Description
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.
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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, intere
