Marriott International (MAR) 10-K risk factor changes: FY2019 vs FY2018

[removed: Forward-Looking Statements][added: Forward-Looking Statements]

We make forward-looking statements in Management’s Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this [removed: report] [added: Annual Report] based on the beliefs and assumptions of our management and on information currently available to us.

Forward-looking statements include information about our possible or assumed future results of operations, which follow under the [removed: headings] [added: captions] “Business and Overview,” “Liquidity and Capital Resources,” and other statements throughout this [removed: report] [added: Annual Report] preceded by, followed by, or that include the words “believes,” “expects,” “anticipates,” “intends,” “plans,” “estimates,” or similar expressions.

Any number of risks and uncertainties could cause actual results to differ materially from those we express in our forward-looking statements, including the risks and uncertainties we describe below and other factors we describe from time to [added: time in our periodic filings with the SEC.]

The forward-looking statements in this [removed: report] [added: Annual Report] speak only as of the date of this [removed: report,] [added: Annual Report,] and we undertake no obligation to update or revise any forward-looking statement, whether due to new information, future developments, or otherwise.

[removed: Risks] [added: Risks] and [removed: Uncertainties][added: Uncertainties]

[removed: You should understand that] [added: In addition,] these risks could cause results to differ materially from those we express in forward-looking statements contained in this [removed: report] [added: Annual Report] or in other Company communications.

[removed: Our] [added: *Our] industry is highly competitive, which may impact our ability to compete successfully [added: for guests] with other hotel properties and home [removed: and apartment] sharing [removed: services for guests.][added: or rental services.* We operate in markets that contain many competitors.]

Each of our hotel brands [added: and our home rental offering] competes with major hotel [removed: chains] [added: chains, regional hotel chains, independent hotels,] and home [removed: and apartment] sharing [added: and rental] services [removed: in] [added: across] national and international [removed: venues, and with independent companies in regional markets.][added: venues.]

[added: In addition,] U.S. government travel and travel associated with U.S. government operations are [removed: also] a significant part of our business, [removed: and this aspect of our business has suffered and could in the future] [added: which can] suffer due to U.S. federal spending cuts, [removed: or] government hiring [removed: restrictions and any further] [added: restrictions, or other spending] limitations that may result from presidential or congressional action or inaction, including for example, a U.S. federal government shutdown, such as the partial shutdown that occurred in December 2018 and January 2019.

[removed: Risks] [added: Risks] Relating to Our Integration of [removed: Starwood][added: Starwood]

[removed: Because] [added: *Some] of [removed: these or other factors,] [added: the anticipated benefits of combining Starwood and Marriott may still not be realized and challenges related to our integration efforts could have adverse effects on our business.* Although] we [added: have achieved substantial benefits from the Starwood Combination, we] cannot assure you when or that we will be able to fully realize additional benefits [removed: from the Starwood Combination in the form of] [added: that we anticipated when we decided to acquire Starwood, including] enhancing revenues or achieving other operating [removed: efficiencies, cost savings, or benefits, or that challenges encountered with our harmonization efforts will not have adverse effects on our business] [added: efficiencies] or [removed: reputation.][added: cost savings.]

[removed: Program] [added: *Program] changes associated with our integration efforts could have a negative effect on guest preference or [removed: behavior.][added: behavior.* Our integration efforts involved significant changes to certain of our guest programs and services, including our Loyalty Program, co-brand credit card arrangements, and consumer-facing technology platforms and services.]

[removed: Risks] [added: Risks] Relating to Our [removed: Business][added: Business]

[added: *Premature termination of our management or franchise agreements could hurt our financial performance.*] Our hotel management and franchise agreements may be subject to premature termination in certain circumstances, such as the bankruptcy of a hotel owner or franchisee, [removed: or] a failure under some agreements to meet specified financial or performance criteria that are subject to the risks described in this section, which we fail or elect not to [removed: cure.][added: cure, or in certain limited cases, other negotiated contractual termination rights.]

[removed: If] [added: When] terminations occur for these or other reasons, we may need to enforce our right to damages for breach of contract and related claims, which may cause us to incur significant legal fees and expenses.

[added: *Economic downturns and other global, national, and regional conditions could impact our financial results and growth.*] Because we conduct our business on a global platform, changes in [removed: global and] [added: global, national, or] regional [removed: economies and] [added: economies,] governmental policies [added: (including in areas such as trade, travel, immigration, healthcare, and related issues), and geopolitical conditions] impact our activities.

[removed: The] [added: *The] growing significance of our operations outside of the U.S. makes us increasingly susceptible to the risks of doing business internationally, which could lower our revenues, increase our costs, reduce our profits, disrupt our business, or damage our [removed: reputation.][added: reputation.* More than a third of the rooms in our system are located outside of the U.S. and its territories.]

This increasingly exposes us to the challenges and risks of doing business outside the U.S., many of which are outside of our control, and which could [added: materially] reduce our revenues or profits, [added: materially] increase our costs, result in significant liabilities or sanctions, [added: significantly] disrupt our business, or [added: significantly] damage our reputation.

These challenges include: (1) compliance with complex and changing laws, regulations and government policies that may impact our operations, such as foreign ownership restrictions, import and export controls, and trade restrictions; (2) compliance with U.S. and foreign laws that affect the activities of companies abroad, such as competition laws, cybersecurity and privacy laws, currency regulations, and other laws affecting dealings with certain nations; (3) the difficulties involved in managing an organization doing business in many different countries; (4) uncertainties as to the enforceability of contract and intellectual property rights under local laws; (5) rapid changes in government policy, political or civil unrest, acts of terrorism, [added: war, pandemics,] or the threat of international boycotts or U.S. anti-boycott legislation; and (6) currency exchange rate fluctuations, which may impact the results and cash flows of our international operations.

[removed: Any] [added: *Any] failure by our international operations to comply with anti-corruption laws or trade sanctions could increase our costs, reduce our profits, limit our growth, harm our reputation, or subject us to broader [removed: liability.][added: liability.* We are subject to restrictions imposed by the U.S. Foreign Corrupt Practices Act and anti-corruption laws and regulations of other countries applicable to our operations, such as the U.K. Bribery Act.]

Anti-corruption laws and regulations generally prohibit companies and their intermediaries from making [removed: improper] [added: certain] payments to government officials or other persons [added: in order] to [removed: receive] [added: influence official acts] or [added: decisions or to obtain or] retain business.

The compliance programs, internal controls and policies we maintain and enforce to promote compliance with applicable anti-bribery and anti-corruption laws may not prevent our associates, [removed: contractors] [added: contractors,] or agents from acting in ways prohibited by these laws and regulations.

We are also subject to trade sanctions administered by the [added: U.S.] Office of Foreign Assets Control and the U.S. Department of [removed: Commerce.][added: Commerce, and authorities in other countries where we do business.]

The U.S. [added: or other countries] may impose additional sanctions at any time against any country in which or with whom we do business.

Any violations of anti-corruption laws and regulations or trade sanctions could result in significant civil and criminal penalties, reduce our profits, disrupt or have a material adverse effect on our business, damage our reputation, or result in lawsuits [added: or regulatory actions] being brought against the Company or its officers or directors.

[removed: Exchange] [added: *Exchange] rate fluctuations and foreign exchange hedging arrangements could result in significant foreign currency gains and losses and affect our business [removed: results.][added: results.* We earn revenues and incur expenses in foreign currencies as part of our operations outside of the U.S. Accordingly, fluctuations in currency exchange rates may significantly increase the amount of U.S. dollars required for foreign currency expenses or significantly decrease the U.S. dollars we receive from foreign currency revenues.]

[removed: As a result, changes between the] foreign exchange rates and the U.S. dollar affect the amounts we record for our foreign assets, liabilities, revenues and expenses, and could have a negative effect on our financial results.

[removed: Some] [added: *Some] of our management agreements and related contracts require us to make payments to owners if the hotels do not achieve specified levels of operating [added: profit.* Some of our contracts with hotel owners require that we fund shortfalls if the hotels do not attain specified levels of operating] profit.

[added: *Our new programs and new branded products may not be successful.*] We cannot assure you that new or newly acquired brands, [removed: such as those we acquired as a result of the Starwood Combination, our investments in PlacePass and the joint venture with Alibaba, our pilot of a homesharing offering in certain European cities,] or any other new programs or products we [added: have recently launched or] may launch in the future, will be accepted by hotel owners, potential franchisees, or the traveling public or other guests.

[removed: So] [added: *Risks relating to natural or man-made disasters, contagious disease, violence, and war could reduce the demand for lodging, which may adversely affect our revenues.* We have seen a decline in travel and reduced demand for lodging due to so] called “Acts of God,” such as hurricanes, earthquakes, tsunamis, floods, volcanic activity, wildfires, and other natural disasters, as well as man-made disasters and the [removed: potential] spread of contagious diseases in locations where we own, manage, or franchise significant properties and areas of the world from which we draw a large number of guests, [removed: have in the past caused] and [added: these circumstances] could [added: continue or worsen] in the future [removed: cause a decline in business or leisure travel and reduce demand for lodging] to an extent and for durations that we are not able to predict.

Actual or threatened war, terrorist activity, political unrest, [removed: or] civil [added: or geopolitical] strife, and other [removed: geopolitical uncertainty] [added: acts of violence] could have a similar effect.

Any one or more of these events may reduce the overall demand for [removed: hotel rooms and corporate apartments or] [added: lodging,] limit the prices that we can [removed: obtain for them, both] [added: obtain, or increase our operating costs, all] of which could adversely affect our profits.

If a terrorist event [added: or other incident of violence] were to involve one or more of our branded properties, demand for our [removed: hotels] [added: properties] in particular could suffer, which could further hurt our revenues and profits.

[removed: Disagreements] [added: *Disagreements] with owners of hotels that we manage or franchise may result in litigation or delay implementation of product or service [removed: initiatives.][added: initiatives.* Consistent with our focus on management and franchising, we own very few of our lodging properties.]

We seek to resolve any disagreements to develop and maintain positive relations with current and potential hotel [removed: owners] [added: owners, franchisees,] and joint venture partners, but we cannot always do so.

[removed: Our] [added: *Our] business depends on the quality and reputation of our company and our brands, and any deterioration could adversely impact our market share, reputation, business, financial condition, or results of [removed: operations.][added: operations.* Certain events, including those that may be beyond our control, could affect the reputation of one or more of our properties or more generally impact the reputation of our brands.]

Many other factors also can influence our reputation and the value of our brands, including service, food quality and safety, [added: safety of our guests and associates,] availability and management of scarce natural resources, supply chain management, diversity, human rights, and support for local communities.

Reputational value is also based on perceptions, and broad access to social media makes it easy for anyone to provide public feedback that can influence perceptions of us, our brands and our hotels, and it may [added: be difficult to control or effectively manage negative publicity, regardless of whether it is accurate.]

Any [added: material] decline in the reputation or perceived quality of our brands or corporate image could affect our market share, reputation, business, financial condition, or results of operations.

We are subject to various risks that make an investment in our securities risky.

The events and consequences discussed in these risk factors could, in circumstances we may or may not be able to accurately predict, recognize, or control, have a material adverse effect on our business, growth, reputation, prospects, financial condition, operating results (including components of our financial results), cash flows, liquidity, and stock price.

These risk factors do not identify all risks that we face; our operations could also be affected by factors, events, or uncertainties that are not presently known to us or that we currently do not consider to present significant risks to our operations.

Our business is impacted by decreases in travel resulting from weak economic conditions, changes in energy prices and currency values, political instability, heightened travel security measures, travel advisories, disruptions in air travel, and concerns over disease, violence, war, or terrorism.

Our performance could be materially affected if these conditions arise or extend longer than anticipated, or in other circumstances that we are not able to predict or mitigate.

During the last recession when demand for hotel rooms declined significantly, particularly in 2009, we took steps to reduce operating costs and improve efficiency and such cost controls could again become necessary if demand significantly declines.

Our efforts to implement any such changes in a manner designed to maintain guest loyalty, owner preference, and associate satisfaction may not be successful, and our market share may suffer as a result.

We also cannot assure you that challenges we encountered with the harmonization of our systems, our Loyalty Program, and other business practices (some of which still place a significant burden on our management and internal resources) will not have significant adverse effects on our business or reputation.

As a result, changes between the

impairment may have occurred.

Numerous collective bargaining agreements are typically subject to negotiation each year, and our past ability to resolve such negotiations does not mean that we will resolve future negotiations without strikes, disruptions, or on terms that we consider reasonable.

In addition, the efforts and abilities of our senior executives are important elements of maintaining our competitive position and driving future growth, and if we lose the services of one or more of our senior executives, we could experience challenges executing our business strategies or other adverse effects on our business.

damage caused by the 2017 Atlantic hurricane season and other natural disasters coupled with continued large global losses in the property market in 2018.

Also, due to the Data Security Incident and the state of the cyber insurance market generally, the costs for our cyber insurance increased for our policy period beginning in the 2019 third quarter, and the cost of such insurance could continue to increase in future years.

both to acquire and to sell real property.

Disagreements with our venture partners may result in litigation.

*Changes affecting the availability of the London Interbank Offered Rate (“LIBOR”) may have consequences that we cannot yet reasonably predict.* We are a party to various agreements and other instruments where obligations by or to us are calculated based on or otherwise dependent on LIBOR.

In July 2017, the U.K. Financial Conduct Authority announced that it intends to stop persuading or compelling banks to submit rates for calculation of LIBOR after 2021.

As a result, LIBOR may perform differently than in the past and may ultimately cease to be utilized or to exist, either before or after 2021.

Alternative benchmark rate(s) may replace LIBOR and could affect our agreements that rely on LIBOR, not all of which contain alternative rate provisions.

We are still in the process of investigating which of our agreements rely on LIBOR and, at this time, it is not possible for us to predict the effect of any changes to LIBOR, any phase out of LIBOR, or any establishment of alternative benchmark rates.

There is uncertainty about how we, the financial markets, applicable law and the courts will address the replacement of LIBOR with alternative rates on contracts that do not include alternative rate provisions.

In addition, any changes to benchmark rates may have an uncertain impact on our cost of funds, our receipts or payments under agreements that rely on LIBOR, and the valuation of derivative or other contracts to which we are a party, any of which could impact our results of operations and cash flows.

We may incur significant additional costs to meet these requirements, obligations, and

cyberattacks, security compromises, and other related incidents.

Following the Data Security Incident, the ICO and certain other regulators also opened investigations into our privacy practices, including the representations in our privacy policies and how we handle individual rights requests.

We are in the process of remediating the material weakness and have responded to requests from the SEC for documents and information related to these matters.

time in our periodic filings with the SEC.

We are subject to various risks that could have a negative effect on us or on our financial condition.

We operate in markets that contain many competitors.

Economic downturns could impact our financial results and growth.

Weak economic conditions in one or more parts of the world, changes in oil prices and currency values, disruptions in national, regional, or global economies generally and the travel business in particular that might result from changing governmental policies in areas such as trade, travel, immigration, healthcare, and related issues, political instability in some areas, and the uncertainty over how long any of these conditions could continue, could have a negative impact on the lodging industry.

Because of such uncertainty, we continue to experience weakened demand for our hotel rooms in some markets.

Our future financial results and growth could be further harmed or constrained if economic or these other conditions worsen.

The continued diversion of resources and management’s attention to the integration of Starwood could still adversely affect our day-to-day business.

While the integration of Starwood is largely complete, integration related matters still place a significant burden on our management and internal resources and may continue to do so for some time, which could have adverse effects on our business or financial results.

Some of the anticipated benefits of combining Starwood and Marriott may still not be realized.

We decided to acquire Starwood with the expectation that the Starwood Combination would result in various benefits.

Although we have already achieved substantial benefits, others remain subject to several uncertainties, including whether we can achieve certain revenue synergies.

Integration could also involve unexpected costs.

Disruptions of each legacy company’s ongoing businesses, processes, and systems could adversely affect the combined company.

We have encountered challenges in harmonizing our different reservations and other systems, our Loyalty Program, and other business practices, and we may encounter additional or increased challenges related to integration.

Our integration efforts involved significant changes to certain of our guest programs and services, including our Loyalty Program, co-branded credit card arrangements, and consumer-facing technology platforms and services.

Premature termination of our management or franchise agreements could hurt our financial performance.

Our lodging operations are subject to global, national, and regional conditions.

In recent years, decreases in travel resulting from weak economic conditions and the heightened travel security measures resulting from the threat of further terrorism have hurt our business.

Our future performance could be similarly affected by the economic and political environment in each of our operating regions, the resulting unknown pace of both business and leisure travel, and any future incidents or changes in those regions.

More than a third of the rooms in our system are located outside of the U.S. and its territories.

We are subject to restrictions imposed by the U.S. Foreign Corrupt Practices Act (the “FCPA”) and anti-corruption laws and regulations of other countries applicable to our operations, such as the UK Bribery Act.

We earn revenues and incur expenses in foreign currencies as part of our operations outside of the U.S. Accordingly, fluctuations in currency exchange rates may significantly increase the amount of U.S. dollars required for foreign currency expenses or significantly decrease the U.S. dollars we receive from foreign currency revenues.

Some of our contracts with hotel owners require that we fund shortfalls if the hotels do not attain specified levels of operating profit.

Our new programs and new branded products may not be successful.

In addition, some of our new or newly acquired brands involve or may involve cooperation and/or consultation with one or more third parties, including some shared control over product design and development, sales and marketing, and brand standards.

Disagreements with these third parties could slow the development of these brands and/or impair our ability to take actions we believe to be advisable for the success and profitability of such brands.

Risks relating to natural or man-made disasters, contagious disease, terrorist activity, and war could reduce the demand for lodging, which may adversely affect our revenues.

Consistent with our focus on management and franchising, we own very few of our lodging properties.

Certain events, including those that may be beyond our control, could affect the reputation of one or more of our properties or more generally impact the reputation of our brands.

be difficult to control or effectively manage negative publicity, regardless of whether it is accurate.

The Data Security Incident could have a negative impact on our reputation, our corporate image and our relationship with our guests.

As of December 31, 2018, we had $17.4 billion of goodwill and other intangible assets.

Actions by our franchisees and licensees could adversely affect our image and reputation.

Although we recently completed contract negotiations for 43 unionized hotels following multi-week strikes by our associates at 29 of those hotels, a number of collective bargaining agreements are expected to be negotiated in 2019.

We compete with other companies both within and outside of our industry for talented personnel.

Marriott requires comprehensive property and liability insurance policies for our

managed, leased, and owned properties with coverage features and insured limits that we believe are customary.

Both we and current and potential hotel owners must periodically spend money to fund new hotel investments, as well as to refurbish and improve existing hotels.

Our growth strategy for adding lodging facilities entails entering into and maintaining various arrangements with property owners.

[removed: BUSINESS] [added: BUSINESS] AND [removed: OVERVIEW][added: OVERVIEW]

[removed: Overview][added: *Overview*]

We are a worldwide operator, franchisor, and licensor of hotel, residential, and timeshare properties in [removed: 130] [added: 134] countries and territories under 30 brand names.

Our Europe, Middle East and Africa, and Caribbean and Latin America operating segments do not individually meet the criteria for separate disclosure as reportable [removed: segments.][added: segments. 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.]

[removed: ][added: ]

Net house profit is calculated as gross operating profit (also referred to as “house profit,” which we discuss under the “Performance Measures” section below) less non-controllable expenses such as [added: property] insurance, real estate taxes, and capital spending reserves.

We provide our guests new and memorable experiences through our portfolio of brands, innovative technology, personalized guest recognition, and access to travel experiences through our Marriott Bonvoy [removed: Moments] [added: Tours & Activities] program.

Our brands remain strong due to our skilled management teams, dedicated associates, superior guest service with an emphasis on guest and associate satisfaction, significant distribution, [removed: our] Loyalty Program, multichannel reservation systems, and desirable property amenities.

We continue to enhance the appeal of our proprietary, information-rich, and easy-to-use websites, and of our associated mobile [removed: smartphone] applications, through functionality and service improvements.

[removed: Data] [added: *Data] Security [removed: Incident][added: Incident*]

On November 30, 2018, we announced a data security incident involving unauthorized access to the Starwood reservations [removed: database (the “Data Security Incident”).][added: database.]

We are currently unable to estimate the range of total possible financial impact to the Company from the Data Security [removed: Incident.][added: Incident in excess of the expenses already incurred.]

[removed: We maintain] [added: Although our] insurance [added: program includes coverage] designed to limit our exposure to losses such as those related to the Data Security [added: Incident, that insurance may not be sufficient or available to cover all of our expenses or other losses (including fines and penalties) related to the Data Security] Incident.

We expect to incur significant expenses associated with the Data Security Incident in future periods, primarily related to legal proceedings and regulatory [removed: investigations,] [added: investigations (including possible fines and penalties),] increased expenses and capital investments for [removed: IT] [added: information technology] and information [removed: security, incident response] [added: security] and [removed: customer care,] [added: data privacy,] and increased expenses for [removed: insurance,] compliance [removed: activities,] [added: activities] and to meet increased legal and regulatory requirements.

[removed: Commitments and Contingencies] [added: See Note 7] for information related to expenses incurred in [removed: 2018,] [added: 2018 and 2019,] insurance recoveries, and legal proceedings and governmental investigations related to the Data Security Incident.

[removed: Performance Measures][added: *Performance Measures*]

RevPAR may not be comparable to similarly titled measures, such as [removed: revenues.][added: revenues, and should not be viewed as necessarily correlating with our fee revenue.]

We define our comparable properties as our [removed: properties, including those that we acquired through the Starwood Combination,] [added: properties] that were open and operating under one of our [removed: Legacy-Marriott or Legacy-Starwood] brands since the beginning of the last full calendar year (since January 1, [removed: 2017] [added: 2018] for the current period) and have not, in either the current or previous year: (i) undergone significant room or public space renovations or expansions, (ii) been converted between company-operated and franchised, or (iii) sustained substantial property damage or business interruption.

For [removed: 2017] [added: 2019] compared to [removed: 2016,] [added: 2018,] we had [removed: 3,883] [added: 4,371] comparable North American properties and [removed: 1,030] [added: 1,232] comparable International properties.

House profit includes room, food and beverage, and other revenue and the related expenses including payroll and benefits expenses, as well as repairs and maintenance, utility, general and administrative, and sales and marketing [removed: expenses.]

[removed: Business Trends][added: *Business Trends*]

Our [removed: 2018] [added: 2019] full-year results reflected a year-over-year increase in the number of properties in our system, [removed: favorable] [added: strong] demand for our brands in many markets around the world, and generally favorable economic conditions.

Comparable worldwide systemwide RevPAR for [removed: 2018] [added: 2019] increased [removed: 2.6] [added: 1.3] percent to [removed: $117.37,] [added: $117.30,] ADR increased [removed: 2.0] [added: 0.8] percent on a constant dollar basis to [removed: $160.37,] [added: $160.55,] and occupancy increased 0.4 percentage points to [removed: 73.2] [added: 73.1] percent, compared to [removed: 2017.][added: 2018.]

Our Europe region experienced higher demand in [removed: 2018,] [added: 2019,] led by strong [removed: transient business in most countries and] demand from [removed: the World Cup, partially constrained by lower RevPAR] [added: U.S. travelers] in [added: the U.K., Italy, and] Spain.

In our Middle East and Africa region, RevPAR [removed: decreased] [added: remained relatively stable in 2019] due to [added: RevPAR growth in Africa, partially offset by ongoing] geopolitical [added: and economic] instability and supply growth in the Middle [removed: East, partially offset by strong growth in Africa.][added: East.]

RevPAR grew across our Caribbean and Latin America region, driven by higher ADR, partially [removed: due to] [added: constrained by] lower [removed: supply following 2017 hurricane activity] [added: demand] in [removed: the Caribbean.][added: Mexico.]

[removed: In 2018 compared to 2017 at comparable properties, worldwide] [added: International] company-operated house profit margins increased by [removed: 40] [added: 20] basis [removed: points,] [added: points in 2019 compared to 2018 at comparable properties,] primarily [removed: reflecting] [added: due to] RevPAR [removed: growth, improved productivity, procurement] [added: growth in our Asia Pacific segment and Europe region and] cost [removed: savings,] [added: controls] and synergy savings from the Starwood Combination.

[removed: System] [added: *System] Growth and [removed: Pipeline][added: Pipeline*]

In [removed: 2018,] [added: 2019,] we added [removed: 494] [added: 516] properties with [removed: 80,255] [added: 78,142] rooms around the world across our portfolio of brands.

Approximately [removed: 45] [added: 44] percent of [removed: the] added rooms are located outside North America, and [removed: 12] [added: 18] percent are conversions from competitor brands.

In [removed: 2018, 107] [added: 2019, 70] properties [removed: (21,176] [added: (11,908] rooms) exited our system.

At year-end [removed: 2018,] [added: 2019,] our development pipeline grew to a record [removed: 478,000] [added: 515,000] rooms, with more than half located outside of North America.

The pipeline includes hotel rooms under construction and under signed contracts, and [removed: nearly] [added: approximately] 23,000 hotel rooms approved for development but not yet under signed contracts.

In [removed: 2018,] [added: 2019,] we signed management and franchise agreements for [removed: 816] [added: 815] properties [removed: (125,000] [added: (136,000] rooms), setting company records for rooms signings in [removed: Europe] [added: Asia Pacific, Europe, Caribbean] and [added: Latin America, and] Middle East and [removed: Africa and hotel signings in Asia Pacific.][added: Africa.]

Contracts signed in [removed: 2018] [added: 2019] also reflected the Company’s strength in the [removed: industry’s highest] [added: luxury] tier, with [removed: 29] [added: 42] properties [removed: (6,200 rooms)] signed across [removed: six luxury brands.][added: 27 countries and territories.]

[removed: Properties] [added: Properties] and [removed: Rooms][added: Rooms]

At year-end [removed: 2018,] [added: 2019,] we operated, franchised, and licensed the following properties and rooms:

| | [removed: Managed | | | | | | Franchised/Licensed] [added: Managed] | | | | | | [removed: Owned/Leased] [added: Franchised/Licensed] | | | | | | [removed: Other (1)] [added: Owned/Leased] | | | | | | [removed: Total] [added: Total] | | | | |

| | [removed: Properties | | | Rooms | | | Properties] [added: Properties] | | | [removed: Rooms] [added: Rooms] | | | [removed: Properties] [added: Properties] | | | [removed: Rooms] [added: Rooms] | | | [removed: Properties] [added: Properties] | | | [removed: Rooms] [added: Rooms] | | | [removed: Properties] [added: Properties] | | | [removed: Rooms] [added: Rooms] | |

[removed: Lodging Statistics][added: Lodging Statistics]

Beginning with the first quarter of 2020, we will present the following reportable business segments: North America; Asia Pacific; and Europe, Middle East, and Africa.

Our Caribbean and Latin America operating segment will be included in a combined Caribbean and Latin America and “Unallocated corporate” caption.

We believe that our Loyalty Program generates substantial repeat business that might otherwise go to competing hotels, and we strategically market to the program’s large and growing member base to generate revenue.

The Starwood reservations database is no longer used for business operations.

In July 2019, the ICO issued a formal notice of intent under the U.K. Data Protection Act 2018 proposing a fine in the amount of £99 million against the Company in relation to the Data Security Incident (the “Proposed ICO Fine”).

We mutually agreed with the ICO to an extension of the regulatory process until June 1, 2020 and the ICO proceeding is ongoing.

In the 2019 second quarter, we recorded an accrual in the full amount of the Proposed ICO Fine for this loss contingency, and in the 2019 fourth quarter, we reduced the accrual to $65 million based on the ongoing proceeding.

See Note 7 for additional information.

As we expected, the cost of such insurance increased for our current policy period, and the cost of such insurance could continue to increase in future years.

expenses.

In North America, RevPAR increased modestly in 2019, driven by higher ADR, partially constrained by new lodging supply in certain markets.

In our Asia Pacific segment in 2019, RevPAR growth was driven by India and major urban markets in Greater China but was partially constrained by lower demand in Hong Kong.

North American company-operated house profit margins decreased by 20 basis points in 2019 compared to 2018 at comparable properties, primarily due to wage increases and modest RevPAR growth, partially offset by cost controls and synergy savings from the Starwood Combination.

The Coronavirus outbreak currently is impacting our operations in China and other parts of our Asia Pacific segment by necessitating the closure of numerous hotels in mainland China and significantly reducing demand in Greater China and certain other Asia Pacific markets.

We cannot presently estimate the overall operational and financial impact, which could be material to our 2020 results, and which is highly dependent on the breadth and duration of the outbreak and could be affected by other factors we are not currently able to predict.

In 2020, we expect the number of our open hotel rooms will increase at a rate consistent with our recent experience.

This growth expectation does not include any potential impact related to the Coronavirus outbreak.

| | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | |

| North American Full-Service | 413 | | | 182,691 | | | 738 | | | 210,019 | | | 8 | | | 4,833 | | | 1,159 | | | 397,543 | |

| North American Limited-Service | 402 | | | 63,224 | | | 3,743 | | | 436,032 | | | 20 | | | 3,006 | | | 4,165 | | | 502,262 | |

| Asia Pacific | 660 | | | 190,239 | | | 120 | | | 31,123 | | | 2 | | | 410 | | | 782 | | | 221,772 | |

| Other International | 601 | | | 131,722 | | | 513 | | | 96,347 | | | 38 | | | 8,754 | | | 1,152 | | | 236,823 | |

| Timeshare | — | | | — | | | 91 | | | 22,521 | | | — | | | — | | | 91 | | | 22,521 | |

| Total | 2,076 | | | 567,876 | | | 5,205 | | | 796,042 | | | 68 | | | 17,003 | | | 7,349 | | | 1,380,921 | |

The following tables present RevPAR, occupancy, and ADR statistics for comparable properties for 2019, 2019 compared to 2018, 2018, and 2018 compared to 2017.

*2019* *Compared to* *2018*

| | 2019 | | | | vs. 2018 | | | 2019 | | | vs. 2018 | | | | 2019 | | | | vs. 2018 | |

| North American Full-Service (1) | $ | 174.86 | | | 1.5 | % | | 76.7 | % | | 0.3 | % | pts. | | $ | 228.12 | | | 1.0 | % |

| North American - All (3) | $ | 153.64 | | | 1.0 | % | | 75.8 | % | | (0.1 | )% | pts. | | $ | 202.75 | | | 1.1 | % |

| Asia Pacific | $ | 102.39 | | | 2.2 | % | | 72.4 | % | | 2.1 | % | pts. | | $ | 141.38 | | | (0.8 | )% |

| Caribbean & Latin America | $ | 132.25 | | | 2.3 | % | | 65.1 | % | | 0.7 | % | pts. | | $ | 203.23 | | | 1.2 | % |

| Europe | $ | 149.51 | | | 2.8 | % | | 74.7 | % | | 0.9 | % | pts. | | $ | 200.21 | | | 1.5 | % |

| Middle East & Africa | $ | 107.20 | | | — | % | | 68.5 | % | | 2.6 | % | pts. | | $ | 156.43 | | | (3.8 | )% |

| International - All (4) | $ | 116.10 | | | 2.0 | % | | 71.7 | % | | 1.8 | % | pts. | | $ | 161.91 | | | (0.6 | )% |

| Worldwide (5) | $ | 134.60 | | | 1.4 | % | | 73.7 | % | | 0.9 | % | pts. | | $ | 182.60 | | | 0.2 | % |

| | RevPAR | | | | | | | Occupancy | | | | | | | Average Daily Rate | | | | | |

| | 2019 | | | | vs. 2018 | | | 2019 | | | vs. 2018 | | | | 2019 | | | | vs. 2018 | |

| North American Full-Service (1) | $ | 147.53 | | | 2.0 | % | | 74.2 | % | | 0.4 | % | pts. | | $ | 198.88 | | | 1.5 | % |

Working with leading security experts, we determined that there was unauthorized access to the Starwood network since 2014 and that an unauthorized party had copied information from the Starwood reservations database and taken steps towards removing it.

The information copied from the Starwood reservations database over time included information about guests who made a reservation at a Starwood property, including names, mailing addresses, phone numbers, email addresses, passport numbers, payment card numbers and expiration dates, Starwood Preferred Guest account information, dates of birth, gender, arrival and departure information, reservation dates, and communication preferences.

The combination of information varied by guest.

Based on our analysis as of the date of this filing, we believe that the upper limit for the total number of guest records involved in this incident is approximately 383 million records.

In many instances, there appear to be multiple records for the same guest, so we have concluded with a fair degree of certainty that information for fewer than 383 million unique guests was involved, although we are currently unable to quantify that lower number because of the nature of the data in the database.

Based on our analysis as of the date of this filing, we believe that the information accessed by an unauthorized third party included approximately 5.25 million unencrypted passport numbers, approximately 18.5 million encrypted passport numbers and approximately 9.1 million encrypted payment card numbers (approximately 385,000 of which cards were unexpired as of September 2018).

Certain data analytics work continues, including by the investigative firm engaged on behalf of the payment card networks, and based on the preliminary information we have as of the date of this filing, we believe that the information accessed by an unauthorized third party could include several thousand unencrypted payment card numbers.

Upon receiving information that an alert from an internal security tool was related to an attempt to access the Starwood reservations database, we quickly engaged leading security experts to conduct a comprehensive forensic review to determine the scope of the intrusion, including the specific data impacted, and assist with containment measures.

While that forensic review of the incident is now complete, certain data analytics work continues.

We reported this incident to law enforcement and continue to support their investigation.

We have completed the planned phase out of the operation of the Starwood reservations database, effective as of the end of 2018.

Following the Data Security Incident, we began a guest outreach effort and offered certain services to help guests monitor and protect their information.

Promptly following our announcement of the incident, we began sending emails on a rolling basis directly to various Starwood guests whose email addresses were in the Starwood reservations database, and we completed sending these emails on December 21, 2018.

We also established a multi-language dedicated website and multi-language call center to answer guests’ questions about the incident.

The dedicated website provides guests details of the incident, the information affected, the steps being taken to investigate, FAQs and information about how guests can monitor and protect their information.

We are offering free web monitoring solutions for affected guests in certain jurisdictions where the monitoring services are available.

We expect that the cost of such insurance will increase significantly in 2019 and future years.

See Footnote 7.

Our RevPAR statistics for 2018, 2017, and 2016, include Legacy-Starwood comparable properties for each of the full years even though Marriott did not own the Legacy-Starwood brands before the Merger Date.

Therefore, our RevPAR statistics

include Legacy-Starwood properties for periods during which fees from the Legacy-Starwood properties are not included in our Income Statements.

We provide these RevPAR statistics as an indicator of the performance of our brands and to allow for comparison to industry metrics, and they should not be viewed as necessarily correlating with our fee revenue.

In North America, RevPAR increased in 2018, driven by both higher transient and group demand.

RevPAR growth was partially constrained by new lodging supply in certain markets and comparisons to 2017 natural disasters.

In our Asia Pacific segment in 2018, RevPAR grew in most markets, led by China, Indonesia and India.

International company-operated house profit margins increased by 70 basis points, and North American company-operated house profit margins increased by 10 basis points.

In 2019, we expect the number of our open hotel rooms will increase approximately 5.5 percent net, reflecting room exits of 1.0 to 1.5 percent.

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| North American Full-Service | 413 | | | 184,541 | | | 705 | | | 202,204 | | | 9 | | | 5,275 | | | — | | | — | | | 1,127 | | | 392,020 | |

| North American Limited-Service | 408 | | | 64,372 | | | 3,432 | | | 395,522 | | | 20 | | | 3,006 | | | 49 | | | 8,447 | | | 3,909 | | | 471,347 | |

| Asia Pacific | 612 | | | 179,243 | | | 98 | | | 27,258 | | | 2 | | | 410 | | | — | | | — | | | 712 | | | 206,911 | |

| Other International | 524 | | | 121,508 | | | 411 | | | 82,243 | | | 32 | | | 8,404 | | | 102 | | | 12,749 | | | 1,069 | | | 224,904 | |

| Timeshare | — | | | — | | | 89 | | | 22,186 | | | — | | | — | | | — | | | — | | | 89 | | | 22,186 | |

| Total | 1,957 | | | 549,664 | | | 4,735 | | | 729,413 | | | 63 | | | 17,095 | | | 151 | | | 21,196 | | | 6,906 | | | 1,317,368 | |

| | |

| --- | --- |

| (1) | Other represents unconsolidated equity method investments, which we present in the “Equity in earnings” caption of our Income Statements. |

The following lodging statistics present RevPAR, occupancy, and ADR for comparable properties 2018, 2018 compared to 2017, 2017, and 2017 compared to 2016, including Legacy-Starwood comparable properties for the full years even though Marriott did not own the Legacy-Starwood brands before the Merger Date.

| North American Luxury (1) | $ | 258.71 | | | 3.3 | % | | 76.9 | % | | (0.5 | )% | pts. | | $ | 336.58 | | | 3.9 | % |

[removed: Summary of Significant Accounting Policies] [added: See Note 2] for more information on derivative instruments.

The following table sets forth the scheduled maturities and the total fair value as of year-end [removed: 2018] [added: 2019] for our financial instruments that are impacted by market risks:

| | [removed: Maturities] [added: Maturities] by [removed: Period] [added: Period] | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| [removed: ($] [added: *($] in [removed: millions)] [added: millions)*] | [removed: 2019] [added: 2020] | | | | [removed: 2020] [added: 2021] | | | | [removed: 2021] [added: 2022] | | | | [removed: 2022] [added: 2023] | | | | [removed: 2023] [added: 2024] | | | | [removed: There- after] [added: There- after] | | | | [removed: Total Carrying Amount] [added: Total Carrying Amount] | | | | [removed: Total Fair Value] [added: Total Fair Value] | | |

| [removed: Assets] [added: Assets] - Maturities represent expected principal receipts, fair values represent assets. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Fixed-rate notes receivable | $ | [removed: 2] [added: 5] | | | $ | [removed: 2] [added: 3] | | | $ | [removed: 2] [added: 3] | | | $ | [removed: 2] [added: 1] | | | $ | [removed: —] [added: 1] | | | $ | [removed: 38] [added: 31] | | | $ | [removed: 46] [added: 44] | | | $ | [removed: 46] [added: 44] | |

| Floating-rate notes receivable | $ | 4 | | | $ | [removed: 60] [added: 29] | | | $ | [removed: —] [added: 25] | | | $ | [removed: —] [added: 1] | | | $ | [removed: —] [added: 7] | | | $ | [removed: 21] [added: 16] | | | $ | [removed: 85] [added: 82] | | | $ | [removed: 76] [added: 77] | |

| Average interest rate | | | | | | | | | | | | | | | | | | | | | | | | | [removed: 4.65] [added: 4.36] | | % | | | | |

| [removed: Liabilities] [added: Liabilities] - Maturities represent expected principal payments, fair values represent liabilities. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Average interest rate | | | | | | | | | | | | | | | | | | | | | | | | | [removed: 3.45] [added: 3.44] | | % | | | | |

| Average interest rate | | | | | | | | | | | | | | | | | | | | | | | | | [removed: 2.88] [added: 2.30] | | % | | | | |

| Fixed-rate debt | $ | (422 | ) | | $ | (859 | ) | | $ | (1,107 | ) | | $ | (686 | ) | | $ | (14 | ) | | $ | (2,543 | ) | | $ | (5,631 | ) | | $ | (5,880 | ) |

| Floating-rate debt | $ | (549 | ) | | $ | (299 | ) | | $ | (543 | ) | | $ | — | | | $ | (3,761 | ) | | $ | — | | | $ | (5,152 | ) | | $ | (5,179 | ) |

See Footnote 2.

| Fixed-rate debt | $ | (827 | ) | | $ | (359 | ) | | $ | (857 | ) | | $ | (1,107 | ) | | $ | (687 | ) | | $ | (2,555 | ) | | $ | (6,392 | ) | | $ | (6,254 | ) |

| Floating-rate debt | $ | — | | | $ | (547 | ) | | $ | (2,245 | ) | | $ | — | | | $ | — | | | $ | — | | | $ | (2,792 | ) | | $ | (2,793 | ) |

[removed: Corporate] [added: *Corporate] Structure and [removed: Business][added: Business*]

[removed: ][added: ]

[removed: Acquisition] [added: *Acquisition] of Starwood Hotels & Resorts [removed: Worldwide][added: Worldwide*]

On September 23, 2016 (the “Merger Date”), we completed the acquisition of Starwood Hotels & Resorts Worldwide, LLC, formerly known as Starwood Hotels & Resorts Worldwide, Inc. (“Starwood”), through a series of transactions (the “Starwood Combination”), after which Starwood became an indirect wholly-owned subsidiary of [removed: Marriott.][added: the Company.]

We refer to our business associated with brands that were in our portfolio before the Starwood Combination as “Legacy-Marriott” and to the Starwood business and brands that we acquired as “Legacy-Starwood.” [removed: See Footnote 3.]

[removed: Starwood] [added: *Starwood] Reservations Database Security [removed: Incident][added: Incident*]

For further information about the Data Security Incident, see Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Data Security Incident” in [removed: Footnote 7.][added: Note 7 in Part II, Item 8.]

[removed: Company-Operated Properties][added: *Company-Operated Properties*]

At year-end [removed: 2018,] [added: 2019,] we had [removed: 2,020] [added: 2,144] company-operated properties [removed: (566,759] [added: (584,879] rooms), which included properties under long-term management or lease agreements with property owners (management and lease agreements together, the “Operating Agreements”), properties that we own, and home and condominium communities for which we manage the related owners’ associations.

Many of our Operating Agreements also permit the owners to terminate the agreement if we do not meet certain performance [removed: metrics and] [added: metrics,] financial returns fail to meet defined levels for a period of [removed: time] [added: time,] and we have not cured those deficiencies.

[removed: Franchised,] [added: *Franchised,] Licensed, and Unconsolidated Joint Venture [removed: Properties][added: Properties*]

We have franchising, licensing, and joint venture programs that permit hotel owners and operators [removed: and Marriott Vacations Worldwide Corporation (“MVW”), our former timeshare subsidiary that we spun off in 2011,] to use many of our lodging brand names and systems.

Under our hotel franchising programs, we generally receive an initial application fee and continuing royalty fees, which typically range from four to [removed: six] [added: seven] percent of room revenues for all brands, plus two to three percent of food and beverage revenues for certain full-service [removed: hotels.][added: brands.]

We also receive royalty fees under license agreements with [removed: MVW] [added: Marriott Vacations Worldwide Corporation (“MVW”), our former timeshare subsidiary that we spun off in 2011,] and its affiliates for certain brands, including Marriott Vacation Club, Grand Residences by Marriott, The Ritz-Carlton Destination Club, Westin, Sheraton, and for certain existing properties, St. Regis and The Luxury Collection.

[removed: Residential][added: *Residential*]

[removed: Seasonality][added: *Seasonality*]

In general, business at company-operated and franchised properties fluctuates [removed: only] moderately with the seasons and is relatively stable.

Business at some resort properties may be [added: more] seasonal depending on location.

[removed: Relationship] [added: *Relationship] with Major [removed: Customer][added: Customer*]

[removed: Intellectual Property][added: *Intellectual Property*]

[removed: Brand Portfolio][added: *Brand Portfolio*]

[removed: Luxury] [added: Luxury] offers bespoke and superb amenities and services.

[removed: Premium] [added: Premium] offers sophisticated and thoughtful amenities and services.

[removed: Select] [added: Select] offers smart and easy amenities and services with our longer stay brands offering amenities that mirror the comforts of home.

The following table shows the geographic distribution of our brands at year-end [removed: 2018:][added: 2019:]

| | | [removed: North America] [added: North America] | [removed: Europe] [added: Europe] | [removed: Middle] [added: Middle] East & [removed: Africa] [added: Africa] | [removed: Asia Pacific] [added: Asia Pacific] | [removed: Caribbean] [added: Caribbean] & Latin [removed: America] [added: America] | [removed: Total] [added: Total] |

| [removed: Luxury] [added: Luxury] | | | | | | | |

| JW Marriott® | Properties | [removed: 28] [added: 30] | [removed: 6] [added: 7] | [removed: 4] [added: 6] | [removed: 33] [added: 40] | 13 | [removed: 84] [added: 96] |

| The Ritz-Carlton® | Properties | 39 | 13 | 13 | [removed: 30] [added: 33] | [removed: 6] [added: 8] | [removed: 101] [added: 106] |

| W® Hotels | Properties | [removed: 25] [added: 26] | [removed: 6] [added: 7] | [removed: 3] [added: 5] | [removed: 15] [added: 14] | 6 | [removed: 55] [added: 58] |

| The Luxury Collection® [added: (1)] | Properties | [removed: 17] [added: 16] | [removed: 44] [added: 47] | [removed: 7] [added: 10] | [removed: 30] [added: 31] | [removed: 12] [added: 14] | [removed: 110] [added: 118] |

| St. Regis® | Properties | 10 | [removed: 6] [added: 7] | [removed: 4] [added: 5] | [removed: 18] [added: 20] | 3 | [removed: 41] [added: 45] |

| EDITION® | Properties | [removed: 2] [added: 4] | 3 | 1 | 2 | — | [removed: 8] [added: 10] |

| [removed: Premium] [added: Premium] | | | | | | | |

| [removed: Marriott Hotels®] [added: AC Hotels by Marriott®] | Properties | [removed: 341] [added: 63] | [removed: 94] [added: 83] | [removed: 24] [added: 1] | [removed: 80] [added: —] | [removed: 28] [added: 12] | [removed: 567] [added: 159] |

| Renaissance® Hotels | Properties | [removed: 88] [added: 86] | [removed: 36] [added: 34] | 4 | [removed: 39] [added: 42] | [removed: 8] [added: 9] | 175 |

| Le Méridien® | Properties | [removed: 19] [added: 21] | 15 | [removed: 24] [added: 23] | [removed: 47] [added: 49] | 2 | [removed: 107] [added: 110] |

| Autograph Collection® Hotels [added: (2)] | Properties | [removed: 95 | 46] [added: 108] | [removed: 8] [added: 53] | [removed: 8] [added: 9] | 9 | [removed: 166] [added: 13] | [added: 192 |]

| Delta Hotels by MarriottTM (Delta Hotels®) | Properties | [removed: 61] [added: 72] | [removed: 1] [added: 5] | [removed: —] [added: 1] | 1 | — | [removed: 63] [added: 79] |

| Marriott Executive Apartments® | Properties | — | 4 | [removed: 7] [added: 9] | 17 | 2 | [removed: 30] [added: 32] |

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 reportable business segments: North America; Asia Pacific; and Europe, Middle East, and Africa.

Our Caribbean and Latin America operating segment will be included in a combined Caribbean and Latin America and “Unallocated corporate” caption.

See Note 15 for more information.

*Acquisition of Elegant*

On December 9, 2019, we completed the acquisition of Elegant Hotels Group plc (“Elegant”), and Elegant became an indirect wholly-owned subsidiary of the Company.

See Note 3 for more information.

The Starwood reservations database is no longer used for business operations.

At year-end 2019, we had 5,205 franchised and licensed properties (796,042 rooms).

See Note 17 for more information.

| Rooms | 16,853 | 2,205 | 3,327 | 15,080 | 3,597 | 41,062 | |

| Rooms | 11,410 | 3,079 | 3,523 | 8,207 | 2,081 | 28,300 | |

| Rooms | 7,672 | 1,423 | 1,850 | 3,788 | 1,074 | 15,807 | |

| Rooms | 4,799 | 6,962 | 2,411 | 7,883 | 1,188 | 23,243 | |

| Rooms | 1,968 | 1,002 | 1,426 | 4,812 | 448 | 9,656 | |

| Rooms | 1,209 | 381 | 255 | 651 | — | 2,496 | |

| Rooms | 134,412 | 24,595 | 8,119 | 28,000 | 8,033 | 203,159 | |

| Sheraton® | Properties | 189 | 62 | 31 | 130 | 35 | 447 |

| Rooms | 72,039 | 17,054 | 9,910 | 47,878 | 9,682 | 156,563 | |

| Westin® | Properties | 130 | 18 | 7 | 58 | 12 | 225 |

| Rooms | 53,097 | 6,024 | 1,839 | 17,872 | 3,640 | 82,472 | |

| Rooms | 28,597 | 8,049 | 1,035 | 14,535 | 2,745 | 54,961 | |

| Rooms | 4,480 | 5,021 | 6,526 | 12,903 | 271 | 29,201 | |

| Rooms | 22,463 | 7,165 | 1,906 | 2,364 | 3,751 | 37,649 | |

| Rooms | 17,376 | 729 | 360 | 339 | — | 18,804 | |

| Rooms | — | 361 | 1,029 | 2,959 | 240 | 4,589 | |

| Rooms | 4,445 | 905 | — | 1,107 | 155 | 6,612 | |

| Design Hotels® | Properties | 1 | 3 | — | — | — | 4 |

| Rooms | 248 | 542 | — | — | — | 790 | |

| Rooms | 146,602 | 12,892 | 1,487 | 16,931 | 6,717 | 184,629 | |

| Rooms | 103,038 | 1,477 | 301 | — | 249 | 105,065 | |

| Rooms | 94,063 | — | — | 7,050 | 2,036 | 103,149 | |

| Rooms | 54,033 | — | — | — | — | 54,033 | |

| Rooms | 23,847 | 2,778 | 4,371 | 18,561 | 2,686 | 52,243 | |

| Rooms | 42,378 | — | — | — | — | 42,378 | |

| | | North America | Europe | Middle East & Africa | Asia Pacific | Caribbean & Latin America | Total |

| Rooms | 17,647 | 1,801 | 2,012 | 6,598 | 1,644 | 29,702 | |

| Rooms | 10,720 | 10,631 | 188 | — | 1,922 | 23,461 | |

| Rooms | — | — | 8,359 | — | — | 8,359 | |

| Rooms | 5,785 | 293 | 168 | 1,253 | — | 7,499 | |

Our Financial Statements and related discussions in this report include Starwood’s results of operations only from the Merger Date through year-end 2018 and reflect the financial position of our combined company at December 31, 2018 and 2017 except where we specifically state otherwise, such as certain statistics described under the caption “Performance Measures” in Part II, Item 7.

Dispositions and Acquisitions for more information.

We have completed the planned phase out of the operation of the Starwood reservations database, effective as of the end of 2018.

Commitments and Contingencies in Part II, Item 8.

We are a partner in unconsolidated joint ventures that manage and, in some cases, own hotels.

Some of these joint ventures also provide services to franchised hotels.

We recognize our share of these joint ventures’ net income or loss in the “Equity in earnings” caption of our Income Statements.

At year-end 2018, we had 4,735 franchised and licensed properties (729,413 rooms) and 151 unconsolidated joint venture properties (21,196 rooms).

While the worldwide residential market is very large, we believe the luxurious nature of our residential properties, the quality and exclusivity associated with our brands, and the hospitality services that we provide, all serve to make residential properties bearing our trademarks distinctive.

See Footnote 19.

Relationship with Major Customer for more information.

| Rooms | 15,681 | 2,075 | 2,708 | 13,122 | 3,597 | 37,183 | |

| Rooms | 11,398 | 3,079 | 3,867 | 7,520 | 1,786 | 27,650 | |

| Rooms | 7,474 | 1,253 | 1,221 | 4,021 | 1,074 | 15,043 | |

| Rooms | 5,084 | 6,566 | 1,962 | 7,286 | 1,058 | 21,956 | |

| Rooms | 1,977 | 834 | 1,168 | 4,612 | 448 | 9,039 | |

| Rooms | 567 | 375 | 255 | 671 | — | 1,868 | |

| Rooms | 134,834 | 23,969 | 8,061 | 26,962 | 7,540 | 201,366 | |

| Sheraton® | Properties | 190 | 61 | 31 | 123 | 36 | 441 |

| Rooms | 72,674 | 16,580 | 10,408 | 46,073 | 9,882 | 155,617 | |

| Westin® | Properties | 129 | 19 | 7 | 56 | 12 | 223 |

| Rooms | 52,955 | 6,125 | 1,839 | 17,595 | 3,639 | 82,153 | |

| Rooms | 29,104 | 8,564 | 1,233 | 13,633 | 2,565 | 55,099 | |

| Rooms | 3,987 | 5,010 | 6,612 | 12,154 | 271 | 28,034 | |

| Rooms | 20,218 | 6,466 | 1,738 | 2,167 | 4,313 | 34,902 | |

| Rooms | 14,905 | 223 | — | 339 | — | 15,467 | |

| Rooms | — | 361 | 823 | 3,016 | 240 | 4,440 | |

| Rooms | 4,285 | 697 | — | 882 | 57 | 5,921 | |

| Rooms | 143,389 | 11,828 | 1,487 | 15,306 | 6,428 | 178,438 | |

| Rooms | 97,335 | 1,196 | 301 | — | 249 | 99,081 | |

| Rooms | 88,052 | — | — | 4,403 | 1,833 | 94,288 | |

| Rooms | 48,959 | — | — | — | — | 48,959 | |

| Rooms | 23,015 | 3,042 | 3,451 | 16,951 | 2,685 | 49,144 | |

| Rooms | 39,231 | — | — | — | — | 39,231 | |

| Rooms | 16,296 | 1,310 | 2,012 | 6,240 | 1,494 | 27,352 | |

| Rooms | 8,447 | 10,589 | 188 | — | 1,553 | 20,777 | |

| Rooms | — | — | 8,265 | — | — | 8,265 | |

| Rooms | 4,388 | 293 | 168 | 1,085 | — | 5,934 | |

| Rooms | 2,235 | 4,873 | — | 469 | — | 7,577 | |

| Rooms | 6,959 | 256 | 197 | 2,144 | 401 | 9,957 | |

See the information under the “Litigation, Claims, and Government Investigations” caption in [removed: Footnote 7.][added: Note 7, which we incorporate here by reference.]

Commitments and Contingencies, which we incorporate here by reference.

[removed: UNITED STATES][added: UNITED STATES]

[removed: SECURITIES] [added: SECURITIES] AND EXCHANGE [removed: COMMISSION][added: COMMISSION]

[removed: Washington,] [added: Washington,] D.C. [removed: 20549][added: 20549]

[removed: FORM 10-K][added: FORM 10-K]

| [removed: ý] [added: ☒] | [removed: ANNUAL] [added: ANNUAL] REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF [removed: 1934] [added: 1934] |

[removed: For] [added: For] the Fiscal Year [removed: Ended December] [added: Ended December] 31, [removed: 2018][added: 2019]

| [removed: o] [added: ☐] | [removed: TRANSITION] [added: TRANSITION] REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF [removed: 1934] [added: 1934] |

[removed: For] [added: For] the transition period from [removed: to][added: to]

[removed: Commission] [added: Commission] File [removed: No. 1-13881][added: No. 1-13881]

[removed: ][added: ]

[removed: MARRIOTT] [added: MARRIOTT] INTERNATIONAL, [removed: INC.][added: INC.]

[removed: (Exact] [added: (Exact] name of registrant as specified in its [removed: charter)][added: charter)]

| [removed: Delaware] [added: Delaware] | [removed: 52-2055918] | [added: | | | | 52-2055918 |]

| [removed: (State] [added: (State] or other jurisdiction [removed: of incorporation] [added: of incorporation] or [removed: organization)] [added: organization)] | [removed: (IRS Employer Identification No.)] | [added: | | | | (IRS Employer Identification No.) |]

| [removed: 10400] [added: 10400] Fernwood [removed: Road, Bethesda, Maryland] [added: Road] | [removed: 20817] | [added: Bethesda | | Maryland | | 20817 |]

| [removed: (Address] [added: (Address] of Principal Executive [removed: Offices)] [added: Offices)] | [removed: (Zip Code)] | [added: | | | | (Zip Code) |]

[removed: Registrant’s] [added: Registrant’s] Telephone Number, Including Area Code [removed: (301) 380-3000][added: (301) 380-3000]

[removed: Securities] [added: Securities] registered pursuant to Section 12(b) of the [removed: Act:][added: Act:]

| [removed: Title] [added: Title] of Each [removed: Class] [added: Class] | | [removed: Name] [added: Trading Symbol(s) | | Name] of Each Exchange on Which [removed: Registered] [added: Registered] |

| [removed: Class] [added: Class] A Common Stock, $0.01 par [removed: value (339,668,839 shares outstanding as of February 20, 2019)] [added: value] | | [removed: Nasdaq] [added: MAR | | Nasdaq] Global Select [removed: Market Chicago Stock Exchange] [added: Market] |

Yes [removed: o] [added: ☐] No ý

| Non-accelerated filer | o | | Smaller reporting company | [removed: o] [added: ☐] |

| | | | Emerging growth company | [removed: o] [added: ☐] |

The aggregate market value of shares of common stock held by non-affiliates at June [removed: 29, 2018,] [added: 28, 2019,] was [removed: $36,386,234,246.][added: $38,730,375,024.]

[removed: DOCUMENTS] [added: DOCUMENTS] INCORPORATED BY [removed: REFERENCE][added: REFERENCE]

Portions of the Proxy Statement prepared for the [removed: 2019] [added: 2020] Annual Meeting of Shareholders are incorporated by reference into Part III of this report.

[removed: FORM] [added: FORM] 10-K TABLE OF [removed: CONTENTS][added: CONTENTS]

[removed: FISCAL] [added: FISCAL] YEAR [removed: ENDED DECEMBER] [added: ENDED DECEMBER] 31, [removed: 2018][added: 2019]

| | | [removed: Page No.] [added: Page No.] |

[removed: | [Part I.](#sD87D6A357EF358A395AD571C0928CB05) | | |][added: PART I]

| [Item [removed: 1.](#sCF98EE4E0FE8508F9AFBF7893F49696C)] [added: 1.](#s82AAEEF0D18A5F0082B1A0D44E328F34)] | [removed: [Business](#sCF98EE4E0FE8508F9AFBF7893F49696C)] [added: [Business](#s82AAEEF0D18A5F0082B1A0D44E328F34)] | [removed: [3](#sCF98EE4E0FE8508F9AFBF7893F49696C)] [added: [3](#s82AAEEF0D18A5F0082B1A0D44E328F34)] |

| [Item [removed: 1A.](#sF70D6AB47B8D52EC805E29D4A23112D9)] [added: 1A.](#sAEA366FE8714568F9AE14FFAE7DE2CC7)] | [Risk [removed: Factors](#sF70D6AB47B8D52EC805E29D4A23112D9)] [added: Factors](#sAEA366FE8714568F9AE14FFAE7DE2CC7)] | [removed: [9](#sF70D6AB47B8D52EC805E29D4A23112D9)] [added: [9](#sAEA366FE8714568F9AE14FFAE7DE2CC7)] |

| [Item [removed: 1B.](#sD71EA74DDFD65B7B85A31F1B7572F29E)] [added: 1B.](#sB3F6A567E35E5689B05F4962D0762575)] | [Unresolved Staff [removed: Comments](#sD71EA74DDFD65B7B85A31F1B7572F29E)] [added: Comments](#sB3F6A567E35E5689B05F4962D0762575)] | [removed: [19](#sD71EA74DDFD65B7B85A31F1B7572F29E)] [added: [19](#sB3F6A567E35E5689B05F4962D0762575)] |

| [Item [removed: 2.](#sF3701FEF4C0053F49414901E9A3E36E3)] [added: 2.](#s708303E352375864BA003AF80689DC0B)] | [removed: [Properties](#sF3701FEF4C0053F49414901E9A3E36E3)] [added: [Properties](#s708303E352375864BA003AF80689DC0B)] | [removed: [19](#sF3701FEF4C0053F49414901E9A3E36E3)] [added: [19](#s708303E352375864BA003AF80689DC0B)] |

| [Item [removed: 3.](#sC04F21BC05F45B969BEDDC4409B00E2C)] [added: 3.](#s903E9C356BC755C8AB406ACC5D38A50A)] | [Legal [removed: Proceedings](#sC04F21BC05F45B969BEDDC4409B00E2C)] [added: Proceedings](#s903E9C356BC755C8AB406ACC5D38A50A)] | [removed: [21](#sC04F21BC05F45B969BEDDC4409B00E2C)] [added: [21](#s903E9C356BC755C8AB406ACC5D38A50A)] |

| [Item [removed: 4.](#sBE5A5281657A5F7C92FF5A5F0FFCA9F2)] [added: 4.](#s98F19D6E0D9F5E28A3350F4E456D57E4)] | [Mine Safety [removed: Disclosures](#sBE5A5281657A5F7C92FF5A5F0FFCA9F2)] [added: Disclosures](#s98F19D6E0D9F5E28A3350F4E456D57E4)] | [removed: [21](#sBE5A5281657A5F7C92FF5A5F0FFCA9F2)] [added: [22](#s98F19D6E0D9F5E28A3350F4E456D57E4)] |

| [Part [removed: II.](#s0D81D30548EE56038E5D148A53975B1E)] [added: II.](#s10263F9CB92152FAAF59D8D484D28C9F)] | | |

| [Item [removed: 5.](#s5D0B1D18319953A585D25F9DA5519F48)] [added: 5.](#sD3179DC31AC555469AFF84342F6A41DA)] | [Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity [removed: Securities](#s5D0B1D18319953A585D25F9DA5519F48)] [added: Securities](#sD3179DC31AC555469AFF84342F6A41DA)] | [removed: [22](#s5D0B1D18319953A585D25F9DA5519F48)] [added: [23](#sD3179DC31AC555469AFF84342F6A41DA)] |

| [Item [removed: 6.](#s8BC67CA60D16553EAF0CE258FCA0E399)] [added: 6.](#s59FC3F1E7301568AAD961F42F72250A7)] | [Selected Financial [removed: Data](#s8BC67CA60D16553EAF0CE258FCA0E399)] [added: Data](#s59FC3F1E7301568AAD961F42F72250A7)] | [removed: [23](#s8BC67CA60D16553EAF0CE258FCA0E399)] [added: [24](#s59FC3F1E7301568AAD961F42F72250A7)] |

| [Item [removed: 7.](#sD610F1E5831E57C287DEAD3650782A22)] [added: 7.](#s5B3E6E080B735DE9AAF7A2BFE30938DB)] | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#sD610F1E5831E57C287DEAD3650782A22)] [added: Operations](#s5B3E6E080B735DE9AAF7A2BFE30938DB)] | [removed: [24](#sD610F1E5831E57C287DEAD3650782A22)] [added: [25](#s5B3E6E080B735DE9AAF7A2BFE30938DB)] |

or

| | | | | | | |

| --- | --- | --- | --- | --- | --- | --- |

| | | | | | | |

| | | | | | | |

| Class A Common Stock, $0.01 par value | | MAR | | Chicago Stock Exchange |

| | | | | |

| --- | --- | --- | --- | --- |

| | | | | |

There were 324,214,545 shares of Class A Common Stock, par value $0.01 per share, outstanding at February 20, 2020.

MARRIOTT INTERNATIONAL, INC.

| | [Signatures](#sA9117F0A5D8C56E9B1F151EF8CCDE0C4) | [93](#sA9117F0A5D8C56E9B1F151EF8CCDE0C4) |

10-K 1 mar-q42018x10k.htm 10-K

| | |

| --- | --- |

or

| | | |

| --- | --- | --- |

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

| | [Signatures](#sCF013597190054A9BC7F18060E4A98D7) | [97](#sCF013597190054A9BC7F18060E4A98D7) |

As of December 31, [removed: 2018,] [added: 2019,] we owned or leased the following hotel properties:

| [removed: Properties] [added: Properties] | | [removed: Location] [added: Location] | | [removed: Rooms] [added: Rooms] | |

| [removed: North] [added: *North] American [removed: Full-Service] [added: Full-Service*] | | | | | |

| [removed: Owned Hotels] [added: *Owned Hotels*] | | | | | |

| Sheraton [removed: Grand] Phoenix [added: Downtown] | | Phoenix, AZ | | 1,000 | |

| [removed: Leased Hotels] [added: *Leased Hotels*] | | | | | |

| [removed: North] [added: *North] American [removed: Limited-Service] [added: Limited-Service*] | | | | | |

| [removed: Asia Pacific] [added: *Asia Pacific*] | | | | | |

| [removed: Other International] [added: *Other International*] | | | | | |

| Frankfurt Marriott Hotel | | Frankfurt, Germany | | [removed: 587] [added: 593] | |

| W New York - Union Square | | New York, NY | | 270 | |

| *Owned Hotels* | | | | | |

| *Leased Hotels* | | | | | |

| *Leased Hotels* | | | | | |

| Properties | | Location | | Rooms | |

| *Owned Hotels* | | | | | |

| Treasure Beach, Barbados | | Barbados | | 35 | |

| Crystal Cove, Barbados | | Barbados | | 88 | |

| Tamarind, Barbados | | Barbados | | 104 | |

| Waves, Barbados | | Barbados | | 70 | |

| The House, Barbados | | Barbados | | 34 | |

| Colony Club, Barbados | | Barbados | | 96 | |

| Turtle Beach, Barbados | | Barbados | | 161 | |

| *Leased Hotels* | | | | | |

| The St. Regis New York | | New York, NY | | 238 | |

| Sheraton Gateway Hotel in Toronto International Airport | | Mississauga, Canada | | 474 | |

| Renaissance Düsseldorf Hotel | | Düsseldorf, Germany | | 244 | |

See the information under [removed: “Executive Officers of the Registrant”] [added: “Information about our Executive Officers”] in Part III, Item 10 of this report for information about our executive officers, which we incorporate here by reference.

[removed: PART II][added: PART II]

Information about our Executive Officers

Executive Officers of the Registrant

[removed: Market Information][added: Market Information]

At February 20, [removed: 2019, 339,668,839] [added: 2020, 324,214,545] shares of our Class A Common Stock (our “common stock”) were outstanding and were held by [removed: 36,417] [added: 34,999] shareholders of record.

[removed: Fourth] [added: Fourth] Quarter [removed: 2018] [added: 2019] Issuer Purchases of Equity [removed: Securities][added: Securities]

| [removed: (in] [added: *(in] millions, except per share [removed: amounts)] [added: amounts)*] | | | | | | | | | | | | |

| [removed: Period] [added: Period] | [removed: Total Number of Shares Purchased] [added: Total Number of Shares Purchased] | | | [removed: Average Price per Share] [added: Average Price per Share] | | | | [removed: Total] [added: Total] Number of Shares Purchased as Part of Publicly Announced Plans or [removed: Programs (1)] [added: Programs (1)] | | | [removed: Maximum] [added: Maximum] Number of Shares That May Yet Be Purchased Under the Plans or [removed: Programs (1)] [added: Programs (1)] | |

| (1) | On [removed: November 9, 2017,] [added: February 15, 2019,] we announced that our Board of Directors increased our common stock repurchase authorization by [removed: 30] [added: 25] million shares. At year-end [removed: 2018, 10.7] [added: 2019, 18.4] million shares remained available for repurchase under Board approved authorizations. [removed: In addition, on February 15, 2019, our Board of Directors further increased our common stock repurchase authorization by 25 million shares.] We repurchase shares in the open market and in privately negotiated transactions. |

| October 1, 2019-October 31, 2019 | — | | | $ | — | | | — | | | 21.5 | |

| November 1, 2019-November 30, 2019 | 1.6 | | | $ | 134.96 | | | 1.6 | | | 19.9 | |

| December 1, 2019-December 31, 2019 | 1.5 | | | $ | 145.13 | | | 1.5 | | | 18.4 | |

| October 1, 2018-October 31, 2018 | 1.9 | | | $ | 111.79 | | | 1.9 | | | 11.8 | |

| November 1, 2018-November 30, 2018 | 1.1 | | | $ | 117.64 | | | 1.1 | | | 10.7 | |

| December 1, 2018-December 31, 2018 | — | | | $ | — | | | — | | | 10.7 | |

Because this information is only a summary and does not provide all of the information contained in our Financial Statements, including the related notes, you should read “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our Financial Statements for each year for more detailed information including, among other items, our adoption of ASU 2014-09 “Revenue from Contracts with Customers” in 2018, [added: our acquisition of Starwood in 2016,] restructuring charges we incurred in [removed: 2016 and 2009,] [added: 2016,] timeshare strategy-impairment charges we incurred in [removed: 2011 and 2009,] [added: 2011,] and our 2011 spin-off of our former timeshare operations and timeshare development business.

| | [removed: Fiscal Year (1)] [added: Fiscal Year (1)] | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| [removed: ($] [added: *($] in millions, except per share [removed: data)] [added: data)*] | [removed: 2018] [added: 2019] | | | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | | | [removed: 2011] [added: 2012] | | | | [removed: 2010] [added: 2011] | | | | [removed: 2009] [added: 2010] | | |

| [removed: Income] [added: Income] Statement [removed: Data:] [added: Data:] | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Revenues (6) | $ | [added: 20,972 | | | $ |] 20,758 | | | $ | 20,452 | | | $ | 15,407 | | | $ | 14,486 | | | $ | 13,796 | | | $ | 12,784 | | | $ | 11,814 | | | $ | 12,317 | | | $ | 11,691 | | [removed: | $ | 10,908 | |]

| Operating income (loss) (6) | $ | [added: 1,800 | | | $ |] 2,366 | | | $ | 2,504 | | | $ | 1,424 | | | $ | 1,350 | | | $ | 1,159 | | | $ | 988 | | | $ | 940 | | | $ | 526 | | | $ | 695 | | [removed: | $ | (152 | ) |]

| Net income (loss) (6) | $ | [added: 1,273 | | | $ |] 1,907 | | | $ | 1,459 | | | $ | 808 | | | $ | 859 | | | $ | 753 | | | $ | 626 | | | $ | 571 | | | $ | 198 | | | $ | 458 | | [removed: | $ | (346 | ) |]

| [removed: Per] [added: Per] Share [removed: Data:] [added: Data:] | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Diluted earnings (losses) per share (6) | $ | [added: 3.80 | | | $ |] 5.38 | | | $ | 3.84 | | | $ | 2.73 | | | $ | 3.15 | | | $ | 2.54 | | | $ | 2.00 | | | $ | 1.72 | | | $ | 0.55 | | | $ | 1.21 | | [removed: | $ | (0.97 | ) |]

| Cash dividends declared per share | $ | [added: 1.8500 | | | $ |] 1.5600 | | | $ | 1.2900 | | | $ | 1.1500 | | | $ | 0.9500 | | | $ | 0.7700 | | | $ | 0.6400 | | | $ | 0.4900 | | | $ | 0.3875 | | | $ | 0.2075 | | [removed: | $ | 0.0866 | |]

| [removed: Balance] [added: Balance] Sheet Data (at [removed: year-end):] [added: year-end):] | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Total assets (4) (6) [added: (7)] | $ | [added: 25,051 | | | $ |] 23,696 | | | $ | 23,846 | | | $ | 24,078 | | | $ | 6,082 | | | $ | 6,833 | | | $ | 6,794 | | | $ | 6,342 | | | $ | 5,910 | | | $ | 8,983 | | [removed: | $ | 7,933 | |]

| Long-term debt (4) | [added: 9,963 | | | |] 8,514 | | | | 7,840 | | | | 8,197 | | | | 3,807 | | | | 3,447 | | | | 3,147 | | | | 2,528 | | | | 1,816 | | | | 2,691 | | | [removed: | 2,234 | | |]

| Shareholders’ equity (deficit) (6) | [added: 703 | | | |] 2,225 | | | | 3,582 | | | | 6,265 | | | | (3,590 | | ) | | (2,200 | | ) | | (1,415 | | ) | | (1,285 | | ) | | (781 | | ) | | 1,585 | | | [removed: | 1,142 | | |]

| [removed: Other Data:] [added: Other Data:] | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Base management fees | $ | [added: 1,180 | | | $ |] 1,140 | | | $ | 1,102 | | | $ | 806 | | | $ | 698 | | | $ | 672 | | | $ | 621 | | | $ | 581 | | | $ | 602 | | | $ | 562 | | [removed: | $ | 530 | |]

| Franchise fees (5) (6) | [added: 2,006 | | | |] 1,849 | | | | 1,586 | | | | 1,157 | | | | 984 | | | | 872 | | | | 697 | | | | 607 | | | | 506 | | | | 441 | | | [removed: | 400 | | |]

| Incentive management fees | [added: 637 | | | |] 649 | | | | 607 | | | | 425 | | | | 319 | | | | 302 | | | | 256 | | | | 232 | | | | 195 | | | | 182 | | | [removed: | 154 | | |]

| Total [removed: gross] fees (5) (6) | $ | [added: 3,823 | | | $ |] 3,638 | | | $ | 3,295 | | | $ | 2,388 | | | $ | 2,001 | | | $ | 1,846 | | | $ | 1,574 | | | $ | 1,420 | | | $ | 1,303 | | | $ | 1,185 | | [removed: | $ | 1,084 | |]

| [removed: Fee Revenue-Source:] [added: Fee Revenue-Source:] | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| North America (2) (5) (6) | $ | [added: 2,791 | | | $ |] 2,641 | | | $ | 2,388 | | | $ | 1,845 | | | $ | 1,586 | | | $ | 1,439 | | | $ | 1,200 | | | $ | 1,074 | | | $ | 970 | | | $ | 878 | | [removed: | $ | 806 | |]

| Total Outside North America (3) (5) [added: (6)] | [added: 1,032 | | | |] 997 | | | | 907 | | | | 543 | | | | 415 | | | | 407 | | | | 374 | | | | 346 | | | | 333 | | | | 307 | | | [removed: | 278 | | |]

| (6) | In 2018, we adopted ASU 2014-09, which impacted our [removed: annual] recognition of revenues and certain expenses. Years before 2016 have not been adjusted for this new accounting standard. |

| Total fees (5) (6) | $ | 3,823 | | | $ | 3,638 | | | $ | 3,295 | | | $ | 2,388 | | | $ | 2,001 | | | $ | 1,846 | | | $ | 1,574 | | | $ | 1,420 | | | $ | 1,303 | | | $ | 1,185 | |

| (7) | In 2019, we adopted ASU No. 2016-02, which brought substantially all leases onto the balance sheet. Years before 2019 have not been adjusted for this new accounting standard. |

| | |

| --- | --- |

| | [removed: Page] [added: Page] |

| [Management’s Report on Internal Control Over Financial [removed: Reporting](#s6F760101C3A859FC99C06BE347824F6C)] [added: Reporting](#sE6F4028D1F3D52C3B4A2795C08EABFF7)] | [removed: [42](#s6F760101C3A859FC99C06BE347824F6C)] [added: [43](#sE6F4028D1F3D52C3B4A2795C08EABFF7)] |

[removed: | [Report of Independent Registered Public Accounting Firm](#s4AA10266F64F53BD972BC4B160A72568) | [43](#s4AA10266F64F53BD972BC4B160A72568) |][added: REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM]

[removed: | [Report of Independent Registered Public Accounting Firm](#sD247A6500FD2561B80281E8A1A1A12E1) | [45](#sD247A6500FD2561B80281E8A1A1A12E1) |][added: REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM]

[removed: | [Consolidated Statements of Income](#s66578CFCB57B5EDBB17AD15F9B777983) | [46](#s66578CFCB57B5EDBB17AD15F9B777983) |][added: CONSOLIDATED STATEMENTS OF INCOME]

[removed: | [Consolidated Statements of Comprehensive Income](#sBE6FD669B28A5C1A847C7C80D28FF8E4) | [47](#sBE6FD669B28A5C1A847C7C80D28FF8E4) |][added: CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME]

[removed: | [Consolidated Balance Sheets](#sEFAB2F30D19252AF82D8AD4FEC027F6E) | [48](#sEFAB2F30D19252AF82D8AD4FEC027F6E) |][added: CONSOLIDATED BALANCE SHEETS]

[removed: | [Consolidated Statements of Cash Flows](#sDB56A5B4E94C5B0EAB6EA86DC4DB687F) | [49](#sDB56A5B4E94C5B0EAB6EA86DC4DB687F) |][added: CONSOLIDATED STATEMENTS OF CASH FLOWS]

[removed: | [Consolidated Statements of Shareholders’ Equity](#sBBE7DEF0E5B053FF83082274EFE070C9) | [50](#sBBE7DEF0E5B053FF83082274EFE070C9) |][added: CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY]

[removed: | [Notes to Consolidated Financial Statements](#sDFC157520BF258B4B82C3D4001866AB3) | [51](#sDFC157520BF258B4B82C3D4001866AB3) |][added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS]

| [Basis of [removed: Presentation](#sF3BA0F02CDE651DA81D505EEDCC991EA)] [added: Presentation](#s1E258DC271685DF3A220A4E95CFCF47B)] | [removed: [51](#sF3BA0F02CDE651DA81D505EEDCC991EA)] [added: [55](#s1E258DC271685DF3A220A4E95CFCF47B)] |

| [Summary of Significant Accounting [removed: Policies](#s15F158966A7A5D4285C18EB0B7919463)] [added: Policies](#s59578A19839155D0A9D81C07485EB40B)] | [removed: [51](#s15F158966A7A5D4285C18EB0B7919463)] [added: [55](#s59578A19839155D0A9D81C07485EB40B)] |

| [removed: [Dispositions] [added: [Acquisitions] and [removed: Acquisitions](#s2B6FE9AD2CB658B5AC69C5FAD27D5C80)] [added: Dispositions](#s93E728CD07335FA3ACCF0617BB28A784)] | [removed: [64](#s2B6FE9AD2CB658B5AC69C5FAD27D5C80)] [added: [63](#s93E728CD07335FA3ACCF0617BB28A784)] |

| [removed: [Earnings Per Share](#sD455A4EB52CF5D3DAD1F68326B5DC60E)] [added: EARNINGS PER SHARE] | [removed: [66](#sD455A4EB52CF5D3DAD1F68326B5DC60E)] | [added: | | | | | | | | | |]

[removed: | [Share-Based Compensation](#s48D1F18BF5205893844788E1F85C785D) | [66](#s48D1F18BF5205893844788E1F85C785D) |][added: *Share-Based Compensation*]

[removed: | [Income Taxes](#s099F0F56F8185352B6A7726AE88FA2D9) | [67](#s099F0F56F8185352B6A7726AE88FA2D9) |][added: *Income Taxes*]

| [Commitments and [removed: Contingencies](#s45178231361D530DB00EEF5CFDE3A6FB)] [added: Contingencies](#s720599FC361353E7AE457397FBE46520)] | [removed: [70](#s45178231361D530DB00EEF5CFDE3A6FB)] [added: [68](#s720599FC361353E7AE457397FBE46520)] |

[removed: | [Leases](#sEA93D154B0AA538CB5D559BDC1599CE1) | [72](#sEA93D154B0AA538CB5D559BDC1599CE1) |][added: *Leases*]

| [Long-Term [removed: Debt](#s573B45373A5A54DC918261E0E7242F96)] [added: Debt](#s6E601EE2374C5545BCBA13A60B711186)] | [removed: [74](#s573B45373A5A54DC918261E0E7242F96)] [added: [72](#s6E601EE2374C5545BCBA13A60B711186)] |

[removed: | [Pension] [added: *Pension] and Other Postretirement [removed: Benefits](#s05B3E8C2A5EB55CBB84494391FA10237) | [75](#s05B3E8C2A5EB55CBB84494391FA10237) |][added: Benefits*]

| [Intangible Assets and [removed: Goodwill](#sE227F0BCEEA65EE4BFDC5AA206302699)] [added: Goodwill](#sCA857A75C08D58FD9FE7D2BF73B9E8D1)] | [removed: [78](#sE227F0BCEEA65EE4BFDC5AA206302699)] [added: [74](#sCA857A75C08D58FD9FE7D2BF73B9E8D1)] |

| [removed: [Property] [added: Property] and [removed: Equipment](#sA60948EA079D53569963BA51AA3A784D)] [added: equipment] | [removed: [78](#sA60948EA079D53569963BA51AA3A784D)] [added: (82] | [added: | ) | | (85 | | ) |]

| [Notes [removed: Receivable](#s8809644D111D5A8A85F1556D28219B70)] [added: Receivable](#s85D1448335CA5A61A8A41819AC0680D8)] | [removed: [79](#s8809644D111D5A8A85F1556D28219B70)] [added: [75](#s85D1448335CA5A61A8A41819AC0680D8)] |

| [Fair Value of Financial [removed: Instruments](#s6B00340BA0C75541A4027270ABFE59D1)] [added: Instruments](#s2D8691472CF554ADA08ADB91A08C457A)] | [removed: [79](#s6B00340BA0C75541A4027270ABFE59D1)] [added: [75](#s2D8691472CF554ADA08ADB91A08C457A)] |

| [Accumulated Other Comprehensive [removed: Loss](#s3E215D7E1A3159A6830BEF2A25CA14A6)] [added: Loss](#s96B276595EC15C14BC6786A87E710483)] | [removed: [80](#s3E215D7E1A3159A6830BEF2A25CA14A6)] [added: [76](#s96B276595EC15C14BC6786A87E710483)] |

| [Business [removed: Segments](#s3F12BDCE2862509DBD832BE62B293047)] [added: Segments](#s7D449B2C50125064B553660B3B580B6D)] | [removed: [80](#s3F12BDCE2862509DBD832BE62B293047)] [added: [76](#s7D449B2C50125064B553660B3B580B6D)] |

| [Related Party [removed: Transactions](#s5E8522B4221D5F5FA21555E27A8F6CCA)] [added: Transactions](#s3343CF5B658856618AB78A69C004E5AD)] | [removed: [82](#s5E8522B4221D5F5FA21555E27A8F6CCA)] [added: [78](#s3343CF5B658856618AB78A69C004E5AD)] |

| [Relationship with Major [removed: Customer](#s4D20F74F3E2E58C6BBAE4286D28EF201)] [added: Customer](#s3FD868C6FF825A65ADB7755E39ECFA8C)] | [removed: [84](#s4D20F74F3E2E58C6BBAE4286D28EF201)] [added: [80](#s3FD868C6FF825A65ADB7755E39ECFA8C)] |

[removed: MANAGEMENT’S] [added: MANAGEMENT’S] REPORT [removed: ON][added: ON]

[removed: INTERNAL] [added: INTERNAL] CONTROL OVER FINANCIAL [removed: REPORTING][added: REPORTING]

In connection with the preparation of the Company’s annual consolidated financial statements, management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, [removed: 2018,] [added: 2019,] based on criteria established in the Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) (the “COSO criteria”).

Based on this assessment, and the existence of a material weakness related to the accounting for our Loyalty Program further described in Part II, Item 9A, management has concluded that, applying the COSO criteria, as of December 31, [removed: 2018,] [added: 2019,] the Company’s internal control over financial reporting was not effective to provide reasonable assurance of the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles.

[removed: REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM][added: | [Report of Independent Registered Public Accounting Firm](#s709F156E9625553E9FBE45230181DC99) | [44](#s709F156E9625553E9FBE45230181DC99) |]

[removed: Opinion] [added: Opinion] on Internal Control over Financial [removed: Reporting][added: Reporting]

We have audited Marriott International, Inc.’s internal control over financial reporting as of December 31, [removed: 2018,] [added: 2019,] based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) (the COSO criteria).

In our opinion, because of the effect of the material weakness described below on the achievement of the objectives of the control criteria, Marriott International, Inc. (the Company) has not maintained effective internal control over financial reporting as of December 31, [removed: 2018,] [added: 2019,] based on the COSO criteria.

Management has identified a material weakness in controls whereby the Company did not have a sufficient complement of resources, including IT [removed: systems] and accounting [added: processes and] personnel, to [removed: fully evaluate, value and] perform the [removed: analysis and] ongoing accounting associated with the guest loyalty program.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of Marriott International, Inc. as of December 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] and the related consolidated statements of income, comprehensive income, shareholders’ equity and cash flows for each of the three fiscal years in the period ended December 31, [removed: 2018,] [added: 2019,] and the related notes.

This material weakness was considered in determining the nature, timing and extent of audit tests applied in our audit of the [removed: 2018] [added: 2019] consolidated financial statements, and this report does not affect our report dated [removed: March 1, 2019,] [added: February 27, 2020,] which expressed an unqualified opinion thereon.

[removed: Basis] [added: Basis] for [removed: Opinion][added: Opinion]

| [Report of Independent Registered Public Accounting Firm](#sBE33FF53421851EAB9BD6A4701ED8AF2) | [46](#sBE33FF53421851EAB9BD6A4701ED8AF2) |

We have made progress towards remediation and continue to implement our remediation plan.

See the “Remediation of Material Weakness” caption in Part II, Item 9A for further information.

Basis for Opinion

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

| | | |

| --- | --- | --- |

| | | |

| | | Accounting for the Loyalty Program |

| *Description of the Matter* | | During 2019 the Company recognized $2,211 million of revenues previously deferred as of December 31, 2018 and had deferred revenue of $5,718 million as of December 31, 2019 associated with the Marriott Bonvoy guest loyalty program (the “Loyalty Program”). As discussed in Note 2 to the financial statements, the Company recognizes revenue for performance obligations relating to Loyalty Program points and free night certificates as they are redeemed and the related performance obligations are satisfied. The Company recognizes a portion of revenue for the Licensed IP performance obligation under the sales-based royalty criteria, with the remaining portion recognized on a straight-line basis over the contract term. Revenue is recognized utilizing complex models based upon the estimated standalone selling price per point and per free night certificate, which includes judgment in making the estimates of variable consideration and breakage of points. Auditing Loyalty Program results is complex due to: (1) the complexity of models and high volume of data used to monitor and account for Loyalty Program results, (2) the material weakness in the Company’s internal control over financial reporting relating to the insufficient complement of resources, including IT and accounting processes and personnel, to perform the ongoing accounting associated with the Loyalty Program and (3) the complexity and judgment of estimating the standalone selling price per Loyalty Program point, including both the estimate of variable consideration under the Company’s co-brand credit card agreements and the estimated breakage of Loyalty Program points which requires the use of specialists. Such estimates are complex given the significant estimation uncertainty associated with projecting future cardholder spending and redemption activity. |

| | | |

| *How We Addressed the Matter in Our Audit* | | We obtained an understanding, evaluated the design and tested the operating effectiveness of certain controls over the Company’s process of accounting for the Loyalty Program. We tested controls over management’s review of the assumptions and data inputs utilized in estimating the standalone selling price per Loyalty Program point, as well as the development of the estimated breakage. To test the recognition of revenues and costs associated with the Loyalty Program, we performed audit procedures that included, among others, testing the clerical accuracy and consistency with US GAAP of the accounting model developed by the Company to recognize revenue and costs associated with the Loyalty Program, and testing significant inputs into the accounting model, including the estimated standalone selling price and recognition of points earned and redeemed during the period. Because of the material weakness we expanded our sample sizes selected for substantive testing and performed additional testing over the completeness and accuracy of Loyalty Program data. We involved our actuarial professionals to assist in our testing procedures with respect to the estimate of the breakage of Loyalty Program points. We evaluated management’s methodology for estimating the breakage of Loyalty Program points, and we tested underlying data and actuarial assumptions used in estimating the breakage. We evaluated the reasonableness of management’s assumptions, including projections of cash flows, used to estimate variable consideration under the Company’s co-brand credit cards. |

| | | |

| --- | --- | --- |

| | | |

| | | Accounting for General & Administrative Expenses and Reimbursed Expenses |

| *Description of the Matter* | | During 2019 the Company recognized $938 million of general and administrative expenses and $16,439 million of reimbursed expenses. As discussed in Note 2 to the financial statements, the Company incurs certain expenses that are for the benefit of, and reimbursable from, hotel owners and franchisees. Such amounts are recorded in the period in which the expense is incurred and include judgment with respect to the allocation of certain costs between general & administrative expenses, which are non-reimbursable, and reimbursed expenses. |

| | | |

| --- | --- | --- |

| | | |

| | | Auditing the classification of general and administrative expenses and reimbursed expenses is complex due to: (1) judgment associated with testing management’s conclusions regarding the allocation of costs between reimbursable and non-reimbursable expenses, (2) the complexity associated with allocating above-property expenses to hotel owners and franchisees due to the high volume of data used to monitor and account for reimbursed expenses and (3) incentives within management’s compensation structure designed to limit the growth in general and administrative expenses. |

| | | |

| *How We Addressed the Matter in Our Audit* | | We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process of accounting for reimbursed expenses, general and administrative expenses, and the process for allocating expenses. For example, we tested management’s controls over the review of the allocation of certain costs to determine if they were reasonably classified. To test the recognition of reimbursed expenses for appropriate classification, we performed audit procedures that included, among others, (1) testing a sample of transactions that were classified within reimbursed expenses in order to evaluate the appropriate accounting treatment and financial statement classification pursuant to the terms of the management and franchise agreements, (2) performed analytical procedures over total reimbursed expenses and general and administrative expenses in order to identify any trends or indicators of material errors in the classification of expenses, (3) tested manual journal entries made to reimbursed expenses and general and administrative expenses and (4) evaluated the methodology of cost allocations, including any material changes to allocations during the period. |

| | | |

| *Description of the Matter* | | As discussed in Note 3 to the financial statements, the Company executed acquisitions and disposals of real estate, including: (1) the acquisition of the remaining interest in two joint ventures that resulted in the recognition of the indefinite-lived intangible brand asset for AC Hotels by Marriott of $156 million and management and franchise agreements of $34 million, (2) the acquisition of the W New York - Union Square for $206 million, (3) the acquisition of Elegant Hotels for $128 million in cash and assumed Elegant’s net debt outstanding of $63 million and (4) the dispositions of The St. Regis New York and the Sheraton Gateway Hotel in Toronto International Airport, resulting in recognition of aggregate gains on the disposition of real estate assets of $134 million recognized within “Gains and other income, net” during 2019. Auditing the accounting for acquisitions and dispositions is complex and judgmental as a result of: (1) the magnitude of acquisitions, real estate dispositions and related gains on disposition recognized during the year, (2) significant estimation involved in estimating the fair value of acquired real estate and intangible assets, including the estimate of the relative fair value of assets acquired and (3) technical accounting complexities associated with each individual acquisition and disposition. For dispositions, such complexities included the determination of whether the sale meets the definition of a business, the appropriate treatment of deferred taxes, and in instances where the Company enters into an agreement to manage or franchise the property subsequent to disposition, whether such agreements are consistent with market value. |

| *How We Addressed the Matter in Our Audit* | | We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process of accounting for acquisitions and dispositions during the year. For example, we tested management’s controls over the review of the technical accounting conclusions reached. To test the accounting for acquisitions and dispositions we performed audit procedures that included, among others, assessing the technical positions taken by management, vouching of consideration paid in acquisitions and proceeds received in dispositions, testing the estimate of fair value or relative fair value allocation to acquired assets, testing the clerical accuracy of the Company’s gain or loss calculations, and testing the appropriateness of the allocation of deferred taxes to individual asset dispositions. |

MARRIOTT INTERNATIONAL, INC.

| Net income | $ | 1,273 | | | $ | 1,907 | | | $ | 1,459 | |

MARRIOTT INTERNATIONAL, INC.

Fiscal Years-Ended 2019 and 2018

| | December 31, 2019 | | | | December 31, 2018 | | |

| | 3,127 | | | | 2,706 | | |

| | 17,689 | | | | 17,419 | | |

| Operating lease assets | 888 | | | | — | | |

| | $ | 25,051 | | | $ | 23,696 | |

| | 6,677 | | | | 6,437 | | |

| Operating lease liabilities | 882 | | | | — | | |

| | 703 | | | | 2,225 | | |

| | |

| --- | --- |

| [Self-Insurance Reserve for Losses and Loss Adjustment Expenses](#s845D20D32B3A59F782E8DAB78A9C4F2A) | [73](#s845D20D32B3A59F782E8DAB78A9C4F2A) |

March 1, 2019

| | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Unrealized (loss) gain on available-for-sale securities, net of tax | — | | | | (2 | | ) | | 2 | | |

| Pension and postretirement adjustments, net of tax | (8 | | ) | | 7 | | | | 5 | | |

| | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- |

| | 2,706 | | | | 2,740 | | |

| | 17,419 | | | | 17,751 | | |

| | $ | 23,696 | | | $ | 23,846 | |

| | 6,437 | | | | 5,807 | | |

| | 2,225 | | | | 3,582 | | |

| Acquisition of a business, net of cash acquired | — | | | | — | | | | (2,392 | | ) |

| 256.3 | | | Balance at December 31, 2015 | $ | (3,590 | ) | | $ | 5 | | | $ | 2,821 | | | $ | 4,878 | | | $ | (11,098 | ) | | $ | (196 | ) |

| — | | | Dividends | (374 | | ) | | — | | | | — | | | | (374 | | ) | | — | | | | — | | |

| 136.0 | | | Starwood Combination (1) | 9,269 | | | | — | | | | 2,877 | | | | 1,238 | | | | 5,154 | | | | — | | |

| (1) | Represents Marriott common stock and equity-based awards issued in the Starwood Combination, which also resulted in the depletion of our accumulated historical losses on reissuances of treasury stock in Retained Earnings. |

1.

The accompanying Financial Statements also reflect our adoption of several new accounting standards, including ASU 2014-09 “Revenue from Contracts with Customers” (Topic 606).

In the 2018 fourth quarter, we identified errors related to our Loyalty Program, which resulted in the understatement of cost reimbursement revenue, net of reimbursed expenses in our previously issued financial statements for the 2018 first, second, and third quarters.

Correction of the errors resulted in a $99 million increase to net income for the 2018 first three quarters combined.

We concluded that the errors were and continue to be immaterial to those financial statements.

We adjusted our 2018 first, second, and third quarter information presented in Part II, Item 8 “Supplementary Data” to reflect the correction of the immaterial errors because recording the out of period adjustments would have been material to the 2018 fourth quarter.

See Part II, Item 8 “Supplementary Data” for more information.

Acquisition of Starwood Hotels & Resorts Worldwide

On September 23, 2016 (the “Merger Date”), we completed the acquisition of Starwood Hotels & Resorts Worldwide, LLC, formerly known as Starwood Hotels & Resorts Worldwide, Inc. (“Starwood”), through a series of transactions (the “Starwood Combination”), after which Starwood became an indirect wholly-owned subsidiary of Marriott.

Accordingly, our Income Statements include Starwood’s results of operations from the Merger Date.

See Footnote 3.

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Loyalty Program.

If the free night certificate redemption involves a managed or franchised property, we recognize revenue net of the redemption cost, as our performance obligation is to facilitate the transaction between the Loyalty Program member and the managed or franchised property.

Contract Balances.

See Footnote 12.

Profit Sharing Plan

See Footnote 6.

See Footnote 15.

[removed: Disclosure] [added: *Disclosure] Controls and [removed: Procedures][added: Procedures*]

[removed: Material] [added: *Material] Weakness in Internal Control Over Financial [removed: Reporting][added: Reporting*]

[removed: In] [added: As we reported in our Annual Report on Form 10-K for] the [added: fiscal year ended December 31, 2018, in the] 2018 fourth quarter, we identified the following deficiencies in the design of internal control over financial reporting for our Loyalty Program.

[removed: Remediation] [added: *Remediation] of Material [removed: Weakness][added: Weakness*]

We have [removed: developed a] [added: made progress towards] remediation [added: and continue to implement our remediation] plan [removed: that] [added: for the material weakness in internal control over financial reporting described above, which] includes steps to increase dedicated personnel, improve reporting processes, [added: design] and [added: implement new controls, and] enhance related supporting technology.

[removed: Internal] [added: *Internal] Control Over Financial [removed: Reporting][added: Reporting*]

We made no other changes in internal control over financial reporting during the fourth quarter of [removed: 2018] [added: 2019] that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We will consider the material weakness remediated after the applicable controls operate for a sufficient period of time, and management has concluded, through testing, that the controls are operating effectively.

[removed: PART III][added: PART III]

[removed: Items] [added: Items] 10, 11, 12, 13, [removed: 14.][added: 14.]

As described below, we incorporate by reference in this Annual Report on Form 10-K certain information appearing in the Proxy Statement that we will furnish to our shareholders for our [removed: 2019] [added: 2020] Annual Meeting of Shareholders.

| [removed: Item] [added: Item] 10. Directors, Executive Officers, and Corporate [removed: Governance.] [added: Governance.] | We incorporate this information by reference to “Our Board of Directors,” [removed: “Section 16(a) Beneficial Ownership Reporting Compliance,”] “Audit Committee,” “Transactions with Related Persons,” and “Selection of Director Nominees” sections of our Proxy Statement. We have included information regarding our executive officers and our Code of Ethics below. |

| [removed: Item] [added: Item] 11. Executive [removed: Compensation.] [added: Compensation.] | We incorporate this information by reference to the “Executive and Director Compensation” and “Compensation Committee Interlocks and Insider Participation” sections of our Proxy Statement. |

| [removed: Item] [added: Item] 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters.] [added: Matters.] | We incorporate this information by reference to the “Securities Authorized for Issuance Under Equity Compensation Plans” and the “Stock Ownership” sections of our Proxy Statement. |

| [removed: Item] [added: Item] 13. Certain Relationships and Related Transactions, and Director [removed: Independence.] [added: Independence.] | We incorporate this information by reference to the “Transactions with Related Persons” and “Director Independence” sections of our Proxy Statement. |

| [removed: Item] [added: Item] 14. Principal [removed: Accounting] [added: Accountant] Fees and [removed: Services.] [added: Services.] | We incorporate this information by reference to the “Independent Registered Public Accounting Firm Fee Disclosure” and the “Pre-Approval of Independent Auditor Fees and Services Policy” sections of our Proxy Statement. |

This information is as of February 1, [removed: 2019,] [added: 2020,] except where indicated.

| [removed: Name] [added: Name] and [removed: Title] [added: Title] | | [removed: Age] [added: Age] | | | [removed: Business Experience] [added: Business Experience] |

| J.W. Marriott, Jr. Executive Chairman and Chairman of the Board | | [removed: 86] [added: 87] | | | J.W. Marriott, Jr. was elected Executive Chairman effective March 31, 2012, having relinquished his position as Chief Executive Officer. He served as Chief Executive Officer of the Company and its predecessors since 1972. He joined Marriott in 1956, became President and a Director in 1964, Chief Executive Officer in 1972, and Chairman of the Board in 1985. Mr. Marriott serves on the Board of Trustees of The J. Willard & Alice S. Marriott Foundation and the Executive Committee of the World Travel & Tourism Council. Mr. Marriott has served as a Director of the Company and its predecessors since 1964. He holds a Bachelor of Science degree in [removed: banking] [added: Banking] and [removed: finance] [added: Finance] from the University of Utah. |

| Arne M. Sorenson President and Chief Executive Officer | | [removed: 60] [added: 61] | | | Arne M. Sorenson is President and Chief Executive Officer of Marriott. Mr. Sorenson became the third CEO in the Company’s history in 2012. Before that, he served as Marriott’s President and Chief Operating Officer. He has held a number of positions since joining Marriott in 1996, including Executive Vice President, Chief Financial Officer, President of Continental European Lodging, and Senior Vice President of Business Development. He was elected to Marriott’s Board of Directors in 2011. Mr. Sorenson is active on multiple boards. He joined the Microsoft Board of Directors in November 2017. He is also a member of the Business Roundtable, serving on both its Immigration and Infrastructure Committees. He serves on the Board of Trustees for The Brookings Institution, the Board of Directors for the Warrior-Scholar Project, and as a member of the Luther College Board of Regents. Before he joined Marriott, Mr. Sorenson was a Partner with the law firm Latham & Watkins in Washington, D.C. He holds a Bachelor of Arts degree from Luther College in Decorah, Iowa and a J.D. from the University of Minnesota Law School. |

| Bao Giang Val Bauduin Controller and Chief Accounting Officer | | [removed: 42] [added: 43] | | | Val Bauduin became Marriott’s Controller and Chief Accounting Officer in June 2014, with responsibility for the accounting operations of the Company including oversight of Financial Reporting & Analysis, Accounting Policy, Governance, Risk Management (Insurance, Claims, Business Continuity, Fire & Life Safety), Global Finance Shared Services, and the Corporate Finance Business [removed: Partners.] [added: Partners and in January 2020, he also became Chief Financial Officer - Consumer Operations, Technology & Emerging Business.] Before joining Marriott, Mr. Bauduin was a Partner and U.S. Hospitality leader of Deloitte & Touche LLP from 2011 to 2014, where he served as a Travel, Hospitality & Leisure industry expert for Deloitte teams globally. He [removed: has supported complex capital market transactions, including initial public offerings, mergers, acquisitions, spinoffs, and real estate development projects related to gaming and hospitality. Mr. Bauduin] earned a Bachelor of Arts in Economics from the University of Notre Dame and a Master of Business Administration from The Wharton School at the University of Pennsylvania. He is also a Certified Public Accountant. |

| Liam Brown [removed: President] [added: Group President, Europe, Middle East] & [removed: Managing Director Europe] [added: Africa] | | [removed: 58] [added: 59] | | | Liam Brown [removed: was appointed] [added: became Group] President [removed: & Managing Director] of Europe, [added: Middle East & Africa,] a division that encompasses Continental Europe, the United Kingdom, and Ireland, [added: along with the entire Middle East region and the continent of Africa] in January [removed: 2019.] [added: 2020.] Mr. Brown joined Marriott in 1989 and [removed: most recently] served as President for Franchising, Owner Services and Managed by Marriott Select Brands, North America [removed: since 2012.] [added: from 2012 to 2018. Most recently, he served as the President and Managing Director of Europe.] Other key positions held by Mr. Brown include Chief Operations Officer for [removed: The] [added: the] Americas for Select Service & Extended Stay Lodging and Owner & Franchise Services, as well as Senior Vice President and Executive Vice President of Development for Marriott’s Select Service & Extended Stay lodging products. [removed: Mr. Brown currently serves on the Board of Directors for the International Franchise Association.] He holds a Hotel Diploma and Business Degree from the Dublin Institute of Technology, Trinity College and earned his Master of Business Administration from the Robert H. Smith School of Management at the University of Maryland. |

| Anthony G. Capuano [removed: Executive Vice] [added: Group] President [removed: and] [added: -] Global [removed: Chief Development Officer] [added: Development, Design and Operations Services] | | [removed: 53] [added: 54] | | | Anthony G. Capuano became [removed: Marriott’s Executive Vice] [added: Group] President [removed: and] [added: -] Global [removed: Chief Development Officer] [added: Development, Design and Operations Services] in [removed: 2009.] [added: January 2020.] He [removed: is] [added: continues to be] responsible for [added: leading] the [added: Company’s] global development [removed: of all Marriott lodging brands] and [removed: supervises 20 offices outside of North America as well as multiple offices across North America.] [added: design efforts.] Mr. Capuano began his Marriott [removed: International] career in 1995 as part of the Market Planning and Feasibility team. Between 1997 and 2005, he led Marriott’s full-service development efforts in the Western U.S. and Canada. In early 2008, his responsibilities expanded to include all of North America and the Caribbean and Latin [removed: America.] [added: America and he became Executive Vice President and Global Chief Development Officer in 2009.] Mr. Capuano began his professional career in Laventhol and Horwath’s Boston-based Leisure Time Advisory Group. He then joined Kenneth Leventhal and Company’s hospitality consulting group in Los Angeles, CA. Mr. Capuano earned his bachelor’s degree in Hotel Administration from Cornell University. He is an active member of the Cornell [added: Hotel] Society [removed: of Hotelmen] and a member of The Cornell School of Hotel Administration Dean’s Advisory Board. Mr. Capuano is also a member of the American Hotel and Lodging Association’s Industry Real Estate Financial Advisory Council. |

| David Grissen Group President | | [removed: 61] [added: 62] | | | David Grissen became Group President effective February 2014, assuming additional responsibility for The Ritz-Carlton and [removed: Global Operations Services.] [added: EDITION Brands.] He became the Group President for the Americas in 2012, with responsibility for all business activities including Operations, Sales and Marketing, Revenue Management, Human Resources, Engineering, Rooms Operations, Food and Beverage, Retail, Spa, Information Technology and Development. Before this, he served as President, Americas from 2010; Executive Vice President of the Eastern Region from 2005; Senior Vice President of the Mid-Atlantic Region and Senior Vice President of Finance and Business Development from 2000. Mr. Grissen is chair of the Americas’ Hotel Development Committee and a member of the Lodging Strategy Group and Corporate Growth Committee. He is a member of the Board of Directors of Regis Corporation. Mr. Grissen holds a Bachelor of Arts degree from Michigan State University and earned his Master of Business Administration from Loyola University in Chicago. |

| Stephanie Linnartz [removed: Executive Vice] [added: Group] President [removed: and Global Chief Commercial Officer] [added: - Consumer Operations, Technology & Emerging Businesses] | | [removed: 50] [added: 51] | | | Stephanie Linnartz became [removed: the Global Chief Commercial Officer in March 2013 and was named an executive officer] [added: Group President - Consumer Operations, Technology & Emerging Businesses] in [removed: February 2014.] [added: January 2020.] She [removed: has responsibility] [added: is responsible] for the Company’s brand management, [removed: marketing, digital,] sales, [removed: reservations,] [added: marketing,] revenue management, [removed: consumer insight,] [added: distribution, customer experience] and [added: innovation,] information technology [removed: functions.] [added: and digital functions, including Marriott Bonvoy. Ms. Linnartz also is responsible for developing, incubating, and running new lines of business that focus on consumer interaction with Marriott Bonvoy.] Before assuming her current position, Ms. Linnartz served as Global [added: Chief Commercial Officer from 2013 to 2019; Global] Officer, Sales and Revenue Management from 2009 to 2013; Senior Vice President, Global Sales from 2008 to 2009; [removed: and] [added: and,] Senior Vice President, Sales and Marketing Planning and Support from 2005 to 2008. She holds a bachelor’s degree in Political Science and Government from the College of the Holy Cross and earned her Master of Business Administration from the College of William and Mary. |

| Kathleen K. Oberg Executive Vice President and Chief Financial Officer | | [removed: 58] [added: 59] | | | Kathleen (“Leeny”) K. Oberg was appointed as Marriott’s Chief Financial Officer, effective January 1, 2016. Previously, Ms. Oberg was the Chief Financial Officer for The Ritz-Carlton since 2013, where she contributed significantly to the brand’s performance, growth, and organizational effectiveness. Prior to assuming that role, Ms. Oberg served in a range of financial leadership positions with Marriott. From 2008 to 2013, she was the Company’s Senior Vice President, Corporate and Development Finance, where she led a team that valued new hotel development projects and merger and acquisition opportunities, prepared the Company’s long-range plans and annual budgets, and made recommendations for the Company’s financial and capital allocation strategy. From 2006 to 2008, Ms. Oberg served in London as Senior Vice President, International Project Finance and Asset Management for Europe and the Middle East and Africa, and as the region’s senior finance executive. Ms. Oberg first joined Marriott as part of its Investor Relations group in 1999. Before joining Marriott, Ms. Oberg held a variety of financial leadership positions with such organizations as Sodexo (previously Sodexo Marriott Services), Sallie Mae, Goldman Sachs, and Chase Manhattan Bank. She currently serves on the Adobe Board of Directors. She earned her Bachelor of Science in Commerce, with concentrations in Finance and Management Information Systems from the University of Virginia, McIntire School of Commerce and received her Master of Business Administration from Stanford University Graduate School of Business. |

| Rena Hozore Reiss Executive Vice President and General Counsel | | [removed: 59] [added: 60] | | | Rena Hozore Reiss became Executive Vice President and General Counsel in December 2017. Ms. Reiss previously held the position of Executive Vice President, General Counsel and Corporate Secretary at Hyatt Hotels where she led the global legal team and oversaw Hyatt’s risk management team and corporate transactions group. Prior to her position with Hyatt, Ms. Reiss was an attorney in Marriott’s law department from 2000 to 2010 building her career in roles with increasing responsibility, ultimately holding the position of Senior Vice President and Associate General Counsel in which she led Marriott’s [added: managed] development efforts in the [removed: America’s] [added: Americas] region. Before joining Marriott, Ms. Reiss was a partner at Counts & Kanne, Chartered, in Washington, D.C. and Associate General Counsel at the Miami Herald Publishing Company. She earned her A.B. from Princeton University and her J.D. from Harvard Law School. |

| David A. Rodriguez Executive Vice President and Global Chief Human Resources Officer | | [removed: 60] [added: 61] | | | David A. Rodriguez was appointed Executive Vice President and Global Chief Human Resources Officer in 2006. Before joining Marriott in 1998, he held senior roles in human resources at Citicorp (now Citigroup) from 1989 through 1998. Dr. Rodriguez holds a Bachelor of Arts degree and a doctorate degree in [removed: industrial/organizational psychology] [added: Industrial and Organizational Psychology] from New York University. He is an elected fellow of the National Academy of Human Resources, [removed: a vice chair and member] [added: chairman] of the [removed: executive committees] [added: American Health Policy Institute, vice chair] of the Human Resources Policy [removed: Association and the American Health Policy Institute,] [added: Association,] and a governor on the board of the Health Transformation Alliance. |

| Craig S. Smith [added: Group] President & Managing Director Asia Pacific | | [removed: 56] [added: 57] | | | Craig S. Smith became [added: Group] President and Managing Director of Asia Pacific in [added: October 2019 and previously served as President and Managing Director of Asia Pacific since] June 2015, assuming the responsibility for the strategic leadership of all operational and development functions spanning the region. Mr. Smith began his career with Marriott in 1988. Before his current position, Mr. Smith served as President of Marriott’s Caribbean and Latin [removed: American] [added: America] region from 2011 to 2015. Before moving to the Caribbean and Latin [removed: American] [added: America] region in 2011, he was Executive Vice President and Chief Operations Officer for Asia Pacific. As the son of an American diplomat, Mr. Smith has lived in 13 countries, working in North America, the Caribbean, Latin America, Asia Pacific, and Australia. He is fluent in Spanish and conversant in Portuguese. Mr. Smith earned his Master of Business Administration from the Rotman School of Management at the University of Toronto and a Bachelor of Science from Brigham Young University. |

[removed: Code] [added: Code] of Ethics and Business Conduct [removed: Guide][added: Guide]

[removed: PART IV][added: PART IV]

INFORMATION ABOUT OUR EXECUTIVE OFFICERS

| Name and Title | | Age | | | Business Experience |

| Name and Title | | Age | | | Business Experience |

EXECUTIVE OFFICERS OF THE REGISTRANT

| | | | | | |

| Alex Kyriakidis President & Managing Director Middle East & Africa | | 66 | | | Alex Kyriakidis became President & Managing Director, Middle East & Africa (MEA), for Marriott in 2012. He is responsible for all business activities for MEA, including Development, Brands, Sales, Marketing, Finance, Human Resources, Legal, and Operations. Before joining Marriott in 2012, Mr. Kyriakidis served as Global Managing Director - Travel, Hospitality & Leisure for Deloitte LLP. In this role, Mr. Kyriakidis led the Global Travel, Hospitality & Leisure Industry team, where he was responsible for a team of 4,500 professionals. He has dozens of years of experience providing strategic, financial, M&A, operational, asset management and integration services to the travel, hospitality and leisure sectors and has served clients in 25 countries, predominantly in the EMEA and Asia/Pacific regions. Mr. Kyriakidis is a fellow of the Arab Society of Certified Accountants, the British Association of Hotel Accountants, and the Institute of Chartered Accountants in England and Wales. He holds a Bachelor of Science degree in computer science and mathematics from Leeds University in the United Kingdom. |

We include this portion of Item 15 under Part II, Item 8 of this [added: Annual] Report on Form 10-K.

| [removed: Exhibit No.] [added: Exhibit No.] | | [removed: Description] [added: Description] | | [removed: Incorporation] [added: Incorporation] by Reference (where a report is indicated below, that document has been previously filed with the SEC and the applicable exhibit is incorporated by reference [removed: thereto)] [added: thereto)] |

| 3.2 | | Amended and Restated Bylaws. | | [Exhibit No. 3.(ii) to our Form 8-K filed [removed: February] [added: August] 14, [removed: 2017] [added: 2019] (File No. [removed: 001-13881).](http://www.sec.gov/Archives/edgar/data/1048286/000119312517043514/d326991dex3ii.htm)] [added: 001-13881).](http://www.sec.gov/Archives/edgar/data/1048286/000119312519220960/d640459dex3ii.htm)] |