: Current portion of longterm debt (977 ) (833 ) $ 9,963 $ 8,514
The following table presents future principal payments, net of discounts, premiums, and debt
issuance costs, for our debt at year-end 2019 : Debt Principal Payments ($ in millions) Amount 2020
$ 977 2021 1,164 2022 1,657 2023 694 2024 3,783 Thereafter 2,665 Balance at year-end 2019 $
10,940
INTANGIBLE ASSETS AND GOODWILL (Tables)
Goodwill and Intangible Assets Disclosure [Abstract]
Composition of Intangible Assets, Finite-Lived
Composition of Intangible Assets, Indefinite-Lived
Carrying Amount of Goodwill
12 Months Ended
Dec. 31, 2019
The following table details the composition of our intangible assets at year-end 2019 and 2018 : ($
in millions) At Year-End 2019 At Year-End 2018 Definite-lived Intangible Assets Costs incurred to
obtain contracts with customers $ 1,588 $ 1,347 Contracts acquired in business combinations and
other 1,972 1,983 3,560 3,330 Accumulated amortization (808 ) (674 ) 2,752 2,656 Indefinite-lived
Intangible Brand Assets 5,889 5,724 $ 8,641 $ 8,380
The following table details the composition of our intangible assets at year-end 2019 and 2018 : ($
in millions) At Year-End 2019 At Year-End 2018 Definite-lived Intangible Assets Costs incurred to
obtain contracts with customers $ 1,588 $ 1,347 Contracts acquired in business combinations and
other 1,972 1,983 3,560 3,330 Accumulated amortization (808 ) (674 ) 2,752 2,656 Indefinite-lived
Intangible Brand Assets 5,889 5,724 $ 8,641 $ 8,380
The following table details the carrying amount of our goodwill at year-end 2019 and 2018 : ($ in
millions) North American Full-Service North American Limited-Service Asia Pacific Other
International Total Goodwill Balance at year-end 2018 $ 3,566 $ 1,755 $ 1,862 $ 1,856 $ 9,039
Foreign currency translation 10 7 2 (10 ) 9 Balance at year-end 2019 $ 3,576 $ 1,762 $ 1,864 $
1,846 $ 9,048
PROPERTY AND EQUIPMENT (Tables)
Property, Plant and Equipment [Abstract]
Composition of Property and Equipment Balances
12 Months Ended
Dec. 31, 2019
The following table presents the composition of our property and equipment balances at year-end
2019 and 2018 : ($ in millions) At Year-End 2019 At Year-End 2018 Land $ 684 $ 591 Buildings and
leasehold improvements 1,100 1,275 Furniture and equipment 1,225 1,439 Construction in
progress 196 168 3,205 3,473 Accumulated depreciation (1,301 ) (1,517 ) $ 1,904 $ 1,956
NOTES RECEIVABLE (Tables)
Receivables [Abstract]
Notes Receivable Expected Future Principal Payments
12 Months Ended
Dec. 31, 2019
The following table presents the expected future principal payments, net of reserves and
unamortized discounts, as well as interest rates for our notes receivable at year-end 2019 : Notes
Receivable Principal Payments ($ in millions) Amount 2020 $ 9 2021 32 2022 28 2023 2 2024 8
Thereafter 47 Balance at year-end 2019 $ 126 Weighted average interest rate at year-end 2019
5.6% Range of stated interest rates at year-end 2019 0-9%
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)
Fair Value Disclosures [Abstract]
Carrying Values and Fair Values of Non-Current Financial Assets and Liabilities
12 Months Ended
Dec. 31, 2019
We present the carrying values and the fair values of noncurrent financial assets and liabilities that
qualify as financial instruments, determined under current guidance for disclosures on the fair
value of financial instruments, in the following table: At Year-End 2019 At Year-End 2018 ($ in
millions) Carrying Amount Fair Value Carrying Amount Fair Value Senior, mezzanine, and other
loans $ 117 $ 112 $ 125 $ 116 Total noncurrent financial assets $ 117 $ 112 $ 125 $ 116 Senior
Notes $ (6,441 ) $ (6,712 ) $ (5,928 ) $ (5,794 ) Commercial paper (3,197 ) (3,197 ) (2,245 ) (2,245 )
Other long-term debt (174 ) (179 ) (184 ) (182 ) Other noncurrent liabilities (196 ) (196 ) (153 ) (153
) Total noncurrent financial liabilities $ (10,008 ) $ (10,284 ) $ (8,510 ) $ (8,374 )
ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables)
Equity [Abstract]
Accumulated Other Comprehensive (Loss) Income Activity
12 Months Ended
Dec. 31, 2019
The following table details the accumulated other comprehensive loss activity for 2019 , 2018 , and
2017 : ($ in millions) Foreign Currency Translation Adjustments Derivative Instrument and Other
Adjustments Accumulated Other Comprehensive Loss Balance at year-end 2016 $ (503 ) $ 6 $ (497
) Other comprehensive (loss) income before reclassifications (1) 478 (9 ) 469 Reclassification of
losses (gains), net of tax 2 9 11 Net other comprehensive (loss) income 480 — 480 Balance at yearend 2017 $ (23 ) $ 6 $ (17 ) Other comprehensive (loss) income before reclassifications (1) (391 ) 4
(387 ) Reclassification of losses (gains), net of tax 11 6 17 Net other comprehensive (loss) income
(380 ) 10 (370 ) Adoption of ASU 2016-01 — (4 ) (4 ) Balance at year-end 2018 $ (403 ) $ 12 $ (391 )
Other comprehensive (loss) income before reclassifications (1) 35 2 37 Reclassification of losses
(gains), net of tax — (7 ) (7 ) Net other comprehensive (loss) income 35 (5 ) 30 Balance at year-end
2019 $ (368 ) $ 7 $ (361 ) (1) Other comprehensive (loss) income before reclassifications for foreign
currency translation adjustments includes gains (losses) on intra-entity foreign currency
transactions that are of a long-term investment nature of $6 million for 2019 , $14 million for 2018
, and $(147) million for 2017 .
BUSINESS SEGMENTS (Tables)
Segment Reporting [Abstract]
Segment Revenues
Segment Profits
Depreciation and Amortization
Capital Expenditures
12 Months Ended
Dec. 31, 2019
Segment Revenues The following tables present our revenues disaggregated by segment and major
revenue stream for the last three fiscal years: 2019 ($ in millions) North American Full-Service
North American Limited-Service Asia Pacific Other International Total Gross fee revenues $ 1,299 $
966 $ 477 $ 555 $ 3,297 Contract investment amortization (35 ) (13 ) (2 ) (12 ) (62 ) Net fee
revenues 1,264 953 475 543 3,235 Owned, leased, and other revenue 581 134 178 663 1,556 Cost
reimbursement revenue 11,610 2,291 536 1,149 15,586 Total segment revenue $ 13,455 $ 3,378 $
1,189 $ 2,355 $ 20,377 Unallocated corporate 595 Total revenue $ 20,972 2018 ($ in millions)
North American Full-Service North American Limited-Service Asia Pacific Other International Total
Gross fee revenues $ 1,255 $ 903 $ 479 $ …