filings.toolsItem 8. Financial Statements.
137K characters. Original on sec.gov · Markdown
Item 8. Financial Statements.
The following financial information is included on the pages indicated:
MANAGEMENT’S REPORT ON
INTERNAL CONTROL OVER FINANCIAL REPORTING
Management of Marriott International, Inc. (the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting and for assessing the effectiveness of internal control over financial reporting. The Company has designed its internal control over financial reporting to provide reasonable assurance on the reliability of financial reporting and the preparation of the consolidated financial statements in accordance with U.S. generally accepted accounting principles.
The Company’s internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the Company’s transactions and dispositions of the Company’s assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of the consolidated financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of the Company’s management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the consolidated financial statements.
Because of inherent limitations in internal control over financial reporting, such controls may not prevent or detect misstatements. Also, projections of any evaluation of the effectiveness of internal controls to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
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, 2025, 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, management has concluded that, applying the COSO criteria, as of December 31, 2025, the Company’s internal control over financial reporting was 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.
Ernst & Young LLP (PCAOB ID: 42), the independent registered public accounting firm that audited the Company’s consolidated financial statements included in this report, has issued an attestation report on the effectiveness of the Company’s internal control over financial reporting, a copy of which appears on the following page.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors of Marriott International, Inc.
Opinion on Internal Control over Financial Reporting
We have audited Marriott International, Inc.’s internal control over financial reporting as of December 31, 2025, 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, Marriott International, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, stockholders’ deficit and cash flows for each of the three years in the period ended December 31, 2025, and the related notes, and our report dated February 10, 2026 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
| /s/ Ernst & Young LLP |
Tysons, Virginia
February 10, 2026
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors of Marriott International, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Marriott International, Inc. (the Company) as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, stockholders’ deficit and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 10, 2026 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our 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 2025, the Company recognized $3,160 million of revenues previously deferred as of December 31, 2024, and had deferred revenue of $7,992 million as of December 31, 2025, 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. 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 estimate of breakage of points. | |||||||
| Auditing Loyalty Program results is complex due to the complexity and judgment of estimating the standalone selling price per Loyalty Program point, including the estimated breakage of Loyalty Program points which requires the use of specialists. | ||||||||
| 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 the Loyalty Program. For example, we tested controls over management’s review of the development of the estimated breakage. | |||||||
| To test the recognition of points and free night certificates revenue associated with the Loyalty Program, we performed audit procedures that included, among others, involving 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. | ||||||||
| Accounting for General and Administrative Expenses and Reimbursed Expenses | ||||||||
| Description of the Matter | During 2025, the Company recognized $870 million of general and administrative expenses and $19,503 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 certain other counterparties. 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 and 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 and (2) incentives within management’s compensation structure designed to achieve certain financial targets that exclude the impact of reimbursed 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 certain manual journal entries made to reimbursed expenses and general and administrative expenses and (2) performing 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. | ||||||||
| /s/ Ernst & Young LLP |
We have served as the Company’s auditor since 2002.
Tysons, Virginia
February 10, 2026
MARRIOTT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
Fiscal Years 2025, 2024, and 2023
(in millions, except per share amounts)
| 2025 | 2024 | 2023 | |||||||||||||||
| REVENUES | |||||||||||||||||
| Franchise fees | $ | 3,325 | $ | 3,113 | $ | 2,831 | |||||||||||
| Base management fees | 1,322 | 1,288 | 1,238 | ||||||||||||||
| Incentive management fees | 791 | 769 | 755 | ||||||||||||||
| Gross fee revenues | 5,438 | 5,170 | 4,824 | ||||||||||||||
| Contract investment amortization | (135) | (103) | (88) | ||||||||||||||
| Net fee revenues | 5,303 | 5,067 | 4,736 | ||||||||||||||
| Owned, leased, and other revenue | 1,679 | 1,551 | 1,564 | ||||||||||||||
| Cost reimbursement revenue (1) | 19,204 | 18,482 | 17,413 | ||||||||||||||
| 26,186 | 25,100 | 23,713 | |||||||||||||||
| OPERATING COSTS AND EXPENSES | |||||||||||||||||
| Owned, leased, and other expense (2) | 1,461 | 1,329 | 1,309 | ||||||||||||||
| Depreciation, amortization, and other | 213 | 183 | 189 | ||||||||||||||
| General and administrative (2) | 870 | 945 | 867 | ||||||||||||||
| Restructuring and merger-related (recoveries) charges, and other | (2) | 77 | 60 | ||||||||||||||
| Reimbursed expenses (1) | 19,503 | 18,799 | 17,424 | ||||||||||||||
| 22,045 | 21,333 | 19,849 | |||||||||||||||
| OPERATING INCOME | 4,141 | 3,767 | 3,864 | ||||||||||||||
| Gains and other income, net | 9 | 31 | 40 | ||||||||||||||
| Interest expense | (809) | (695) | (565) | ||||||||||||||
| Interest income | 42 | 40 | 30 | ||||||||||||||
| Equity in earnings (1) | 11 | 8 | 9 | ||||||||||||||
| INCOME BEFORE INCOME TAXES | 3,394 | 3,151 | 3,378 | ||||||||||||||
| Provision for income taxes | (793) | (776) | (295) | ||||||||||||||
| NET INCOME | $ | 2,601 | $ | 2,375 | $ | 3,083 | |||||||||||
| EARNINGS PER SHARE | |||||||||||||||||
| Earnings per share – basic | $ | 9.53 | $ | 8.36 | $ | 10.23 | |||||||||||
| Earnings per share – diluted | $ | 9.51 | $ | 8.33 | $ | 10.18 |
(1)See Note 15 for disclosure of related party amounts.
(2)In the 2025 fourth quarter, we reclassified amounts attributable to other expenses previously reported under the “General, administrative, and other” caption to the “Owned, leased, and other expense” caption of our Income Statements. See Note 1 for additional information.
See Notes to Consolidated Financial Statements.
MARRIOTT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Fiscal Years 2025, 2024, and 2023
(in millions)
| 2025 | 2024 | 2023 | |||||||||||||||
| Net income | $ | 2,601 | $ | 2,375 | $ | 3,083 | |||||||||||
| Other comprehensive income (loss) | |||||||||||||||||
| Foreign currency translation adjustments | 442 | (437) | 86 | ||||||||||||||
| Other adjustments, net of tax | (21) | 21 | (4) | ||||||||||||||
| Total other comprehensive income (loss), net of tax | 421 | (416) | 82 | ||||||||||||||
| Comprehensive income | $ | 3,022 | $ | 1,959 | $ | 3,165 |
See Notes to Consolidated Financial Statements.
MARRIOTT INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
Fiscal Years Ended 2025 and 2024
(in millions)
| December 31, 2025 | December 31, 2024 | ||||||||||
| ASSETS | |||||||||||
| Current assets | |||||||||||
| Cash and equivalents | $ | 358 | $ | 396 | |||||||
| Accounts and notes receivable, net | 2,909 | 2,795 | |||||||||
| Prepaid expenses and other | 317 | 294 | |||||||||
| 3,584 | 3,485 | ||||||||||
| Property and equipment, net | 1,954 | 1,833 | |||||||||
| Intangible assets | |||||||||||
| Brands | 6,207 | 5,770 | |||||||||
| Contract acquisition costs and other | 4,129 | 3,718 | |||||||||
| Goodwill | 8,907 | 8,731 | |||||||||
| 19,243 | 18,219 | ||||||||||
| Equity method investments | 298 | 298 | |||||||||
| Notes receivable, net | 151 | 136 | |||||||||
| Deferred tax assets | 570 | 650 | |||||||||
| Operating lease assets | 941 | 845 | |||||||||
| Other noncurrent assets | 799 | 716 | |||||||||
| $ | 27,540 | $ | 26,182 | ||||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | |||||||||||
| Current liabilities | |||||||||||
| Current portion of long-term debt | $ | 1,209 | $ | 1,309 | |||||||
| Accounts payable | 814 | 763 | |||||||||
| Accrued payroll and benefits | 1,438 | 1,449 | |||||||||
| Liability for guest loyalty program | 3,497 | 3,487 | |||||||||
| Accrued expenses and other | 1,440 | 1,641 | |||||||||
| 8,398 | 8,649 | ||||||||||
| Long-term debt | 14,995 | 13,138 | |||||||||
| Liability for guest loyalty program | 4,495 | 4,032 | |||||||||
| Deferred tax liabilities | 79 | 81 | |||||||||
| Deferred revenue | 1,200 | 1,103 | |||||||||
| Operating lease liabilities | 879 | 794 | |||||||||
| Other noncurrent liabilities | 1,265 | 1,377 | |||||||||
| Stockholders’ deficit | |||||||||||
| Class A Common Stock | 5 | 5 | |||||||||
| Additional paid-in-capital | 6,352 | 6,179 | |||||||||
| Retained earnings | 18,414 | 16,531 | |||||||||
| Treasury stock, at cost | (27,900) | (24,644) | |||||||||
| Accumulated other comprehensive loss | (642) | (1,063) | |||||||||
| (3,771) | (2,992) | ||||||||||
| $ | 27,540 | $ | 26,182 |
See Notes to Consolidated Financial Statements.
MARRIOTT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Fiscal Years 2025, 2024, and 2023
(in millions)
| 2025 | 2024 | 2023 | |||||||||||||||
| OPERATING ACTIVITIES | |||||||||||||||||
| Net income | $ | 2,601 | $ | 2,375 | $ | 3,083 | |||||||||||
| Adjustments to reconcile to cash provided by operating activities: | |||||||||||||||||
| Depreciation, amortization, and other (including depreciation and amortization classified in reimbursed expenses) (2) | 599 | 492 | 436 | ||||||||||||||
| Stock-based compensation | 236 | 237 | 205 | ||||||||||||||
| Income taxes | (277) | (172) | (612) | ||||||||||||||
| Liability for guest loyalty program | 473 | 514 | 301 | ||||||||||||||
| Contract acquisition costs | (434) | (341) | (221) | ||||||||||||||
| Restructuring and merger-related (recoveries) charges, and other | (15) | (278) | 47 | ||||||||||||||
| Working capital changes | (147) | (82) | 69 | ||||||||||||||
| Other | 176 | 4 | (138) | ||||||||||||||
| Net cash provided by operating activities | 3,212 | 2,749 | 3,170 | ||||||||||||||
| INVESTING ACTIVITIES | |||||||||||||||||
| Capital and technology expenditures | (604) | (750) | (452) | ||||||||||||||
| Asset acquisitions | (350) | (26) | (101) | ||||||||||||||
| Dispositions | 9 | 16 | 71 | ||||||||||||||
| Loan advances | (35) | (10) | (77) | ||||||||||||||
| Loan collections | 22 | 36 | 61 | ||||||||||||||
| Other | 10 | — | 33 | ||||||||||||||
| Net cash used in investing activities | (948) | (734) | (465) | ||||||||||||||
| FINANCING ACTIVITIES | |||||||||||||||||
| Commercial paper/Credit Facility, net | (403) | 163 | 546 | ||||||||||||||
| Issuance of long-term debt | 3,436 | 2,948 | 1,918 | ||||||||||||||
| Repayment of long-term debt | (1,309) | (558) | (684) | ||||||||||||||
| Issuance of Class A Common Stock | 92 | 73 | 29 | ||||||||||||||
| Dividends paid | (718) | (682) | (587) | ||||||||||||||
| Purchase of treasury stock | (3,300) | (3,762) | (3,953) | ||||||||||||||
| Stock-based compensation withholding taxes | (116) | (138) | (108) | ||||||||||||||
| Other | — | — | (25) | ||||||||||||||
| Net cash used in financing activities | (2,318) | (1,956) | (2,864) | ||||||||||||||
| (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH | (54) | 59 | (159) | ||||||||||||||
| CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period (1) | 425 | 366 | 525 | ||||||||||||||
| CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period (1) | $ | 371 | $ | 425 | $ | 366 |
(1)The 2025 amounts include beginning restricted cash of $29 million at December 31, 2024 and ending restricted cash of $13 million at December 31, 2025, which we present in the “Prepaid expenses and other” and “Other noncurrent assets” captions of our Balance Sheets.
(2)The 2023 amounts reflect the reclassification of $159 million of depreciation and amortization classified in reimbursed expenses from the “Other” caption within operating activities to the “Depreciation, amortization, and other” caption of our Statements of Cash Flows to conform to our current presentation.
See Notes to Consolidated Financial Statements.
MARRIOTT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
Fiscal Years 2025, 2024, and 2023
(in millions, except per share amounts)
| Common Shares Outstanding | Total | Class A Common Stock | Additional Paid-in-Capital | Retained Earnings | Treasury Stock, at Cost | Accumulated Other Comprehensive Loss | |||||||||||||||||||||||||||||||||||
| 310.6 | Balance at December 31, 2022 | $ | 568 | $ | 5 | $ | 5,965 | $ | 12,342 | $ | (17,015) | $ | (729) | ||||||||||||||||||||||||||||
| — | Net income | 3,083 | — | — | 3,083 | — | — | ||||||||||||||||||||||||||||||||||
| — | Other comprehensive income | 82 | — | — | — | — | 82 | ||||||||||||||||||||||||||||||||||
| — | Dividends ($1.96 per share) | (587) | — | — | (587) | — | — | ||||||||||||||||||||||||||||||||||
| 1.4 | Stock-based compensation plans | 126 | — | 86 | — | 40 | — | ||||||||||||||||||||||||||||||||||
| (21.5) | Purchase of treasury stock | (3,954) | — | — | — | (3,954) | — | ||||||||||||||||||||||||||||||||||
| 290.5 | Balance at December 31, 2023 | (682) | 5 | 6,051 | 14,838 | (20,929) | (647) | ||||||||||||||||||||||||||||||||||
| — | Net income | 2,375 | — | — | 2,375 | — | — | ||||||||||||||||||||||||||||||||||
| — | Other comprehensive loss | (416) | — | — | — | — | (416) | ||||||||||||||||||||||||||||||||||
| — | Dividends ($2.41 per share) | (682) | — | — | (682) | — | — | ||||||||||||||||||||||||||||||||||
| 1.6 | Stock-based compensation plans | 174 | — | 128 | — | 46 | — | ||||||||||||||||||||||||||||||||||
| (15.4) | Purchase of treasury stock | (3,761) | — | — | — | (3,761) | — | ||||||||||||||||||||||||||||||||||
| 276.7 | Balance at December 31, 2024 | (2,992) | 5 | 6,179 | 16,531 | (24,644) | (1,063) | ||||||||||||||||||||||||||||||||||
| — | Net income | 2,601 | — | — | 2,601 | — | — | ||||||||||||||||||||||||||||||||||
| — | Other comprehensive income | 421 | — | — | — | — | 421 | ||||||||||||||||||||||||||||||||||
| — | Dividends ($2.64 per share) | (718) | — | — | (718) | — | — | ||||||||||||||||||||||||||||||||||
| 1.3 | Stock-based compensation plans | 211 | — | 173 | — | 38 | — | ||||||||||||||||||||||||||||||||||
| (12.1) | Purchase of treasury stock | (3,294) | — | — | — | (3,294) | — | ||||||||||||||||||||||||||||||||||
| 265.9 | (1) | Balance at December 31, 2025 | $ | (3,771) | $ | 5 | $ | 6,352 | $ | 18,414 | $ | (27,900) | $ | (642) |
(1)Our restated certificate of incorporation authorizes 800,000,000 shares of our common stock, with a par value of $0.01 per share and 10,000,000 shares of preferred stock, without par value. At year-end 2025, we had 265,864,771 of these authorized shares of our common stock and no preferred stock outstanding.
See Notes to Consolidated Financial Statements.
MARRIOTT INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. BASIS OF PRESENTATION
The consolidated financial statements present the results of operations, financial position, and cash flows of Marriott International, Inc. and its consolidated subsidiaries (referred to in this report as “we,” “us,” “Marriott,” or the “Company”). In order to make this report easier to read, we also refer throughout to (1) our Consolidated Financial Statements as our “Financial Statements,” (2) our Consolidated Statements of Income as our “Income Statements,” (3) our Consolidated Balance Sheets as our “Balance Sheets,” (4) our Consolidated Statements of Cash Flows as our “Statements of Cash Flows,” (5) our properties, brands, or markets in the United States and Canada as “U.S. & Canada,” and (6) our properties, brands, or markets in our Europe, Middle East & Africa, Greater China, Asia Pacific excluding China, and Caribbean & Latin America regions, as “International.” References throughout to numbered “Notes” refer to these Notes to Consolidated Financial Statements, unless otherwise stated. In addition, we use the term “hotel owners” throughout this report to refer, collectively, to owners of hotels and other lodging offerings operating in our system pursuant to franchise agreements, management agreements, license agreements or similar arrangements, and we use the term “hotels in our system” to refer to hotels and other lodging offerings operating in our system pursuant to such arrangements, as well as hotels that we own or lease. The terms “hotel owners” and “hotels in our system” exclude Homes & Villas by Marriott BonvoySM (which we also exclude from our property and room count), timeshare, residential, and The Ritz-Carlton Yacht Collection**®**.
Preparation of financial statements that conform with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements, the reported amounts of revenues and expenses during the reporting periods, and the disclosures of contingent liabilities. Accordingly, ultimate results could differ from those estimates.
The accompanying Financial Statements reflect all normal and recurring adjustments necessary to present fairly our financial position at fiscal year-end 2025 and fiscal year-end 2024 and the results of our operations and cash flows for fiscal years 2025, 2024, and 2023. We have eliminated all material intercompany transactions and balances between entities consolidated in these Financial Statements. In addition, in the 2025 fourth quarter, to enhance understanding of the Company’s general and administrative costs, we reclassified amounts attributable to other expenses previously reported under the “General, administrative, and other” caption to the “Owned, leased, and other expense” caption of our Income Statements. The expenses that were reclassified from “General, administrative, and other” are certain costs associated with our property-related fee revenues, such as guarantee expense, provision for credit losses, and certain brand-related or property-related expenses, as well as costs associated with certain third-party agreements. We reclassified prior period amounts, which totaled $129 million in 2024 and $144 million in 2023, to conform to our current presentation.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition
Franchise Fee and Royalty Fee Revenue: For our franchised properties, we have a performance obligation to provide franchisees a license to our intellectual property for use of certain of our brand names. As compensation for such services, we are typically entitled to initial application fees and ongoing royalty fees. Our ongoing royalty fees represent variable consideration, as the transaction price is based on a percentage of certain revenues of the properties, as defined in each contract. We recognize royalty fees on a monthly basis over the term of the agreement as those amounts become payable. Initial application and relicensing fees are fixed consideration payable upon submission of a franchise application or renewal and are recognized on a straight-line basis over the initial or renewal term of the franchise agreements.
Base Management and Incentive Management Fees: For our managed properties, we have performance obligations to provide hotel management services and a license to our intellectual property for the use of our brand names. As compensation for such services, we are generally entitled to receive base management fees, which are a percentage of the revenues of properties, and incentive management fees, which are generally based on a measure of hotel profitability. Both the base management and incentive management fees are variable consideration, as the transaction price is based on a percentage of revenue or profit, as defined in each contract. We recognize base management fees on a monthly basis over the term of the agreement as those amounts become payable. We recognize incentive management fees on a monthly basis over the term of the agreement based on each property’s financial results, as long as we do not expect a significant reversal due to projected future hotel performance or cash flows in future periods.
Owned and Leased Hotel Revenue: At our owned and leased hotels, we have performance obligations to provide accommodations and other ancillary services to hotel guests. As compensation for such goods and services, we are typically entitled to a fixed nightly fee for an agreed upon period and additional fixed fees for any ancillary services purchased. These
fees are generally payable at the time the hotel guest checks out of the hotel. We generally satisfy the performance obligations over time, and we recognize the revenue from room sales and from other ancillary guest services on a daily basis, as the rooms are occupied and we have rendered the services.
Cost Reimbursements: Under our agreements with hotel owners and certain other counterparties, we are entitled to be reimbursed for certain costs we incur on behalf of their properties, with no added mark-up. These costs primarily consist of payroll and related expenses at managed properties where we are the employer of the employees at the properties and include certain operational and administrative costs as provided for in our contracts with the hotel owners. We are entitled to reimbursement in the period we incur the related reimbursable costs, which we recognize within the “Cost reimbursement revenue” caption of our Income Statements.
Hotel owners and certain other counterparties participate in certain centralized programs and services, such as marketing, sales, reservations, and insurance programs, which we operate for their benefit. We do not operate these programs and services to generate a profit over the long term, and accordingly, when we recover the costs that we incur for these programs and services from our hotel owners and other counterparties, we do not seek a mark-up. The amounts we charge for these programs and services are generally a combination of fixed fees and variable fees based on sales or other metrics and are payable on a monthly basis. We generally recognize revenue within the “Cost reimbursement revenue” caption of our Income Statements when the amounts may be billed to hotel owners and other counterparties. Amounts we charge for system implementations are generally recognized on a straight-line basis over the term of the franchise or management agreement. We recognize expenses within the “Reimbursed expenses” caption as they are incurred. This pattern of recognition results in timing differences between the costs incurred for centralized programs and services and the related reimbursement in our operating and net income. Over the long term, these programs and services are not designed to impact our economics, either positively or negatively.
Other Revenue: Includes Global Design fees (described below), termination fees, and other property and brand revenues, which we present within the “Owned, leased, and other revenue” caption of our Income Statements. We generally recognize termination fees when collection is probable and other revenue as services are rendered. Amounts received in advance are deferred as liabilities.
We provide certain hotel design and construction review (“Global Design”) services to hotel owners, generally during the period prior to a hotel’s opening or during the period a hotel is converting to a Marriott brand (the “pre-opening period”). As compensation for such services, we may be entitled to receive a fixed fee that is payable during the pre-opening period of the hotel. These services are not a distinct performance obligation, and therefore we recognize the fees on a straight-line basis over the initial term of the franchise, management, or license agreement.
Practical Expedients and Exemptions: We do not disclose the amount of variable consideration that we expect to recognize in future periods in the following circumstances:
(1) if we recognize the revenue based on the amount invoiced or services performed;
(2) for sales-based or usage-based royalty promised in exchange for a license of intellectual property; or
(3) if the consideration is allocated entirely to a wholly unsatisfied promise to transfer a distinct service that forms part of a single performance obligation, and the terms of the consideration relate specifically to our efforts to transfer, or to a specific outcome from transferring the service.
We are required to collect certain taxes and fees from customers on behalf of governmental agencies and remit these to the applicable governmental agencies on a periodic basis. We do not include these taxes in determining the transaction price.
Loyalty Program: Loyalty Program members earn points based on the money they spend at participating properties; the exchange of timeshare ownership interests; purchases of timeshare interval, fractional ownership, and residential products; and through participation in travel experiences and affiliated partners’ programs, such as those offered by credit card, car rental, airline, and other companies. Members can redeem points for stays at participating properties, airline tickets, airline frequent flyer program miles, rental cars, merchandise, and a variety of other awards. Points cannot be redeemed for cash.
Under our Loyalty Program, we have a performance obligation to provide or arrange for the provision of goods or services to Loyalty Program members in exchange for the redemption of points earned from past activities. We operate our Loyalty Program as a cross-brand marketing program to participating properties. Our agreements with hotel owners and certain other counterparties require that properties reimburse us for costs of operating the Loyalty Program, with no added mark-up, including costs related to the following activities, which we expense as incurred in our “Reimbursed expenses” caption of our Income Statements: marketing, promotion, and communications and services provided to Loyalty Program members. We generally receive monthly cash contributions from participating properties based on a portion of qualified spend by Loyalty Program members (when the points are earned). We recognize these contributions into revenue as we provide the related
service (when the points are redeemed). The amount of revenue we recognize upon point redemption is based on a blend of historical funding rates and is impacted by our estimate of the “breakage” for points that members will never redeem. Breakage is estimated based on historical member activity and expectations of future member behavior. We recognize revenue net of the redemption cost within our “Cost reimbursement revenue” caption on our Income Statements, as our performance obligation is to facilitate the transaction between the Loyalty Program member and the property or program partner. Our redemption cost could be higher or lower than our revenue recognized in any given period.
We have multi-year agreements for our co-branded credit cards associated with our Loyalty Program. Under these agreements, we have performance obligations to provide a license to the intellectual property associated with our brands and marketing lists (“Licensed IP”) to the financial institutions that issue the credit cards, to arrange for the redemption of Loyalty Program points as discussed in the preceding paragraph, and to arrange for the redemption of free night certificates and gift cards provided to cardholders. We receive fees from these agreements, including fixed amounts that are primarily payable at contract inception, and variable amounts that are paid to us monthly over the term of the agreements, generally based on: (1) the volume of cardholder spend; (2) the number of Loyalty Program points purchased; (3) the number of free night certificates issued or redeemed; and (4) the number of gift cards issued. We allocate those fees among the performance obligations, including the Licensed IP, our Loyalty Program points, free night certificates, and gift cards provided to cardholders based on their estimated standalone selling prices. The estimation of the standalone selling prices requires significant judgments based upon generally accepted valuation methodologies regarding the value of our Licensed IP, the amount of funding we will receive, and the number of Loyalty Program points, free night certificates, and gift cards cardholders will ultimately redeem. We base our estimates of these amounts on our historical experience and expectation of future cardholder behavior. We recognize the portion of the Licensed IP revenue that meets the sales-based royalty criteria as the credit cards are used and the remaining portion of the Licensed IP revenue on a straight-line basis over the contract term. In our Income Statements, we primarily recognize Licensed IP revenue in the “Franchise fees” caption, and we recognize a portion in the “Cost reimbursement revenue” caption. We recognize the revenue related to the Loyalty Program points as discussed in the preceding paragraph. We recognize the revenue related to the free night certificates and gift cards when the related service is provided. We recognize revenue net of the redemption cost, as our performance obligation is to facilitate the transaction between the Loyalty Program member and the property or program partner.
Contract Balances: We generally receive payments from customers as we satisfy our performance obligations. We record a receivable when we have an unconditional right to receive payment and only the passage of time is required before payment is due. We record deferred revenue when we receive payment, or have the unconditional right to receive payment, in advance of the satisfaction of our performance obligations related to franchise application and relicensing fees, Global Design fees, credit card branding license fees, and our Loyalty Program.
Our current and noncurrent deferred revenue increased by $110 million, to $1,409 million at December 31, 2025, from $1,299 million at December 31, 2024, primarily as a result of revenue deferred in 2025 related to our co-branded credit cards, gift cards, residential branding fees, certain centralized programs and services fees, and franchise application and relicensing fees. The increase was partially offset by $242 million of revenue recognized in 2025 that was deferred as of December 31, 2024.
Our current and noncurrent liability for guest loyalty program increased by $473 million, to $7,992 million at December 31, 2025, from $7,519 million at December 31, 2024, primarily reflecting points earned by members. The increase was partially offset by $3,160 million of revenue recognized in 2025, that was deferred as of December 31, 2024. At each reporting period, we evaluate the estimates used in the recognition of Loyalty Program revenues, including estimates of the breakage of points that members will never redeem and the amount of funding we expect to receive over the life of the agreements with various third parties. In 2025, the updated estimates resulted in a net decrease in revenue, and a corresponding increase in the liability for guest loyalty program of approximately $102 million.
Costs Incurred to Obtain and Fulfill Contracts with Customers
We incur certain costs to obtain and fulfill contracts with customers, which we capitalize and amortize on a straight-line basis over the initial, non-cancellable term of the contract. We classify incremental costs of obtaining a contract with a customer in the “Contract acquisition costs and other” caption of our Balance Sheets, the related amortization in the “Contract investment amortization” caption of our Income Statements, and the cash flow impact in the “Contract acquisition costs” caption of our Statements of Cash Flows. We assess the assets for impairment when events or changes in circumstances indicate that we may not be able to recover the carrying amount. We recognize an impairment loss for the amount by which the carrying amount exceeds the expected net future cash flows. We classify certain direct costs to fulfill a contract with a customer in the “Other noncurrent assets” and “Prepaid expenses and other” captions of our Balance Sheets, and the related amortization in the “Owned, leased, and other expense” caption of our Income Statements. We had capitalized costs to fulfill contracts with customers of $439 million at December 31, 2025 and $419 million at December 31, 2024. See Note 10 for information on capitalized costs incurred to obtain contracts with customers.
Real Estate Sales
We recognize a gain or loss on real estate transactions when control of the asset transfers to the buyer, generally at the time the sale closes. In sales transactions where we retain a management contract, the terms and conditions of the management contract are generally comparable to the terms and conditions of the management contracts obtained directly with hotel owners in competitive processes.
Retirement Savings Plan
We contribute to tax-qualified retirement plans for the benefit of U.S. employees who meet certain eligibility requirements and choose to participate in the plans. Participating employees specify the percentage or amount of salary they wish to contribute from their compensation, and the Company typically makes matching or supplemental contributions. We recognized compensation costs from Company contributions of $264 million in 2025, $240 million in 2024, and $215 million in 2023.
Non-U.S. Operations
The U.S. dollar is the functional currency of our consolidated and unconsolidated entities operating in the U.S. The functional currency of our consolidated and unconsolidated entities operating outside of the U.S. is generally the principal currency of the economic environment in which the entity primarily generates and expends cash. We translate the financial statements of consolidated entities whose functional currency is not the U.S. dollar into U.S. dollars, and we do the same, as needed, for unconsolidated entities whose functional currency is not the U.S. dollar. We translate assets and liabilities at the exchange rate in effect as of the financial statement date and translate income statement accounts using the weighted average exchange rate for the period. We include translation adjustments from currency exchange and the effect of exchange rate changes on intercompany transactions of a long-term investment nature as a separate component of stockholders’ deficit. We report gains and losses from currency exchange rate changes for intercompany receivables and payables that are not of a long-term investment nature, as well as for third-party transactions, currently in operating costs and expenses.
Stock-Based Compensation
Our stock-based compensation awards primarily consist of restricted stock units (“RSUs”). We measure compensation costs for our stock-based payment transactions at fair value based on the average of the high and low stock price on the grant date (discounted for the lack of marketability and dividends), and we recognize those costs in our Financial Statements on a straight-line basis over the vesting period during which the employee provides service in exchange for the award.
Advertising Costs
We expense costs to produce advertising as they are incurred and to communicate advertising as the communication occurs and record such amounts in our “Reimbursed expenses” caption of our Income Statements to the extent undertaken on behalf of hotel owners. We recognized advertising costs of $999 million in 2025, $993 million in 2024, and $794 million in 2023.
Income Taxes
We record the amounts of taxes payable or refundable for the current year, as well as deferred tax liabilities and assets for the future tax consequences of events we have recognized in our Financial Statements or tax returns, using judgment in assessing future profitability and the likely future tax consequences of those events. We base our estimates of deferred tax assets and liabilities on current tax laws, rates and interpretations, and, in certain cases, business plans and other expectations about future outcomes. We develop our estimates of future profitability based on our historical data and experience, industry projections, micro and macro general economic condition projections, and our expectations. We account for U.S. tax on Global Intangible Low-Taxed Income in the period incurred.
We generally recognize the effect of tax law changes in the period of enactment. Changes in existing tax laws and rates, their related interpretations, and the uncertainty generated by the current economic environment may affect the amounts of our deferred tax liabilities or the valuations of our deferred tax assets over time. Our accounting for deferred tax consequences represents management’s best estimate of future events that can be appropriately reflected in the accounting estimates.
For tax positions we have taken or expect to take in a tax return, we apply a more likely than not threshold (that is, a likelihood of more than 50 percent), under which we must conclude a tax position is more likely than not to be sustained, assuming that the position will be examined by the appropriate taxing authority that has full knowledge of all relevant information, to recognize the benefit. In determining our provision for income taxes, we use judgment, reflecting our estimates and assumptions, in applying the more likely than not threshold. We recognize accrued interest and penalties for our unrecognized tax benefits as a component of tax expense. See Note 6 for further information.
Cash and Equivalents
We consider all highly liquid investments with an initial maturity of three months or less at date of purchase to be cash equivalents.
Accounts Receivable
Our accounts receivable primarily consist of amounts due from hotel owners and include reimbursements of costs we incurred on their behalf. We record an allowance for credit losses measured over the contractual life of the instrument based on an assessment of historical collection activity and current and forecasted future economic conditions by region. Our allowance for credit losses was $212 million at December 31, 2025 and $199 million at December 31, 2024.
Assets Held for Sale
We consider properties to be assets held for sale when (1) management commits to a plan to sell the property; (2) it is unlikely that the disposal plan will be significantly modified or discontinued; (3) the property is available for immediate sale in its present condition; (4) actions required to complete the sale of the property have been initiated; (5) sale of the property is probable and we expect the completed sale will occur within one year; and (6) the property is actively being marketed for sale at a price that is reasonable given our estimate of current market value. Upon designation of a property as an asset held for sale, we record the property’s value at the lower of its carrying amount or its estimated fair value, less estimated costs to sell, and we cease depreciation.
Goodwill
We test goodwill for potential impairment at least annually in the fourth quarter, or more frequently if an event or other circumstance indicates that we may not be able to recover the carrying amount of the net assets of the reporting unit. In evaluating goodwill for impairment, we may assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Factors we consider when making this determination include, but are not limited to, assessing general economic conditions, hospitality industry trends, and overall financial performance of the reporting unit. If we bypass the qualitative assessment, or if we conclude that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then we perform a quantitative impairment test by comparing the fair value of a reporting unit with its carrying amount.
We calculate the estimated fair value of a reporting unit using a combination of the income and market approaches. For the income approach, we use internally developed discounted cash flow models that include the following assumptions, among others: projections of revenues, expenses, and related cash flows based on assumed long-term growth rates and demand trends; expected future investments to grow new units; and estimated discount rates. For the market approach, we use internal analyses based primarily on market comparables. We base these assumptions on our historical data and experience, third-party appraisals, industry projections, micro and macro general economic condition projections, and our expectations.
We have had no goodwill impairment charges for the last three fiscal years.
Intangibles and Long-Lived Assets
We assess indefinite-lived intangible assets for continued indefinite use and for potential impairment annually, or more frequently if an event or other circumstance indicates that we may not be able to recover the carrying amount of the asset. Like goodwill, we may first assess qualitative factors to determine whether it is more likely than not that the fair value of the indefinite-lived intangible is less than its carrying amount. If the carrying amount of the asset exceeds the fair value, we recognize an impairment loss in the amount of that excess.
We test definite-lived intangibles and long-lived asset groups for recoverability when changes in circumstances indicate that we may not be able to recover the carrying amount; for example, when there are material adverse changes in projected revenues or expenses, significant underperformance relative to historical or projected operating results, or significant negative industry or economic trends. We also test recoverability when management has committed to a plan to sell or otherwise dispose of an asset group and we expect to complete the plan within a year. We evaluate recoverability of an asset group by comparing its carrying amount, including right-of-use assets, to the future net undiscounted cash flows that we expect the asset group will generate. If the comparison indicates that we will not be able to recover the carrying amount of an asset group, we recognize an impairment loss for the amount by which the carrying amount exceeds the estimated fair value. When we recognize an impairment loss for assets to be held and used, we depreciate the adjusted carrying amount of those assets over their remaining useful life.
We calculate the estimated fair value of an intangible asset or asset group using the income approach or the market approach. We utilize the same assumptions and methodology for the income approach that we describe in the “Goodwill” caption above. For the market approach, we use internal analyses based primarily on market comparables and assumptions about market capitalization rates, growth rates, and inflation.
Investments
We hold equity interests in ventures established to develop or acquire and own hotel properties or that otherwise support our hospitality operations. We account for these investments as either an equity method investment, a financial asset, or a controlled subsidiary. We apply the equity method of accounting if we have significant influence over the entity, typically when we hold 20 percent or more of the voting common stock (or equivalent) of an investee but do not have a controlling financial interest. In certain circumstances, such as investments in limited liability companies or limited partnerships, we apply the equity method of accounting when we own as little as three to five percent. We account for financial assets at fair value if it is readily determinable, at our share of the entity’s net assets if the investment qualifies for the net asset value practical expedient, or using the fair value alternative method, whereby investments are measured at cost less impairment, adjusted for observable price changes. We consolidate entities that we control.
When we acquire an investment that qualifies for the equity method of accounting, we determine the acquisition date fair value of the identifiable assets and liabilities. If our carrying amount exceeds our proportional share in the equity of the investee, we amortize the difference on a straight-line basis over the underlying assets’ estimated useful lives when calculating equity method earnings attributable to us, excluding the difference attributable to land, which we do not amortize.
We evaluate an investment for impairment when circumstances indicate that we may not be able to recover the carrying amount. When evaluating our ventures, we consider loan defaults, significant underperformance relative to historical or projected operating performance, or significant negative industry or economic trends. Additionally, a venture’s commitment to a plan to sell some or all of its assets could cause us to evaluate the recoverability of the venture’s individual long-lived assets and possibly the venture itself. We impair investments we account for using the equity method of accounting when we determine that there has been an “other-than-temporary” decline in the venture’s estimated fair value compared to its carrying amount. We perform qualitative assessments for investments we account for using the fair value alternative method and we record any associated impairment when the fair value is less than the carrying amount.
Under the accounting guidance for the consolidation of variable interest entities, we analyze our variable interests, including equity investments, loans, and guarantees, to determine if an entity in which we have a variable interest is a variable interest entity. Our analysis may include both quantitative and qualitative reviews and is based primarily on our review of the design of the entity, its organizational structure including decision-making ability, and relevant financial agreements. We also use our qualitative analysis to determine if we must consolidate a variable interest entity as its primary beneficiary.
Fair Value Measurements
We have various financial instruments we must measure at fair value on a recurring basis, including certain marketable securities and derivatives. We also apply the provisions of fair value measurement to various nonrecurring measurements for our financial and nonfinancial assets and liabilities. See Note 12 for further information.
Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). We measure our assets and liabilities using inputs from the following three levels of the fair value hierarchy:
Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access at the measurement date.
Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).
Level 3 inputs include unobservable inputs that reflect our assumptions about what factors market participants would use in pricing the asset or liability. We develop these inputs based on the best information available, including our own data.
Derivative Instruments
We record derivatives at fair value. The designation of a derivative instrument as a hedge and its ability to meet the hedge accounting criteria determine how we reflect the change in fair value of the derivative instrument in our Financial Statements. A derivative qualifies for hedge accounting if, at inception, we expect the derivative will be highly effective in offsetting the underlying hedged cash flows or fair value and we fulfill the hedge documentation standards at the time we enter into the derivative contract. We designate a hedge as a cash flow hedge, a fair value hedge, or a hedge of the net investment in non-U.S. operations based on the exposure we are hedging. For the effective portion of qualifying cash flow hedges, we record changes in fair value in accumulated other comprehensive income (“AOCI”). We release the derivative’s gain or loss from AOCI to match the timing of the underlying hedged items’ effect on earnings. The change in fair value of qualifying fair value hedges as well as changes in fair value of the underlying hedged items to the hedged risks are recorded concurrently in earnings.
We review the effectiveness of our hedging instruments quarterly and discontinue hedge accounting for any hedge that we no longer consider to be highly effective. We recognize changes in fair value for derivatives not designated as hedges or those not qualifying for hedge accounting in current period earnings. Upon termination of cash flow hedges, we release gains and losses from AOCI based on the timing of the underlying cash flows or revenue recognized, unless the termination results from the failure of the intended transaction to occur in the expected time frame. Such untimely transactions require us to immediately recognize in earnings the gains and/or losses that we previously recorded in AOCI.
Changes in interest rates and currency exchange rates expose us to market risk. We manage our exposure to these risks by monitoring available financing alternatives, as well as through development and application of credit granting policies. We also use derivative instruments as part of our overall strategy to manage our exposure to market risks. As a matter of policy, we only enter into transactions that we believe will be highly effective at offsetting the underlying risk, and we do not use derivatives for trading or speculative purposes.
Leases
We determine if an arrangement is a lease or contains a lease at the inception of the contract. We evaluate leases for classification as operating or financing upon lease commencement. Our leases generally contain fixed and variable components. The variable components of our leases are primarily based on operating performance of the leased property. Our lease agreements may also include non-lease components, such as common area maintenance, which we combine with the lease component to account for both as a single lease component.
Lease liabilities, which represent our obligation to make lease payments arising from the lease, and corresponding right-of-use assets, which represent our right to use an underlying asset for the lease term, are recognized at the commencement date of the lease based on the present value of fixed future payments over the lease term. We calculate the present value of future payments using the discount rate implicit in the lease, if available, or our incremental borrowing rate.
For operating leases, lease expense relating to fixed payments is recognized on a straight-line basis over the lease term and lease expense relating to variable payments is expensed as incurred. For finance leases, the amortization of the asset is recognized over the shorter of the lease term or useful life of the underlying asset.
Guarantees
We measure and record our liability for the fair value of a guarantee on a nonrecurring basis, that is when we issue or modify a guarantee. We base our calculation of the estimated fair value of a guarantee on the income approach or the market approach, depending on the type of guarantee. For the income approach, we use internally developed discounted cash flow and Monte Carlo simulation models that include the following assumptions, among others: projections of revenues and expenses and related cash flows based on assumed growth rates and demand trends; historical volatility of projected performance; the guaranteed obligations; and applicable discount rates. We base these assumptions on our historical data and experience, industry projections, micro and macro general economic condition projections, and our expectations. For the market approach, we use internal analyses based primarily on market comparable data and our assumptions about market capitalization rates, credit spreads, growth rates, and inflation.
The offsetting entry for the guarantee liability depends on the circumstances in which the guarantee was issued. Funding under the guarantee reduces the recorded liability. In most cases, when we do not forecast any funding, we amortize the liability into income on a straight-line basis over the remaining term of the guarantee. On a quarterly basis, we evaluate all material estimated liabilities based on the operating results and the terms of the guarantee. If we conclude that it is probable that we will be required to fund a greater amount than previously estimated, we record a loss except to the extent that the applicable contracts provide that the advance can be recovered as a loan.
Self-Insurance Programs
We self-insure for certain levels of liability, workers’ compensation, and employee benefits-related coverages, with purchased insurance protection for costs over specified thresholds. We accrue estimated costs of these insurance programs at the present value of projected settlements for known claims and incurred but not reported claims. We use a discount rate of 3.50 percent, based upon market rates, which we consider to be reasonable given our history of settled claims, including payment patterns. Our employee benefits-related insurance reserve was $72 million at December 31, 2025 and $74 million at December 31, 2024 and was recorded in the “Accrued payroll and benefits” caption of our Balance Sheets. For our other insurance programs, we classify the current and noncurrent portions of these insurance reserves in the “Accrued expenses and other” and “Other noncurrent liabilities” captions of our Balance Sheets, respectively. The current portion of these reserves was $178 million at December 31, 2025 and $198 million at December 31, 2024. The noncurrent portion of these reserves was $496 million at December 31, 2025 and $422 million at December 31, 2024.
Legal Contingencies
We are subject to various legal proceedings and claims, the outcomes of which are uncertain. We record an accrual for legal contingencies when we determine that it is probable that we have incurred a liability and we can reasonably estimate the amount of the loss. In making such determinations we evaluate, among other things, the probability of an unfavorable outcome and, when we believe it probable that a liability has been incurred, our ability to make a reasonable estimate of the loss. We review these accruals each reporting period and make revisions based on changes in facts and circumstances.
Business Combinations
We allocate the purchase price of an acquisition to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. We recognize as goodwill the amount by which the purchase price of an acquired entity exceeds the net of the fair values assigned to the assets acquired and liabilities assumed. In determining the fair values of assets acquired and liabilities assumed, we use various recognized valuation methods including the income and market approaches. Further, we make assumptions within certain valuation techniques, including discount rates, royalty rates, and the amount and timing of future cash flows. We record the net assets and results of operations of an acquired entity in our Financial Statements from the acquisition date. We initially perform these valuations based upon preliminary estimates and assumptions by management or independent valuation specialists under our supervision, where appropriate, and make revisions as estimates and assumptions are finalized. We expense acquisition-related costs as we incur them.
Asset Acquisitions
Acquisitions that do not meet the definition of a business are accounted for as asset acquisitions. We allocate the cost of the acquisition, including direct and incremental transaction costs, to the individual assets acquired and liabilities assumed on a relative fair value basis. Goodwill is not recognized in an asset acquisition.
New Accounting Standards Adopted
Accounting Standards Update (“ASU”) 2023-09 - “Improvements to Income Tax Disclosures” (Topic 740). ASU 2023-09 requires enhanced income tax disclosures, including additional disaggregated information related to the effective tax rate reconciliation, the underlying nature and category of individual reconciling items, and income taxes paid by jurisdictions. We adopted ASU 2023-09 prospectively in the 2025 fourth quarter for the disclosures presented in Note 6.
New Accounting Standards Not Yet Adopted
ASU 2025-06 - “Targeted Improvements to the Accounting for Internal-Use Software” (Topic 350). ASU 2025-06 eliminates references to software development project stages and revises the criteria that must be met to begin capitalizing internal-use software costs. The standard permits entities to adopt the guidance using a prospective, retrospective, or modified transition approach and becomes effective for us beginning January 1, 2028, with early adoption permitted. We are currently assessing the potential impact that ASU 2025-06 will have on our financial statements and disclosures.
NOTE 3. ACQUISITION
In the 2025 second quarter, we announced that we reached an agreement with citizenM Holding BV and certain of its affiliates (the “seller”) to acquire the citizenM brand and related intellectual property for $355 million, and we completed the acquisition in the 2025 third quarter. In addition, we may pay earn-out payments to the seller up to $110 million, based on the future growth of the brand over a specified, multi-year timeframe. Earn-out payments would not begin until the fourth year following closing of the transaction. In the 2025 fourth quarter, we completed the integration of the citizenM portfolio, which included 37 open select-service hotels (8,789 rooms), into our system and platforms. We accounted for the transaction as an
asset acquisition and allocated the cost of the acquisition, including direct and incremental transaction costs, on a relative fair value basis, to an indefinite-lived brand asset of approximately $290 million and contract assets, with a weighted-average term of 20 years, totaling $60 million.
NOTE 4. EARNINGS PER SHARE
The table below illustrates the reconciliation of the earnings and number of shares used in our calculations of basic and diluted earnings per share, the latter of which uses the treasury stock method to calculate the dilutive effect of the Company’s potential common stock:
| (in millions, except per share amounts) | 2025 | 2024 | 2023 | ||||||||||||||
| Computation of Basic Earnings Per Share | |||||||||||||||||
| Net income | $ | 2,601 | $ | 2,375 | $ | 3,083 | |||||||||||
| Shares for basic earnings per share | 272.9 | 284.2 | 301.5 | ||||||||||||||
| Basic earnings per share | $ | 9.53 | $ | 8.36 | $ | 10.23 | |||||||||||
| Computation of Diluted Earnings Per Share | |||||||||||||||||
| Net income | $ | 2,601 | $ | 2,375 | $ | 3,083 | |||||||||||
| Shares for basic earnings per share | 272.9 | 284.2 | 301.5 | ||||||||||||||
| Effect of dilutive securities | |||||||||||||||||
| Stock-based compensation | 0.7 | 1.0 | 1.4 | ||||||||||||||
| Shares for diluted earnings per share | 273.6 | 285.2 | 302.9 | ||||||||||||||
| Diluted earnings per share | $ | 9.51 | $ | 8.33 | $ | 10.18 |
NOTE 5. STOCK-BASED COMPENSATION
RSUs and PSUs
We granted RSUs in 2025 to certain officers and employees, and those units vest generally over four years in equal annual installments commencing one year after the grant date. We also granted performance-based RSUs (“PSUs”) in 2025 to certain executives, which are earned subject to continued employment and the satisfaction of certain performance and market conditions based on the degree of achievement of pre-established targets for 2027 adjusted EBITDA performance and relative total stockholder return over the 2025 to 2027 performance period.
We had deferred compensation costs for unvested awards for RSUs, including PSUs, of approximately $173 million at year-end 2025. The weighted average remaining term for RSUs outstanding at year-end 2025 was 2.2 years.
The following table provides additional information on RSUs, including PSUs, for the last three fiscal years:
| 2025 | 2024 | 2023 | |||||||||||||||
| Stock-based compensation expense (in millions) | $ | 196 | $ | 203 | $ | 179 | |||||||||||
| Weighted average grant-date fair value (per unit) | $ | 267 | $ | 222 | $ | 167 | |||||||||||
| Aggregate intrinsic value of distributed RSUs (in millions) | $ | 331 | $ | 340 | $ | 297 |
The following table presents the changes in our outstanding RSUs, including PSUs, during 2025 and the associated weighted average grant-date fair values:
| Number of RSUs (in millions) | Weighted Average Grant-Date Fair Value (per unit) | ||||||||||
| Outstanding at year-end 2024 | 2.6 | $ | 178 | ||||||||
| Granted | 0.8 | 267 | |||||||||
| Distributed | (1.2) | 157 | |||||||||
| Forfeited | (0.1) | 218 | |||||||||
| Outstanding at year-end 2025 | 2.1 | $ | 222 |
Other Information
At year-end 2025, we had approximately 10 million remaining shares authorized for grant under the 2023 Marriott International, Inc. Stock and Cash Incentive Plan.
NOTE 6. INCOME TAXES
The components of our earnings before income taxes for the last three fiscal years consisted of:
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| U.S. | $ | 2,021 | $ | 1,717 | $ | 2,113 | |||||||||||
| Non-U.S. | 1,373 | 1,434 | 1,265 | ||||||||||||||
| $ | 3,394 | $ | 3,151 | $ | 3,378 |
Our (provision) benefit for income taxes for the last three fiscal years consisted of:
| (in millions) | 2025 | 2024 | 2023 | |||||||||||||||||
| Current | -U.S. Federal | $ | (409) | $ | (447) | $ | (431) | |||||||||||||
| -U.S. State | (70) | (124) | (158) | |||||||||||||||||
| -Non-U.S. | (252) | (282) | (249) | |||||||||||||||||
| (731) | (853) | (838) | ||||||||||||||||||
| Deferred | -U.S. Federal | 8 | 125 | 94 | ||||||||||||||||
| -U.S. State | 4 | 19 | 16 | |||||||||||||||||
| -Non-U.S. | (74) | (67) | 433 | |||||||||||||||||
| (62) | 77 | 543 | ||||||||||||||||||
| $ | (793) | $ | (776) | $ | (295) |
Unrecognized Tax Benefits
The following table reconciles our unrecognized tax benefit balance for each year from the beginning of 2023 to the end of 2025:
| (in millions) | Amount | ||||
| Unrecognized tax benefit at beginning of 2023 | $ | 255 | |||
| Change attributable to tax positions taken in prior years | (90) | ||||
| Change attributable to tax positions taken during the current period | 16 | ||||
| Decrease attributable to settlements with taxing authorities | (9) | ||||
| Unrecognized tax benefit at year-end 2023 | 172 | ||||
| Change attributable to tax positions taken in prior years | (4) | ||||
| Change attributable to tax positions taken during the current period | 17 | ||||
| Decrease attributable to settlements with taxing authorities | (2) | ||||
| Unrecognized tax benefit at year-end 2024 | 183 | ||||
| Change attributable to tax positions taken in prior years | 1 | ||||
| Change attributable to tax positions taken during the current period | 16 | ||||
| Decrease attributable to lapse of statute of limitations | (106) | ||||
| Unrecognized tax benefit at year-end 2025 | $ | 94 |
Our unrecognized tax benefit balance included $90 million at year-end 2025, $171 million at year-end 2024, and $161 million at year-end 2023 of tax positions that, if recognized, would impact our effective tax rate. We recognize accrued interest and penalties for our unrecognized tax benefits as a component of tax expenses. Related interest (benefit) expense totaled $(41) million in 2025, $14 million in 2024, and $6 million in 2023. We accrued interest and penalties related to our unrecognized tax benefits of approximately $22 million at year-end 2025 and $63 million at year-end 2024.
We file income tax returns, including returns for our subsidiaries, in various jurisdictions around the world. The U.S. Internal Revenue Service has examined our federal income tax returns, and as of year-end 2025, we have settled all issues for tax years through 2022. Our 2023 and 2024 tax year audits are currently ongoing. Various foreign, state, and local income tax returns are also under examination by the applicable taxing authorities.
Deferred Income Taxes
Deferred income tax balances reflect the effects of temporary differences between the carrying amounts of assets and liabilities and their tax bases, as well as from net operating loss and tax credit carry-forwards. We state those balances at the enacted tax rates we expect will be in effect when we pay or recover the taxes. Deferred income tax assets represent amounts available to reduce income taxes we will pay on taxable income in future years. We evaluate our ability to realize these future tax deductions and credits by assessing whether we expect to have sufficient future taxable income from all sources, including reversal of taxable temporary differences, forecasted operating earnings, and available tax planning strategies to utilize these future deductions and credits. We establish a valuation allowance when we no longer consider it more likely than not that a deferred tax asset will be realized.
The following table presents the tax effect of each type of temporary difference and carry-forward that gave rise to significant portions of our deferred tax assets and liabilities as of year-end 2025 and year-end 2024:
| (in millions) | At Year-End 2025 | At Year-End 2024 | |||||||||
| Deferred Tax Assets | |||||||||||
| Employee benefits | $ | 289 | $ | 302 | |||||||
| Net operating loss carry-forwards | 982 | 1,046 | |||||||||
| Accrued expenses and other reserves | 134 | 153 | |||||||||
| Tax credits | 64 | 62 | |||||||||
| Loyalty Program | 343 | 313 | |||||||||
| Deferred income | 114 | 114 | |||||||||
| Lease liabilities | 255 | 239 | |||||||||
| Interest limitation | 106 | 123 | |||||||||
| Property and equipment | 29 | 15 | |||||||||
| Other | 47 | 36 | |||||||||
| Deferred tax assets | 2,363 | 2,403 | |||||||||
| Valuation allowance | (1,011) | (1,070) | |||||||||
| Deferred tax assets after valuation allowance | 1,352 | 1,333 | |||||||||
| Deferred Tax Liabilities | |||||||||||
| Intangibles | (584) | (477) | |||||||||
| Right-of-use assets | (245) | (223) | |||||||||
| Other | (32) | (64) | |||||||||
| Deferred tax liabilities | (861) | (764) | |||||||||
| Net deferred taxes | $ | 491 | $ | 569 |
Our valuation allowance is primarily attributable to non-U.S. net operating loss carry-forwards.
At year-end 2025, we had approximately $52 million of tax credits that will expire through 2035 and $12 million of tax credits that do not expire. We recorded $5 million of net operating loss benefits in 2025 and $22 million in 2024. At year-end 2025, we had approximately $4,436 million of primarily state and foreign net operating losses, of which $2,867 million will expire between 2042 and 2045.
We made no provision for U.S. income taxes or additional non-U.S. taxes on certain undistributed earnings of non-U.S. subsidiaries. These earnings could become subject to additional taxes if the non-U.S. subsidiaries dividend or loan those earnings to an affiliate or if we sell our interests in the non-U.S. subsidiaries. We cannot practically estimate the amount of additional taxes that might be payable on the undistributed earnings.
Reconciliation of U.S. Federal Statutory Income Tax Rate to Actual Income Tax Rate
The following table reconciles the U.S. statutory tax rate to our effective income tax rate for the year ended December 31, 2025, as required by ASU 2023-09 (see “New Accounting Standards Adopted” caption in Note 2 for more information):
| 2025 | |||||||||||
| ($ in millions) | Amount | Percent | |||||||||
| U.S. statutory tax rate | $ | 713 | 21.0 | % | |||||||
| Federal | |||||||||||
| Effect of cross-border tax laws | |||||||||||
| Foreign Tax Credits | (41) | (1.2) | |||||||||
| Other | 17 | 0.5 | |||||||||
| Other | (24) | (0.7) | |||||||||
| State and local income tax, net of federal tax benefit (1) | 95 | 2.8 | |||||||||
| Non-U.S. tax effects | |||||||||||
| Canada | |||||||||||
| Effect of cross-border tax laws | 37 | 1.1 | |||||||||
| Luxembourg | |||||||||||
| Changes in valuation allowance | (56) | (1.6) | |||||||||
| Nontaxable or nondeductible items | 76 | 2.2 | |||||||||
| Other Non-U.S. jurisdictions | 105 | 3.1 | |||||||||
| Changes in unrecognized tax benefits | (129) | (3.8) | |||||||||
| Effective rate | $ | 793 | 23.4 | % |
(1) State and local taxes in California, Maryland, and New York make up the majority (greater than 50%) of the tax in this category.
The following table reconciles the U.S. statutory tax rate to our effective income tax rate for the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09:
| 2024 | 2023 | ||||||||||
| U.S. statutory tax rate | 21.0 | % | 21.0 | % | |||||||
| U.S. state income taxes, net of U.S. federal tax benefit | 2.4 | 2.8 | |||||||||
| Non-U.S. income | 1.6 | 0.3 | |||||||||
| Change in valuation allowance | (0.9) | (5.8) | |||||||||
| Change in uncertain tax positions | 0.4 | (2.3) | |||||||||
| Excess tax benefits related to equity awards | (1.0) | (0.8) | |||||||||
| U.S. tax on foreign earnings | 1.0 | 1.1 | |||||||||
| Intellectual property restructuring | 0.0 | (7.9) | |||||||||
| Other, net | 0.1 | 0.3 | |||||||||
| Effective rate | 24.6 | % | 8.7 | % |
Other Information
The following table presents income taxes paid (net of refunds received) for the year ended December 31, 2025, as required by ASU 2023-09:
| (in millions) | 2025 | ||||
| U.S. Federal | $ | 496 | |||
| U.S. State | 156 | ||||
| Non-U.S. | |||||
| Switzerland | 126 | ||||
| Other jurisdictions | 292 | ||||
| Total cash paid | $ | 1,070 |
We paid cash for income taxes, net of refunds, of $947 million in 2024 and $907 million in 2023.
NOTE 7. COMMITMENTS AND CONTINGENCIES
Guarantees
We issue guarantees to certain lenders and hotel owners, chiefly to obtain long-term franchise and management contracts. The guarantees generally have a stated maximum funding amount and a term of three to 10 years. The terms of guarantees to lenders generally require us to fund if cash flows from hotel operations are inadequate to cover annual debt service or to repay the loan at maturity. The terms of the guarantees to hotel owners generally require us to fund if the hotels do not attain specified levels of operating profit. Guarantee fundings to lenders and hotel owners are generally recoverable out of future hotel cash flows and/or proceeds from the sale or refinancing of hotels.
We present the maximum potential amount of our future guarantee fundings and the carrying amount of our liability for our debt service, operating profit, and other guarantees for which we are the primary obligor at year-end 2025 in the following table:
| (in millions) Guarantee Type | Maximum Potential Amount of Future Fundings | Recorded Liability for Guarantees | ||||||||||||
| Debt service | $ | 62 | $ | 6 | ||||||||||
| Operating profit | 142 | 85 | ||||||||||||
| Other | 21 | 5 | ||||||||||||
| $ | 225 | $ | 96 |
Our liability at year-end 2025 for guarantees for which we are the primary obligor is reflected in our Balance Sheets as $12 million of “Accrued expenses and other” and $84 million of “Other noncurrent liabilities.”
Our maximum potential guarantees listed in the preceding table include $73 million of operating profit guarantees that will not be in effect until the underlying properties open and we begin to operate the properties or certain other events occur.
In conjunction with financing obtained for specific projects or properties owned by us or entities in which we have an investment, we may provide industry standard indemnifications to the lender for loss, liability, or damage occurring as a result of the actions of the entity or our own actions.
Letters of Credit
At year-end 2025, we had $116 million of letters of credit outstanding (all outside the Credit Facility, as defined in Note 9), most of which were for our self-insurance programs. Surety bonds issued as of year-end 2025 totaled $187 million, most of which state governments requested in connection with our self-insurance programs.
Starwood Data Security Incident
Description of Event
On November 30, 2018, we announced a data security incident involving unauthorized access to the Starwood Hotels & Resorts Worldwide, LLC, formerly known as Starwood Hotels & Resorts Worldwide, Inc. (“Starwood”), reservations database (the “Data Security Incident”). We discontinued use of the Starwood reservations database for business operations at the end of 2018.
Litigation, Claims, and Government Investigations
Following our announcement of the Data Security Incident, approximately 100 lawsuits were filed by consumers and others against us in U.S. federal, U.S. state and Canadian courts related to the incident. The plaintiffs in these cases, who generally purport to represent various classes of consumers, generally claim to have been harmed by alleged actions and/or omissions by the Company in connection with the Data Security Incident and assert a variety of common law and statutory claims seeking monetary damages, injunctive relief, costs and attorneys’ fees, and other related relief. The U.S. cases were consolidated in the U.S. District Court for the District of Maryland (the “District Court”), pursuant to orders of the U.S. Judicial Panel on Multidistrict Litigation (the “MDL”). On June 3, 2025, the U.S. Court of Appeals for the Fourth Circuit reversed the District Court’s certification of a class of consumer plaintiffs, holding that a class-action waiver signed by putative class members was enforceable. Following the Fourth Circuit’s reversal of class certification, some plaintiffs filed lawsuits in New York state court on an individual basis, alleging violations of New York statutory law and seeking monetary damages, attorneys’ fees, and other related relief. We have been engaged in mediation discussions with the consumer plaintiffs in the MDL. We believe it is probable that we will incur losses in relation to the MDL and the state court cases, and as of December
31, 2025, we have recorded an accrual for an estimated loss contingency related to these matters, which is not material to our Financial Statements. The Canadian cases have effectively been consolidated into a single case in the province of Ontario. We dispute the allegations in these lawsuits and are vigorously defending against such claims.
In addition, most inquiries and investigations by U.S. federal, U.S. state and foreign governmental authorities have been resolved or no longer appear to be active.
While we believe it is reasonably possible that we may incur losses in excess of the amounts recorded associated with the above-described lawsuits or regulatory investigations related to the Data Security Incident, it is not possible to reasonably estimate the amount of such losses or range of loss in excess of the amounts recorded that might result from adverse judgments, settlements, or other resolution of these proceedings based on: (1) in the case of the above-described lawsuits, the current stage of these proceedings, the absence of specificity as to alleged damages, the uncertainty as to the certification of a class or classes and the size of any certified class, and the lack of resolution of significant factual and legal issues, and (2) uncertainty regarding regulatory inquiries or investigations.
Insurance Recoveries
During 2025, we recorded insurance recoveries for costs incurred related to the Data Security Incident, which are not material to our Financial Statements. We recognize insurance recoveries when they are probable of receipt and present them in our Income Statements in the same caption as the related expense, up to the amount of total expense incurred in prior and current periods. Insurance recoveries related to the Data Security Incident recorded in 2025 are presented in the “Restructuring and merger-related (recoveries) charges, and other” caption of our Income Statements.
Other Legal Proceedings
We have been and are currently party to other legal proceedings involving claims that we infringe the intellectual property rights of others. At this time, we do not expect these proceedings to have a material impact on the Company’s business, financial condition, results of operations, or cash flows.
NOTE 8. LEASES
We enter into operating and finance leases primarily for hotels, offices, and equipment. Most leases have initial terms of up to 20 years, and contain one or more renewals at our option, generally for five- or 10-year periods. We have generally not included these renewal periods in the lease term as it is not reasonably certain that we will exercise the renewal option.
The following table details the composition of lease expense and supplemental cash flow information for 2025, 2024, and 2023:
| (in millions) | 2025 | 2024 | 2023 | |||||||||||||||||
| Operating lease cost | $ | 139 | $ | 143 | $ | 155 | ||||||||||||||
| Variable lease cost | 122 | 122 | 128 | |||||||||||||||||
| Operating cash outflows for operating leases | 152 | 154 | 240 | |||||||||||||||||
| Operating lease assets obtained in exchange for lease obligation | 160 | 37 | 25 |
The following table presents our future minimum lease payments at year-end 2025:
| (in millions) | Operating Leases | Finance Leases | |||||||||
| 2026 | $ | 144 | $ | 16 | |||||||
| 2027 | 125 | 16 | |||||||||
| 2028 | 118 | 17 | |||||||||
| 2029 | 102 | 17 | |||||||||
| 2030 | 96 | 18 | |||||||||
| Thereafter | 668 | 60 | |||||||||
| Total minimum lease payments | $ | 1,253 | $ | 144 | |||||||
| Less: Amount representing interest | 275 | 24 | |||||||||
| Present value of minimum lease payments | $ | 978 | $ | 120 | |||||||
The following table presents the composition of our current and noncurrent lease liability at year-end 2025 and 2024:
| (in millions) | December 31, 2025 | December 31, 2024 | |||||||||||||||||||||
| Operating Leases | Finance Leases | Operating Leases | Finance Leases | ||||||||||||||||||||
| Current (1) | $ | 99 | $ | 11 | $ | 104 | $ | 9 | |||||||||||||||
| Noncurrent (2) | 879 | 109 | 794 | 115 | |||||||||||||||||||
| $ | 978 | $ | 120 | $ | 898 | $ | 124 |
(1)Operating leases are recorded in the “Accrued expenses and other” and finance leases are recorded in the “Current portion of long-term debt” captions of our Balance Sheets.
(2)Operating leases are recorded in the “Operating lease liabilities” and finance leases are recorded in the “Long-term debt” captions of our Balance Sheets.
The following table presents additional information about our lease obligations at year-end 2025 and 2024:
| 2025 | 2024 | |||||||||||||||||||||||||
| Operating Leases | Finance Leases | Operating Leases | Finance Leases | |||||||||||||||||||||||
| Weighted Average Remaining Lease Term (in years) | 12 | 8 | 13 | 9 | ||||||||||||||||||||||
| Weighted Average Discount Rate | 4.5 | % | 4.4 | % | 4.3 | % | 4.4 | % |
NOTE 9. LONG-TERM DEBT
We provide detail on our long-term debt balances, net of discounts, premiums, and debt issuance costs, in the following table at year-end 2025 and 2024:
| ($ in millions) | Interest Rate | Effective Interest Rate | Face Amount | Balance as of December 31, 2025 | Balance as of December 31, 2024 | ||||||||||||||||||||||||
| Senior Notes: | |||||||||||||||||||||||||||||
| Series P Notes, matured October 1, 2025 | 3.8 | % | 4.0 | % | $ | 350 | $ | — | $ | 349 | |||||||||||||||||||
| Series R Notes, maturing June 15, 2026 | 3.1 | % | 3.3 | % | 750 | 749 | 749 | ||||||||||||||||||||||
| Series V Notes, matured March 15, 2025 | 3.8 | % | 2.8 | % | 318 | — | 319 | ||||||||||||||||||||||
| Series W Notes, maturing October 1, 2034 | 4.5 | % | 4.1 | % | 278 | 287 | 287 | ||||||||||||||||||||||
| Series X Notes, maturing April 15, 2028 | 4.0 | % | 4.2 | % | 450 | 448 | 447 | ||||||||||||||||||||||
| Series AA Notes, maturing December 1, 2028 | 4.7 | % | 4.8 | % | 300 | 299 | 298 | ||||||||||||||||||||||
| Series EE Notes, matured May 1, 2025 | 5.8 | % | 6.0 | % | 600 | — | 599 | ||||||||||||||||||||||
| Series FF Notes, maturing June 15, 2030 | 4.6 | % | 4.8 | % | 1,000 | 992 | 991 | ||||||||||||||||||||||
| Series GG Notes, maturing October 15, 2032 | 3.5 | % | 3.7 | % | 1,000 | 990 | 989 | ||||||||||||||||||||||
| Series HH Notes, maturing April 15, 2031 | 2.9 | % | 3.0 | % | 1,100 | 1,094 | 1,093 | ||||||||||||||||||||||
| Series II Notes, maturing October 15, 2033 | 2.8 | % | 2.8 | % | 700 | 695 | 695 | ||||||||||||||||||||||
| Series JJ Notes, maturing October 15, 2027 | 5.0 | % | 5.4 | % | 1,000 | 994 | 990 | ||||||||||||||||||||||
| Series KK Notes, maturing April 15, 2029 | 4.9 | % | 5.3 | % | 800 | 790 | 788 | ||||||||||||||||||||||
| Series LL Notes, maturing September 15, 2026 | 5.5 | % | 5.9 | % | 450 | 449 | 447 | ||||||||||||||||||||||
| Series MM Notes, maturing October 15, 2028 | 5.6 | % | 5.9 | % | 700 | 694 | 693 | ||||||||||||||||||||||
| Series NN Notes, maturing May 15, 2029 | 4.9 | % | 5.3 | % | 500 | 493 | 491 | ||||||||||||||||||||||
| Series OO Notes, maturing May 15, 2034 | 5.3 | % | 5.6 | % | 1,000 | 982 | 980 | ||||||||||||||||||||||
| Series PP Notes, maturing March 15, 2030 | 4.8 | % | 5.0 | % | 500 | 496 | 495 | ||||||||||||||||||||||
| Series QQ Notes, maturing March 15, 2035 | 5.4 | % | 5.5 | % | 1,000 | 987 | 986 | ||||||||||||||||||||||
| Series RR Notes, maturing April 15, 2032 | 5.1 | % | 5.4 | % | 500 | 493 | — | ||||||||||||||||||||||
| Series SS Notes, maturing April 15, 2037 | 5.5 | % | 5.7 | % | 1,500 | 1,475 | — | ||||||||||||||||||||||
| Series TT Notes, maturing July 15, 2027 | 4.2 | % | 4.5 | % | 400 | 398 | — | ||||||||||||||||||||||
| Series UU Notes, maturing October 15, 2031 | 4.5 | % | 4.9 | % | 500 | 491 | — | ||||||||||||||||||||||
| Series VV Notes, maturing October 15, 2035 | 5.3 | % | 5.5 | % | 600 | 588 | — | ||||||||||||||||||||||
| Commercial paper | 1,177 | 1,582 | |||||||||||||||||||||||||||
| Credit Facility | — | — | |||||||||||||||||||||||||||
| Finance lease obligations | 120 | 124 | |||||||||||||||||||||||||||
| Other | 23 | 55 | |||||||||||||||||||||||||||
| $ | 16,204 | $ | 14,447 | ||||||||||||||||||||||||||
| Less current portion | (1,209) | (1,309) | |||||||||||||||||||||||||||
| $ | 14,995 | $ | 13,138 |
All our long-term debt is recourse to us but unsecured. All the Senior Notes shown in the table above are our unsecured and unsubordinated obligations, which rank equally with our other Senior Notes and all other unsecured and unsubordinated indebtedness that we have issued or will issue from time to time, and are governed by the terms of an indenture, dated as of November 16, 1998, between us and The Bank of New York Mellon (formerly The Bank of New York), as trustee. We may redeem some or all of each series of the Senior Notes before maturity under the terms provided in the applicable form of Senior Note.
We are party to a $4.5 billion multicurrency revolving credit agreement (as amended, the “Credit Facility”). Available borrowings under the Credit Facility support our commercial paper program and general corporate needs. U.S. dollar borrowings under the Credit Facility bear interest at SOFR (the Secured Overnight Financing Rate) plus a spread based on our public debt rating. We also pay quarterly fees on the Credit Facility at a rate based on our public debt rating. We classify outstanding borrowings under the Credit Facility and outstanding commercial paper borrowings (which generally have short-term maturities of 45 days or less) as long-term based on our ability and intent to refinance the outstanding borrowings on a long-term basis. The Credit Facility expires on December 14, 2027.
In August 2025, we issued $400 million aggregate principal amount of 4.200 percent Series TT Notes due July 15, 2027 (the “Series TT Notes”), $500 million aggregate principal amount of 4.500 percent Series UU Notes due October 15, 2031 (the
“Series UU Notes”), and $600 million aggregate principal amount of 5.250 percent Series VV Notes due October 15, 2035 (the “Series VV Notes”). We pay interest on the Series TT Notes in January and July of each year. We will pay interest on the Series UU Notes and Series VV Notes in April and October of each year, commencing in April 2026. In connection with the offering, we entered into interest rate swap agreements, which have the economic effect of converting $500 million of the Series VV Notes into floating rate debt with a variable interest rate of SOFR plus approximately 1.44 percent. Net proceeds from the offering of the Series TT Notes, Series UU Notes, and Series VV Notes were approximately $1.477 billion, after deducting the underwriting discount and expenses, and were made available for general corporate purposes, including working capital, capital expenditures, acquisitions, stock repurchases, or repayment of outstanding indebtedness.
In February 2025, we issued $500 million aggregate principal amount of 5.100 percent Series RR Notes due April 15, 2032 (the “Series RR Notes”) and $1.5 billion aggregate principal amount of 5.500 percent Series SS Notes due April 15, 2037 (the “Series SS Notes”). We pay interest on the Series RR Notes and Series SS Notes in April and October of each year. In connection with the offering, we entered into interest rate swap agreements, which have the economic effect of converting $700 million of the Series SS Notes into floating rate debt with a variable interest rate of SOFR plus approximately 1.49 percent. Net proceeds from the offering of the Series RR Notes and Series SS Notes were approximately $1.960 billion, after deducting the underwriting discount and expenses, and were made available for general corporate purposes, including working capital, capital expenditures, acquisitions, stock repurchases, or repayment of outstanding indebtedness.
The following table presents future principal payments, net of discounts, premiums, and debt issuance costs, for our debt at year-end 2025:
| (in millions) | Debt Principal Payments | ||||
| 2026 | $ | 1,209 | |||
| 2027 | 2,581 | ||||
| 2028 | 1,454 | ||||
| 2029 | 1,297 | ||||
| 2030 | 1,503 | ||||
| Thereafter | 8,160 | ||||
| Balance at year-end 2025 | $ | 16,204 |
We paid cash for interest, net of amounts capitalized, of $698 million in 2025, $599 million in 2024, and $476 million in 2023.
NOTE 10. INTANGIBLE ASSETS AND GOODWILL
The following table details the composition of our intangible assets at year-end 2025 and 2024:
| (in millions) | At Year-End 2025 | At Year-End 2024 | |||||||||
| Definite-lived Intangible Assets | |||||||||||
| Costs incurred to obtain contracts with customers | $ | 2,899 | $ | 2,538 | |||||||
| Acquired contracts and other | 1,964 | 1,918 | |||||||||
| Software | 1,932 | 792 | |||||||||
| 6,795 | 5,248 | ||||||||||
| Accumulated amortization | (2,607) | (1,471) | |||||||||
| 4,188 | 3,777 | ||||||||||
| Indefinite-lived Intangible Brand Assets | 6,148 | 5,711 | |||||||||
| $ | 10,336 | $ | 9,488 |
We capitalize direct costs that we incur to obtain contracts with customers, which we amortize on a straight-line basis over the initial term of the agreements, generally ranging from 15 to 30 years.
For contracts acquired in business combinations and asset acquisitions, we record a definite-lived intangible asset at the acquisition date, which is amortized on a straight-line basis over the remaining life of the contract. We capitalize costs incurred to develop internal-use software and acquire software licenses and begin amortizing these costs when the software is substantially ready for its intended use on a straight-line basis over its estimated useful life, generally ranging from two to seven years. For acquired contracts, software, and other intangible assets, we recorded amortization expense of $313 million in 2025, $255 million in 2024, and $226 million in 2023 (of which $206 million in 2025, $158 million in 2024, and $122 million in 2023 was included in the “Reimbursed expenses” caption of our Income Statements). For these assets, we estimate that our
aggregate amortization expense will be $308 million in 2026, $272 million in 2027, $225 million in 2028, $181 million in 2029, and $131 million in 2030.
The following table details the carrying amount of our goodwill at year-end 2025 and 2024:
| (in millions) | U.S. & Canada | EMEA | Greater China | APEC | CALA | Total Goodwill | |||||||||||||||||||||||||||||
| Balance at year-end 2024 | $ | 5,301 | $ | 1,417 | $ | 979 | $ | 731 | $ | 303 | $ | 8,731 | |||||||||||||||||||||||
| Foreign currency translation | 18 | 97 | 30 | 17 | 14 | 176 | |||||||||||||||||||||||||||||
| Balance at year-end 2025 | $ | 5,319 | $ | 1,514 | $ | 1,009 | $ | 748 | $ | 317 | $ | 8,907 |
NOTE 11. PROPERTY AND EQUIPMENT
The following table presents the composition of our property and equipment balances at year-end 2025 and 2024:
| (in millions) | At Year-End 2025 | At Year-End 2024 | |||||||||
| Land | $ | 772 | $ | 768 | |||||||
| Buildings and leasehold improvements | 1,337 | 1,238 | |||||||||
| Furniture and equipment | 643 | 619 | |||||||||
| Construction in progress | 149 | 89 | |||||||||
| 2,901 | 2,714 | ||||||||||
| Accumulated depreciation | (947) | (881) | |||||||||
| $ | 1,954 | $ | 1,833 |
We record property and equipment at cost, including interest and real estate taxes we incur during development and construction. We capitalize the cost of improvements that extend the useful life of property and equipment when we incur them. These capitalized costs may include structural costs, equipment, fixtures, floor, and wall coverings. We expense all repair and maintenance costs when we incur them. We compute depreciation using the straight-line method over the estimated useful lives of the assets (generally three to 40 years), and we amortize leasehold improvements over the shorter of the asset life or lease term. Our gross depreciation expense totaled $145 million in 2025, $128 million in 2024, and $122 million in 2023 (of which $39 million in 2025, $42 million in 2024, and $37 million in 2023 was included in the “Reimbursed expenses” caption of our Income Statements). Fixed assets attributed to operations located outside the U.S. were $677 million at year-end 2025 and $554 million at year-end 2024.
NOTE 12. FAIR VALUE OF FINANCIAL INSTRUMENTS
We believe that the fair values of our current assets and current liabilities approximate their reported carrying amounts. We present the carrying amounts and the fair values of noncurrent financial assets and liabilities that qualify as financial instruments in the following table:
| At Year-End 2025 | At Year-End 2024 | ||||||||||||||||||||||
| (in millions) | Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||||||||
| Notes receivable | $ | 151 | $ | 149 | $ | 136 | $ | 133 | |||||||||||||||
| Total noncurrent financial assets | $ | 151 | $ | 149 | $ | 136 | $ | 133 | |||||||||||||||
| Senior Notes | $ | (13,686) | $ | (13,836) | $ | (11,419) | $ | (11,083) | |||||||||||||||
| Commercial paper | (1,177) | (1,177) | (1,582) | (1,582) | |||||||||||||||||||
| Total noncurrent financial liabilities | $ | (14,863) | $ | (15,013) | $ | (13,001) | $ | (12,665) |
Our notes receivable include mezzanine and other loans to hotel owners, generally to facilitate the development or renovation of a hotel and sometimes to facilitate brand programs or initiatives. We estimate the fair value of our notes receivable by discounting cash flows using risk-adjusted rates, both of which are Level 3 inputs.
We determine the fair value of our Senior Notes using quoted market prices, which are directly observable Level 1 inputs. The carrying amount of our commercial paper borrowings approximate fair value due to their short maturity and because they bear interest at a market rate.
See the “Fair Value Measurements” caption of Note 2 for more information on the input levels we use in determining fair value.
NOTE 13. ACCUMULATED OTHER COMPREHENSIVE LOSS
The following table details the accumulated other comprehensive loss activity for 2025, 2024, and 2023:
| (in millions) | Foreign Currency Translation Adjustments | Other Adjustments | Accumulated Other Comprehensive Loss | ||||||||||||||
| Balance at year-end 2022 | $ | (740) | $ | 11 | $ | (729) | |||||||||||
| Other comprehensive income (loss) (1) | 86 | (4) | 82 | ||||||||||||||
| Balance at year-end 2023 | $ | (654) | $ | 7 | $ | (647) | |||||||||||
| Other comprehensive (loss) income (1) | (437) | 21 | (416) | ||||||||||||||
| Balance at year-end 2024 | $ | (1,091) | $ | 28 | $ | (1,063) | |||||||||||
| Other comprehensive income (loss) (1) | 442 | (21) | 421 | ||||||||||||||
| Balance at year-end 2025 | $ | (649) | $ | 7 | $ | (642) |
(1)Other comprehensive income (loss) includes intra-entity foreign currency transactions that are of a long-term investment nature, which resulted in (losses) gains of $(71) million for 2025, $30 million for 2024, and $(28) million for 2023.
NOTE 14. BUSINESS SEGMENTS
We discuss our operations in the following four reportable business segments: (1) U.S. & Canada, (2) Europe, Middle East & Africa (“EMEA”), (3) Greater China, and (4) Asia Pacific excluding China (“APEC”). Our Caribbean & Latin America (“CALA”) operating segment does not meet the applicable accounting criteria for separate disclosure as a reportable business segment, and as such, we include its results in “Unallocated corporate and other.”
Our President and Chief Executive Officer, who is our “chief operating decision maker” (“CODM”), evaluates the performance of our operating segments using “segment profits,” which is based largely on the results of the segment without allocating corporate expenses, income taxes, indirect general and administrative expenses, or restructuring and merger-related recoveries/charges, and other expenses. We assign gains and losses, equity in earnings or losses, and direct general and administrative expenses to each of our segments. “Unallocated corporate and other” includes a portion of our revenues (such as fees we receive from our credit card programs and timeshare licensing agreements), revenues and expenses for our Loyalty Program, indirect general and administrative expenses, restructuring and merger-related recoveries/charges, and other expenses, equity in earnings or losses, and other gains or losses that we do not allocate to our segments, as well as results of our CALA operating segment.
Our CODM uses segment profits to allocate resources (including employees and investment spending) to each segment, primarily as part of the annual budget process. Our CODM reviews budget-to-actual variances on a quarterly basis to assess segment performance. Additionally, our CODM uses segment profits to compare the results of each segment with one another and in the determination of compensation for segment leadership.
Our CODM monitors assets for the consolidated Company but does not use assets by operating segment when assessing performance or making operating segment resource allocations.
Segment Revenues, Expenses, and Profits
The following tables present our revenues (disaggregated by segment and major revenue stream), segment expenses, and segment profits for each of the last three fiscal years:
| 2025 | ||||||||||||||
| (in millions) | U.S. & Canada | EMEA | Greater China | APEC | ||||||||||
| Gross fee revenues | $ | 3,004 | $ | 640 | $ | 261 | $ | 376 | ||||||
| Contract investment amortization | (83) | (19) | (1) | (6) | ||||||||||
| Net fee revenues | 2,921 | 621 | 260 | 370 | ||||||||||
| Owned, leased, and other revenue | 528 | 592 | 26 | 162 | ||||||||||
| Cost reimbursement revenue | 15,900 | 1,194 | 304 | 541 | ||||||||||
| Total reportable segment revenue | 19,349 | 2,407 | 590 | 1,073 | ||||||||||
| Less: | ||||||||||||||
| Owned, leased, and other expense | 434 | 530 | 28 | 146 | ||||||||||
| Depreciation, amortization, and other | 108 | 40 | 12 | 9 | ||||||||||
| General and administrative | 118 | 104 | 52 | 63 | ||||||||||
| Reimbursed expenses | 16,015 | 1,211 | 315 | 552 | ||||||||||
| Other segment items (primarily non-operating income and expenses) | (5) | (3) | (2) | 2 | ||||||||||
| Total reportable segment profit | $ | 2,679 | $ | 525 | $ | 185 | $ | 301 |
| 2024 | ||||||||||||||
| (in millions) | U.S. & Canada | EMEA | Greater China | APEC | ||||||||||
| Gross fee revenues | $ | 2,951 | $ | 589 | $ | 250 | $ | 345 | ||||||
| Contract investment amortization | (76) | (14) | (1) | (5) | ||||||||||
| Net fee revenues | 2,875 | 575 | 249 | 340 | ||||||||||
| Owned, leased, and other revenue | 437 | 595 | 27 | 141 | ||||||||||
| Cost reimbursement revenue | 15,300 | 1,236 | 306 | 495 | ||||||||||
| Total reportable segment revenue | 18,612 | 2,406 | 582 | 976 | ||||||||||
| Less: | ||||||||||||||
| Owned, leased, and other expense | 399 | 519 | 24 | 129 | ||||||||||
| Depreciation, amortization, and other | 84 | 38 | 9 | 8 | ||||||||||
| General and administrative | 113 | 90 | 45 | 53 | ||||||||||
| Reimbursed expenses | 15,381 | 1,252 | 319 | 510 | ||||||||||
| Other segment items (primarily non-operating income and expenses) | (5) | (5) | (1) | (4) | ||||||||||
| Total reportable segment profit | $ | 2,640 | $ | 512 | $ | 186 | $ | 280 |
| 2023 | ||||||||||||||
| (in millions) | U.S. & Canada | EMEA | Greater China | APEC | ||||||||||
| Gross fee revenues | $ | 2,799 | $ | 529 | $ | 265 | $ | 288 | ||||||
| Contract investment amortization | (65) | (13) | — | (4) | ||||||||||
| Net fee revenues | 2,734 | 516 | 265 | 284 | ||||||||||
| Owned, leased, and other revenue | 506 | 574 | 18 | 135 | ||||||||||
| Cost reimbursement revenue | 14,456 | 1,178 | 317 | 411 | ||||||||||
| Total reportable segment revenue | 17,696 | 2,268 | 600 | 830 | ||||||||||
| Less: | ||||||||||||||
| Owned, leased, and other expense | 380 | 537 | 25 | 130 | ||||||||||
| Depreciation, amortization, and other | 84 | 40 | 10 | 9 | ||||||||||
| General and administrative | 114 | 84 | 42 | 47 | ||||||||||
| Reimbursed expenses | 14,399 | 1,168 | 317 | 409 | ||||||||||
| Other segment items (primarily non-operating income and expenses) | (5) | (2) | (2) | (8) | ||||||||||
| Total reportable segment profit | $ | 2,724 | $ | 441 | $ | 208 | $ | 243 |
The following table presents reconciliations of our total reportable segment revenue and profit to consolidated revenue and income before income taxes for each of the last three fiscal years:
| (in millions) | 2025 | 2024 | 2023 | |||||||||||||||||
| Reconciliation of revenue | ||||||||||||||||||||
| Total reportable segment revenue | $ | 23,419 | $ | 22,576 | $ | 21,394 | ||||||||||||||
| Unallocated corporate and other | 2,767 | 2,524 | 2,319 | |||||||||||||||||
| Consolidated revenue | $ | 26,186 | $ | 25,100 | $ | 23,713 | ||||||||||||||
| Reconciliation of income before income taxes | ||||||||||||||||||||
| Total reportable segment profit | $ | 3,690 | $ | 3,618 | $ | 3,616 | ||||||||||||||
| Unallocated corporate and other | 471 | 188 | 297 | |||||||||||||||||
| Interest expense, net of interest income | (767) | (655) | (535) | |||||||||||||||||
| Consolidated income before income taxes | $ | 3,394 | $ | 3,151 | $ | 3,378 |
Revenues attributed to operations located outside the U.S. were $5,672 million in 2025, $5,512 million in 2024, and $5,160 million in 2023, including cost reimbursement revenue outside the U.S. of $3,077 million in 2025, $3,018 million in 2024, and $2,806 million in 2023.
Segment profits attributed to operations located outside the U.S. were $1,382 million in 2025, $1,329 million in 2024, and $1,258 million in 2023, including cost reimbursements, net (cost reimbursement revenue, net of reimbursed expenses) outside the U.S. of $(54) million in 2025, $(55) million in 2024, and $23 million in 2023.
NOTE 15. RELATED PARTY TRANSACTIONS
Equity Method Investments
We have equity method investments in entities that own or lease properties for which we provide management services and receive fees. In addition, in some cases we provide loans, preferred equity, or guarantees to these entities.
The following table presents Income Statement data resulting from transactions with these related parties. This table does not include our Financial Statement captions with insignificant related party activity.
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Cost reimbursement revenue | $ | 133 | $ | 131 | $ | 122 | |||||||||||
| Reimbursed expenses | (138) | (135) | (126) | ||||||||||||||
| Equity in earnings | 11 | 8 | 9 |
The carrying amount of our equity method investments was $298 million at both year-end 2025 and year-end 2024. This value exceeded our share of the book value of the investees’ net assets by $216 million at year-end 2025 and $223 million at year-end 2024, primarily due to the value that we assigned to land, contracts, and buildings owned by the investees.
Other Related Parties
We earned gross fee revenues plus reimbursement of certain expenses from franchised and managed properties in which members of the Marriott family hold varying interests. These amounts are not material to our Financial Statements.
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