10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________________________ 

FORM 10-Q

_______________________________________ 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission File No. 1-13881

_________________________________________________ 

MARRIOTT INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

 _______________________________________

Delaware			52-2055918
(State or other jurisdiction of incorporation or organization)			(IRS Employer Identification No.)
10400 Fernwood Road	Bethesda	Maryland	20817
(Address of principal executive offices)			(Zip Code)

(301) 380-3000

(Registrant’s telephone number, including area code) 

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Class A Common Stock, $0.01 par value	MAR	Nasdaq Global Select Market
Class A Common Stock, $0.01 par value	MAR	Chicago Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ý    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	ý	Accelerated filer	☐
Non-accelerated filer	¨	Smaller Reporting Company	☐
		Emerging growth company	☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ý

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 329,358,821 shares of Class A Common Stock, par value $0.01 per share, outstanding at July 26, 2019.

MARRIOTT INTERNATIONAL, INC.

FORM 10-Q TABLE OF CONTENTS

 

		Page No.
Part I.	Financial Information (Unaudited):
Item 1.	Financial Statements
	Condensed Consolidated Statements of Income - Three and Six Months Ended June 30, 2019 and June 30, 2018	3
	Condensed Consolidated Statements of Comprehensive Income - Three and Six Months Ended June 30, 2019 and June 30, 2018	4
	Condensed Consolidated Balance Sheets - as of June 30, 2019 and December 31, 2018	5
	Condensed Consolidated Statements of Cash Flows - Six Months Ended June 30, 2019 and June 30, 2018	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
	Forward-Looking Statements	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	32
Part II.	Other Information:
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46
Item 6.	Exhibits	47
	Signature	48

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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

MARRIOTT INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

($ in millions, except per share amounts)

(Unaudited)

	Three Months Ended						Six Months Ended
	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018
REVENUES
Base management fees	$	309		$	300		$	591		$	573
Franchise fees	525			475			975			892
Incentive management fees	165			176			328			331
Gross fee revenues	999			951			1,894			1,796
Contract investment amortization	(15		)	(13		)	(29		)	(31		)
Net fee revenues	984			938			1,865			1,765
Owned, leased, and other revenue	418			423			793			829
Cost reimbursement revenue	3,903			4,048			7,659			7,824
	5,305			5,409			10,317			10,418
OPERATING COSTS AND EXPENSES
Owned, leased, and other-direct	331			334			656			670
Depreciation, amortization, and other	56			58			110			112
General, administrative, and other	229			217			451			464
Merger-related costs and charges	173			18			182			52
Reimbursed expenses	4,107			3,964			7,999			7,772
	4,896			4,591			9,398			9,070
OPERATING INCOME	409			818			919			1,348
Gains and other income, net	1			114			6			173
Interest expense	(102		)	(85		)	(199		)	(160		)
Interest income	6			6			12			11
Equity in earnings	—			21			8			34
INCOME BEFORE INCOME TAXES	314			874			746			1,406
Provision for income taxes	(82		)	(207		)	(139		)	(319		)
NET INCOME	$	232		$	667		$	607		$	1,087
EARNINGS PER SHARE
Earnings per share - basic	$	0.70		$	1.89		$	1.80		$	3.06
Earnings per share - diluted	$	0.69		$	1.87		$	1.79		$	3.02

See Notes to Condensed Consolidated Financial Statements.

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MARRIOTT INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

($ in millions)

(Unaudited)

	Three Months Ended						Six Months Ended
	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018
Net income	$	232		$	667		$	607		$	1,087
Other comprehensive income (loss):
Foreign currency translation adjustments	38			(399		)	71			(247		)
Derivative instrument adjustments and other, net of tax	(1		)	11			(2		)	8
Reclassification of (income) loss, net of tax	(3		)	3			(4		)	16
Total other comprehensive income (loss), net of tax	34			(385		)	65			(223		)
Comprehensive income	$	266		$	282		$	672		$	864

See Notes to Condensed Consolidated Financial Statements.

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MARRIOTT INTERNATIONAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

($ in millions)

	(Unaudited)
	June 30, 2019			December 31, 2018
ASSETS
Current assets
Cash and equivalents	$	284		$	316
Accounts and notes receivable, net	2,328			2,133
Prepaid expenses and other	257			257
	2,869			2,706
Property and equipment, net	1,945			1,956
Intangible assets
Brands	5,968			5,790
Contract acquisition costs and other	2,646			2,590
Goodwill	9,067			9,039
	17,681			17,419
Equity method investments	580			732
Notes receivable, net	97			125
Deferred tax assets	171			171
Operating lease assets	977			—
Other noncurrent assets	573			587
	$	24,893		$	23,696
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Current portion of long-term debt	$	229		$	833
Accounts payable	927			767
Accrued payroll and benefits	1,067			1,345
Liability for guest loyalty program	2,157			2,529
Accrued expenses and other	1,244			963
	5,624			6,437
Long-term debt	10,185			8,514
Liability for guest loyalty program	3,530			2,932
Deferred tax liabilities	359			485
Deferred revenue	768			731
Operating lease liabilities	893			—
Other noncurrent liabilities	2,294			2,372
Shareholders’ equity
Class A Common Stock	5			5
Additional paid-in-capital	5,729			5,814
Retained earnings	9,292			8,982
Treasury stock, at cost	(13,460		)	(12,185		)
Accumulated other comprehensive loss	(326		)	(391		)
	1,240			2,225
	$	24,893		$	23,696

See Notes to Condensed Consolidated Financial Statements.

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MARRIOTT INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

($ in millions)

(Unaudited)

	Six Months Ended
	June 30, 2019			June 30, 2018
OPERATING ACTIVITIES
Net income	$	607		$	1,087
Adjustments to reconcile to cash provided by operating activities:
Depreciation, amortization, and other	139			143
Share-based compensation	90			93
Income taxes	(102		)	(170		)
Liability for guest loyalty program	226			360
Contract acquisition costs	(93		)	(71		)
Merger-related charges	142			(23		)
Working capital changes	(379		)	(166		)
Gain on asset dispositions	(6		)	(173		)
Other	114			49
Net cash provided by operating activities	738			1,129
INVESTING ACTIVITIES
Capital expenditures	(142		)	(388		)
Dispositions	2			436
Loan advances	(10		)	(13		)
Loan collections	6			29
Other	(30		)	50
Net cash (used in) provided by investing activities	(174		)	114
FINANCING ACTIVITIES
Commercial paper/Credit Facility, net	823			707
Issuance of long-term debt	841			443
Repayment of long-term debt	(617		)	(387		)
Issuance of Class A Common Stock	6			4
Dividends paid	(298		)	(262		)
Purchase of treasury stock	(1,228		)	(1,673		)
Share-based compensation withholding taxes	(123		)	(101		)
Other	(8		)	—
Net cash used in financing activities	(604		)	(1,269		)
(DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	(40		)	(26		)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period (1)	360			429
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period (1)	$	320		$	403

⁽¹⁾  The 2019 amounts include beginning restricted cash of $44 million at December 31, 2018, and ending restricted cash of $36 million at June 30, 2019, which we present in the “Prepaid expenses and other” and “Other noncurrent assets” captions of our Balance Sheets.

See Notes to Condensed Consolidated Financial Statements.

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MARRIOTT INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.    BASIS OF PRESENTATION

The condensed consolidated financial statements present the results of operations, financial position, and cash flows of Marriott International, Inc. and subsidiaries (referred to in this report as “we,” “us,” “Marriott,” or “the Company”). In order to make this report easier to read, we also refer throughout to (i) our Condensed Consolidated Financial Statements as our “Financial Statements,” (ii) our Condensed Consolidated Statements of Income as our “Income Statements,” (iii) our Condensed Consolidated Balance Sheets as our “Balance Sheets,” (iv) our Condensed Consolidated Statements of Cash Flows as our “Statements of Cash Flows,” (v) our properties, brands, or markets in the United States (“U.S.”) and Canada as “North America” or “North American,” and (vi) our properties, brands, or markets in our Caribbean and Latin America, Europe, and Middle East and Africa regions as “Other International,” and together with those in our Asia Pacific segment, as “International.” In addition, references throughout to numbered “Footnotes” refer to the numbered Notes in these Notes to Condensed Consolidated Financial Statements, unless otherwise noted.

These Financial Statements have not been audited. We have condensed or omitted certain information and footnote disclosures normally included in financial statements presented in accordance with U.S. generally accepted accounting principles (“GAAP”). The financial statements in this report should be read in conjunction with the consolidated financial statements and notes thereto in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018 (“2018 Form 10-K”). Certain terms not otherwise defined in this Form 10-Q have the meanings specified in our 2018 Form 10-K.

Preparation of financial statements that conform with 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 as of June 30, 2019 and December 31, 2018, the results of our operations for the three and six months ended June 30, 2019 and June 30, 2018, and cash flows for the six months ended June 30, 2019 and June 30, 2018. As described in Part II, Item 8 of our 2018 Form 10-K, in the 2018 fourth quarter, we identified errors related to our Loyalty Program, which resulted in the understatement of cost reimbursement revenue, net of reimbursed expenses. We presented revised information for the 2018 first, second, and third quarters in our 2018 Form 10-K, and the accompanying Income Statement for the three and six months ended June 30, 2018 reflects the revised information. Interim results may not be indicative of fiscal year performance because of seasonal and short-term variations. We have eliminated all material intercompany transactions and balances between entities consolidated in these Financial Statements.

The accompanying Financial Statements also reflect our adoption of ASU 2016-02. See the “New Accounting Standards Adopted” caption below for additional information.

New Accounting Standards Adopted

Accounting Standards Update (“ASU”) No. 2016-02 - “Leases” (Topic 842). ASU 2016-02 introduces a lessee model that brings substantially all leases onto the balance sheet. Under the standard, a lessee recognizes on its balance sheet a lease liability and a right-of-use asset for most leases, including operating leases. The new standard also distinguishes leases as either finance leases or operating leases. This distinction affects how leases are measured and presented in the income statement and statement of cash flows. We adopted ASU 2016-02 in the 2019 first quarter using the modified retrospective transition method. Our accounting for finance leases remained substantially unchanged. Adoption of the standard resulted in the recording of $1,013 million of operating lease assets and $1,053 million of operating lease liabilities, as of January 1, 2019. We did not adjust our prior period Balance Sheets. Adoption of the standard did not impact our Income Statements or our Statements of Cash Flows.

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When we adopted ASU 2016-02, we applied the package of practical expedients allowed by the standard, and therefore, we did not reassess:

• Whether any expired or existing contracts are or contain leases under the new definition;

• The lease classification for any expired or existing leases; or

• Whether previously capitalized costs continue to qualify as initial direct costs.

See Footnote 7. Leases for disclosures required by ASU 2016-02.

2.    ACQUISITIONS

In the 2019 first quarter, we accelerated our option to acquire our partner’s remaining interests in two joint ventures. As a result of the transaction, we recognized an indefinite-lived brand asset for AC Hotels by Marriott of $156 million and management and franchise contract assets, with a weighted-average term of 24 years, totaling $34 million.

3.    EARNINGS PER SHARE

The table below presents the reconciliation of the earnings and number of shares used in our calculations of basic and diluted earnings per share:

	Three Months Ended				Six Months Ended
(in millions, except per share amounts)	June 30, 2019		June 30, 2018		June 30, 2019		June 30, 2018
Computation of Basic Earnings Per Share
Net income	$	232	$	667	$	607	$	1,087
Shares for basic earnings per share	333.8		353.4		336.7		355.9
Basic earnings per share	$	0.70	$	1.89	$	1.80	$	3.06
Computation of Diluted Earnings Per Share
Net income	$	232	$	667	$	607	$	1,087
Shares for basic earnings per share	333.8		353.4		336.7		355.9
Effect of dilutive securities
Share-based compensation	2.6		3.9		2.9		4.4
Shares for diluted earnings per share	336.4		357.3		339.6		360.3
Diluted earnings per share	$	0.69	$	1.87	$	1.79	$	3.02

4.    SHARE-BASED COMPENSATION

RSUs and PSUs

We granted 1.6 million restricted stock units (“RSUs”) during the 2019 first half to certain officers and key employees, and those units vest generally over four years in equal annual installments commencing one year after the grant date. We also granted 0.1 million performance-based RSUs (“PSUs”) in the 2019 first half to certain executive officers, which are earned, subject to continued employment and the satisfaction of certain performance conditions based on achievement of pre-established targets for gross room openings, Marriott Bonvoy™ loyalty member penetration, and adjusted operating income growth over, or at the end of, a three-year performance period. RSUs, including PSUs, granted in the 2019 first half had a weighted average grant-date fair value of $117.

We recorded share-based compensation expense for RSUs and PSUs of $48 million in the 2019 second quarter and $49 million in the 2018 second quarter, $86 million for the 2019 first half, and $88 million for the 2018 first half. Deferred compensation costs for unvested awards for RSUs and PSUs totaled $266 million at June 30, 2019 and $167 million at December 31, 2018.

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5.    INCOME TAXES

Our effective tax rate increased to 26.2 percent for the 2019 second quarter from 23.6 percent for the 2018 second quarter, primarily due to the unfavorable impact of the non-tax deductible accrual for the Proposed ICO Fine discussed in Footnote 6. Commitments and Contingencies. The increase was partially offset by a shift in earnings to jurisdictions with lower tax rates and prior year tax expenses for dispositions.

Our effective tax rate decreased to 18.7 percent for the 2019 first half from 22.6 percent for the 2018 first half, primarily due to the prior year tax expense incurred for uncertain tax positions relating to legacy-Starwood operations, the prior year state income tax expense due to a change in our position regarding the future remittance of accumulated earnings of non-U.S. subsidiaries, prior year tax expenses for dispositions, and a shift in earnings to jurisdictions with lower tax rates. The decrease was partially offset by the 2018 release of tax reserves due to the completion of certain examinations and the unfavorable impact in the 2019 second quarter of the non-tax deductible accrual for the loss contingency related to the Proposed ICO Fine discussed in Footnote 6. Commitments and Contingencies.

We paid cash for income taxes, net of refunds, of $241 million in the 2019 first half and $489 million in the 2018 first half.

6.    COMMITMENTS AND CONTINGENCIES

Guarantees

We present the maximum potential amount of our future guarantee fundings and the carrying amount of our liability for our debt service, operating profit, and other guarantees (excluding contingent purchase obligations) for which we are the primary obligor at June 30, 2019 in the following table:

($ in millions) Guarantee Type	Maximum Potential Amount of Future Fundings		Recorded Liability for Guarantees
Debt service	$	109	$	11
Operating profit	198		92
Other	8		1
	$	315	$	104

Our guarantees listed in the preceding table include $46 million of guarantees that will not be in effect until the underlying properties open and we begin to operate the properties or certain other events occur.

Contingent Purchase Obligation

Sheraton Grand Chicago. We granted the owner a one-time right, exercisable in 2022, to require us to purchase the leasehold interest in the land and the hotel for $300 million in cash (the “put option”). If the owner exercises the put option, we have the option to purchase, at the same time the put transaction closes, the fee simple interest in the underlying land for an additional $200 million in cash. We accounted for the put option as a guarantee, and our recorded liability at June 30, 2019 was $57 million.

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Data Security Incident

Description of Event

On November 30, 2018, we announced a data security incident involving unauthorized access to the Starwood reservations database (the “Data Security Incident”). Working with leading security experts, we determined that there was unauthorized access to the Starwood network since 2014 and that an unauthorized party had copied information from the Starwood reservations database and taken steps towards removing it. While our forensic review of the incident is now complete, certain data analytics work continues. The Starwood reservations database is no longer used for business operations.

Expenses and Insurance Recoveries

We recorded $148 million of expenses, partially offset by $22 million of accrued insurance recoveries, related to the Data Security Incident during the 2019 second quarter, and $192 million of expenses, partially offset by $68 million of accrued insurance recoveries, related to the Data Security Incident during the 2019 first half, which we recorded in either the “Reimbursed expenses” or “Merger-related costs and charges” captions of our Income Statements. Expenses for the quarter and year-to-date primarily included the accrual for the loss contingency related to the Proposed ICO Fine discussed below, along with customer care and legal costs. 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.

Litigation, Claims, and Government Investigations

To date, approximately 100 lawsuits have been filed by consumers and others against us in U.S. federal, U.S. state and Canadian courts related to the Data Security Incident. The vast majority of these cases are putative consumer class actions, in which the plaintiffs, who 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. All of the U.S. cases, except for a single case filed in small claims court in Minnesota, have been consolidated and transferred to the U.S. District Court for the District of Maryland, pursuant to orders of the U.S. Judicial Panel on Multidistrict Litigation (MDL). In addition, a putative class action lawsuit was filed against us and certain of our current officers and directors on December 1, 2018, alleging violations of the federal securities laws in connection with statements regarding our cybersecurity systems and controls, and seeking certification of a class of affected persons, unspecified monetary damages, costs and attorneys’ fees, and other related relief. Two shareholder derivative complaints were also filed on February 26, 2019 and March 15, 2019, respectively, against the Company, certain of its officers and certain of the members of our Board of Directors, alleging, among other claims, breach of fiduciary duty, corporate waste, unjust enrichment, mismanagement and violations of the federal securities laws, and seeking unspecified monetary damages and restitution, changes to the Company’s corporate governance and internal procedures, costs and attorneys’ fees, and other related relief. These cases are also covered by the MDL order. We dispute the allegations in the lawsuits described above and intend to defend vigorously against such claims. In addition, in April 2019, we received a letter purportedly on behalf of a shareholder of the Company (also one of the named plaintiffs in the putative securities class action described above) demanding that our Board of Directors take action against the Company’s current and certain former officers and directors to recover damages for alleged breaches of fiduciary duties and related claims arising from the Data Security Incident. The Board of Directors has constituted a demand review committee to investigate the claims made in the demand letter, and the committee has retained independent counsel to assist with the investigation. The committee’s investigation is ongoing.

In addition, numerous U.S. federal, U.S. state and foreign governmental authorities are investigating, or otherwise seeking information and/or documents related to, the Data Security Incident and related matters, including Attorneys General offices from all 50 states and the District of Columbia, the Federal Trade Commission, the Securities and Exchange Commission, certain committees of the U.S. Senate and House of Representatives, the Information Commissioner’s Office in the United Kingdom (“ICO”) as lead supervisory authority in the European Economic Area, and regulatory authorities in various other jurisdictions. On July 9, 2019, we announced that the

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ICO had communicated its intent to issue a fine in the amount of £99 million against the Company in relation to the Data Security Incident (the “Proposed ICO Fine”). In the 2019 second quarter, we recorded an accrual in the amount of $126 million for this loss contingency. The accrual was recorded in the “Accrued expenses and other” caption of our Balance Sheets and in the “Merger-related costs and charges” caption of our Income Statements. We have the right to respond to the ICO before the amount of the fine is finally determined and the fine can be issued by the ICO, and we intend to respond and vigorously defend our position. Following the Data Security Incident, the ICO also notified us that it had opened an investigation into the Company’s online privacy policy and related practices and an investigation into the Company’s handling of data subject access requests. These investigations are separate from the ICO’s investigation related to the Data Security Incident and the Proposed ICO Fine does not relate to either of these separate investigations.

While we believe it is reasonably possible that we may incur additional losses associated with the above described proceedings and investigations, it is not possible to estimate the amount of loss or range of loss, if any, in excess of the amounts already incurred that might result from adverse judgments, settlements, fines, penalties, or other resolution of these proceedings and investigations based on the stage of these proceedings and investigations, the absence of specific allegations as to alleged damages, the uncertainty as to the certification of a class or classes and the size of any certified class, if applicable, and/or the lack of resolution of significant factual and legal issues.

7. 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- to 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. In addition, our leases generally contain fixed and variable components. The variable components of leases of land or building facilities 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. We calculate the present value of future payments using a discount rate equal to our incremental borrowing rate.

The following table details the composition of lease expense for the 2019 second quarter and 2019 first half:

	June 30, 2019
($ in millions)	Three Months Ended		Six Months Ended
Operating lease cost	$	46	$	91
Variable lease cost	31		58

Additionally, in the 2019 second quarter, we recorded an expense of $34 million in the “Merger-related costs and charges” caption of our Income Statements due to the impairment of a legacy-Starwood office building accounted for as a finance lease.

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The following tables present our future minimum lease payments and additional information about our lease obligations as of June 30, 2019:

($ in millions)	Operating Leases			Finance Leases
2019, remaining	$	90		$	6
2020	164			13
2021	148			13
2022	142			13
2023	114			13
Thereafter	680			165
Total minimum lease payments	$	1,338		$	223
Less: Amount representing interest	(318		)	(63		)
Present value of minimum lease payments	$	1,020		$	160

As of June 30, 2019, we had entered into an agreement that we expect to account for as an operating lease with a 20-year term for our new headquarters office, which is not reflected in our Balance Sheets or in the table above as the lease has not commenced.

	June 30, 2019
Weighted Average Remaining Lease Term (in years)
Operating leases	11
Finance leases	15
Weighted Average Discount Rate
Operating leases	5.0	%
Finance leases	4.4	%

The following table details the classification of lease liabilities in our Balance Sheets:

($ in millions)	Caption	June 30, 2019
Operating lease liabilities
Current	Accrued expenses and other	$	127
Noncurrent	Operating lease liabilities	893
		$	1,020
Finance lease liabilities
Current	Current portion of long-term debt	$	6
Noncurrent	Long-term debt	154
		$	160

The following table presents supplemental cash flow information for the 2019 first half:

	Six Months Ended
($ in millions)	June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows for operating leases	$	89
Operating cash outflows for finance leases	4
Financing cash outflows for finance leases	3

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8.    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 the end of the 2019 second quarter and year-end 2018:

	At Period End
($ in millions)	June 30, 2019			December 31, 2018
Senior Notes:
Series K Notes, interest rate of 3.0%, face amount of $600, matured March 1, 2019 (effective interest rate of 4.4%)	$	—		$	600
Series L Notes, interest rate of 3.3%, face amount of $350, maturing September 15, 2022 (effective interest rate of 3.4%)	349			349
Series M Notes, interest rate of 3.4%, face amount of $350, maturing October 15, 2020 (effective interest rate of 3.6%)	349			349
Series N Notes, interest rate of 3.1%, face amount of $400, maturing October 15, 2021 (effective interest rate of 3.4%)	398			397
Series O Notes, interest rate of 2.9%, face amount of $450, maturing March 1, 2021 (effective interest rate of 3.1%)	449			448
Series P Notes, interest rate of 3.8%, face amount of $350, maturing October 1, 2025 (effective interest rate of 4.0%)	345			345
Series Q Notes, interest rate of 2.3%, face amount of $750, maturing January 15, 2022 (effective interest rate of 2.5%)	746			745
Series R Notes, interest rate of 3.1%, face amount of $750, maturing June 15, 2026 (effective interest rate of 3.3%)	744			743
Series T Notes, interest rate of 7.2%, face amount of $181, maturing December 1, 2019 (effective interest rate of 2.3%)	184			188
Series U Notes, interest rate of 3.1%, face amount of $291, maturing February 15, 2023 (effective interest rate of 3.1%)	291			291
Series V Notes, interest rate of 3.8%, face amount of $318, maturing March 15, 2025 (effective interest rate of 2.8%)	334			335
Series W Notes, interest rate of 4.5%, face amount of $278, maturing October 1, 2034 (effective interest rate of 4.1%)	291			292
Series X Notes, interest rate of 4.0%, face amount of $450, maturing April 15, 2028 (effective interest rate of 4.2%)	444			443
Series Y Notes, floating rate, face amount of $550, maturing December 1, 2020 (effective interest rate of 3.1% at June 30, 2019)	548			547
Series Z Notes, interest rate of 4.2%, face amount of $350, maturing December 1, 2023 (effective interest rate of 4.4%)	347			347
Series AA Notes, interest rate of 4.7%, face amount of $300, maturing December 1, 2028 (effective interest rate of 4.8%)	297			297
Series BB Notes, floating rate, face amount of $300, maturing March 8, 2021 (effective interest rate of 3.1% at June 30, 2019)	299			—
Series CC Notes, interest rate of 3.6%, face amount of $550, maturing April 15, 2024 (effective interest rate of 3.9%)	564			—
Commercial paper	3,069			2,245
Credit Facility	—			—
Finance lease obligations	160			163
Other	206			223
	$	10,414		$	9,347
Less: Current portion of long-term debt	(229		)	(833		)
	$	10,185		$	8,514

We paid cash for interest, net of amounts capitalized, of $176 million in the 2019 first half and $144 million in the 2018 first half.

In the 2019 second quarter, we amended and restated our multicurrency revolving credit agreement (the “Credit Facility”) to extend the maturity date of the Credit Facility and increase the aggregate amount of available borrowings to up to $4.5 billion. The available borrowings support our commercial paper program and general corporate needs. Borrowings under the Credit Facility generally bear interest at LIBOR (the London Interbank

13

Offered 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. While any outstanding commercial paper borrowings and/or borrowings under our Credit Facility generally have short-term maturities, we classify the outstanding borrowings as long-term based on our ability and intent to refinance the outstanding borrowings on a long-term basis. The Credit Facility expires on June 28, 2024. See the “Cash Requirements and Our Credit Facility” caption later in this report in the “Liquidity and Capital Resources” section of Item 2 below for further information on our Credit Facility and available borrowing capacity at June 30, 2019.

In the 2019 first quarter, we issued $300 million aggregate principal amount of LIBOR plus 0.650 percent Series BB Notes due March 8, 2021 (the “Series BB Notes”) and $550 million aggregate principal amount of 3.600 percent Series CC Notes due April 15, 2024 (the “Series CC Notes”). We pay interest on the Series BB Notes in March, June, September, and December of each year, commencing in June 2019, and will pay interest on the Series CC Notes in April and October of each year, commencing in October 2019. We received net proceeds of approximately $841 million from the offering of the Series BB Notes and Series CC Notes, after deducting the underwriting discount and estimated expenses, which were made available for general corporate purposes, which may include working capital, capital expenditures, acquisitions, stock repurchases, or repayment of outstanding commercial paper or other borrowings.

9.    FAIR VALUE OF FINANCIAL INSTRUMENTS

We believe that the fair values of our current assets and current liabilities approximate their reported carrying amounts. We present the carrying values and the fair values of noncurrent financial assets and liabilities that qualify as financial instruments, determined under current guidance for disclosures on the fair value of financial instruments, in the following table:

	June 30, 2019						December 31, 2018
($ in millions)	Carrying Amount			Fair Value			Carrying Amount			Fair Value
Senior, mezzanine, and other loans	$	97		$	94		$	125		$	116
Total noncurrent financial assets	$	97		$	94		$	125		$	116
Senior Notes	$	(6,795	)	$	(6,994	)	$	(5,928	)	$	(5,794	)
Commercial paper	(3,069		)	(3,069		)	(2,245		)	(2,245		)
Other long-term debt	(167		)	(175		)	(184		)	(182		)
Other noncurrent liabilities	(143		)	(143		)	(153		)	(153		)
Total noncurrent financial liabilities	$	(10,174	)	$	(10,381	)	$	(8,510	)	$	(8,374	)

See the “Fair Value Measurements” caption of Footnote 2. Summary of Significant Accounting Policies of our 2018 Form 10-K for more information on the input levels we use in determining fair value.

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10.     ACCUMULATED OTHER COMPREHENSIVE LOSS AND SHAREHOLDERS’ EQUITY

The following tables detail the accumulated other comprehensive loss activity for the 2019 first half and 2018 first half:

($ in millions)	Foreign Currency Translation Adjustments			Derivative Instrument and Other Adjustments			Accumulated Other Comprehensive Loss
Balance at year-end 2018	$	(403	)	$	12		$	(391	)
Other comprehensive income (loss) before reclassifications (1)	71			(2		)	69
Reclassification of income	—			(4		)	(4		)
Net other comprehensive income (loss)	71			(6		)	65
Balance at June 30, 2019	$	(332	)	$	6		$	(326	)

($ in millions)	Foreign Currency Translation Adjustments			Derivative Instrument and Other Adjustments			Accumulated Other Comprehensive Loss
Balance at year-end 2017	$	(23	)	$	6		$	(17	)
Other comprehensive income (loss) before reclassifications (1)	(247		)	8			(239		)
Reclassification of losses	8			8			16
Net other comprehensive income	(239		)	16			(223		)
Adoption of ASU 2016-01	—			(4		)	(4		)
Balance at June 30, 2018	$	(262	)	$	18		$	(244	)

⁽¹⁾  Other comprehensive (loss) income before reclassifications for foreign currency translation adjustments includes intra-entity foreign currency transactions that are of a long-term investment nature, which resulted in gains of $2 million for the 2019 first half and $38 million for the 2018 first half.

The following tables detail the changes in common shares outstanding and shareholders’ equity for the 2019 first half and 2018 first half:

(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
339.1		Balance at year-end 2018	$	2,225		$	5	$	5,814		$	8,982		$	(12,185	)	$	(391	)
—		Adoption of ASU 2016-02	1			—		—			1			—			—
—		Net income	375			—		—			375			—			—
—		Other comprehensive income	31			—		—			—			—			31
—		Dividends ($0.41 per share)	(139		)	—		—			(139		)	—			—
1.7		Share-based compensation plans	(62		)	—		(108		)	—			46			—
(6.7	)	Purchase of treasury stock	(828		)	—		—			—			(828		)	—
334.1		Balance at March 31, 2019	1,603			5		5,706			9,219			(12,967		)	(360		)
—		Net income	232			—		—			232			—			—
—		Other comprehensive income	34			—		—			—			—			34
—		Dividends ($0.48 per share)	(159		)	—		—			(159		)	—			—
0.2		Share-based compensation plans	30			—		23			—			7			—
(3.7	)	Purchase of treasury stock (1)	(500		)	—		—			—			(500		)	—
330.6		Balance at June 30, 2019	$	1,240		$	5	$	5,729		$	9,292		$	(13,460	)	$	(326	)

⁽¹⁾  At the end of the 2019 second quarter, we made purchases of shares of our common stock totaling $100 million, which settled in cash in the 2019 third quarter.

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(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
359.1		Balance at year-end 2017 (as previously reported)	$	3,731		$	5	$	5,770		$	7,391		$	(9,418	)	$	(17	)
—		Adoption of ASU 2014-09	(149		)	—		—			(149		)	—			—
359.1		Balance at year-end 2017 (as adjusted)	3,582			5		5,770			7,242			(9,418		)	(17		)
—		Adoption of ASU 2016-01	—			—		—			4			—			(4		)
—		Adoption of ASU 2016-16	372			—		—			372			—			—
—		Net income	420			—		—			420			—			—
—		Other comprehensive income	162			—		—			—			—			162
—		Dividends ($0.33 per share)	(118		)	—		—			(118		)	—			—
1.3		Share-based compensation plans	(48		)	—		(85		)	—			37			—
(5.6	)	Purchase of treasury stock	(782		)	—		—			—			(782		)	—
354.8		Balance at March 31, 2018	3,588			5		5,685			7,920			(10,163		)	141
—		Net income	667			—		—			667			—			—
—		Other comprehensive income	(385		)	—		—			—			—			(385		)
—		Dividends ($0.41 per share)	(145		)	—		—			(145		)	—			—
0.1		Share-based compensation plans	45			—		43			—			2			—
(6.2	)	Purchase of treasury stock	(850		)	—		—			—			(850		)	—
348.7		Balance at June 30, 2018	$	2,920		$	5	$	5,728		$	8,442		$	(11,011	)	$	(244	)

11.     CONTRACTS WITH CUSTOMERS

Our current and noncurrent Loyalty Program liability increased by $226 million, to $5,687 million at June 30, 2019, from $5,461 million at December 31, 2018, primarily reflecting an increase in points earned, partially offset by deferred revenue of $997 million that we recognized in the 2019 first half. 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 the 2019 second quarter, the updated estimates resulted in an increase in deferred revenue, and a corresponding reduction of revenue of approximately $147 million ($111 million net of tax).

12. BUSINESS SEGMENTS

We are a diversified global lodging company with operations in the following reportable business segments:

• North American Full-Service, which includes our Luxury and Premium brands located in the U.S. and Canada;

• North American Limited-Service, which includes our Select brands located in the U.S. and Canada; and

• Asia Pacific, which includes all brand tiers in our Asia Pacific region.

The following operating segments do not meet the applicable accounting criteria for separate disclosure as reportable business segments: Caribbean and Latin America, Europe, and Middle East and Africa. We present these operating segments together as “Other International” in the tables below.

We evaluate the performance of our operating segments using “segment profits” which is based largely on the results of the segment without allocating corporate expenses, income taxes, indirect general, administrative, and other expenses, or merger-related costs and charges. We assign gains and losses, equity in earnings or losses from our joint ventures, and direct general, administrative, and other expenses to each of our segments. “Unallocated corporate” represents a portion of our revenues, including license fees we receive from our credit card programs and

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fees from vacation ownership licensing agreements, general, administrative, and other expenses, merger-related costs and charges, equity in earnings or losses, and other gains or losses that we do not allocate to our segments.

Our President and Chief Executive Officer, who is our chief operating decision maker, monitors assets for the consolidated company but does not use assets by operating segment when assessing performance or making operating segment resource allocations.

Segment Revenues

The following tables present our revenues disaggregated by segment and major revenue stream for the 2019 second quarter, 2018 second quarter, 2019 first half, and 2018 first half:

	Three Months Ended June 30, 2019
($ in millions)	North American Full-Service			North American Limited-Service			Asia Pacific			Other International			Total
Gross fee revenues	$	349		$	264		$	112		$	142		$	867
Contract investment amortization	(8		)	(3		)	(1		)	(3		)	(15		)
Net fee revenues	341			261			111			139			852
Owned, leased, and other revenue	147			38			50			168			403
Cost reimbursement revenue	2,915			602			149			306			3,972
Total segment revenue	$	3,403		$	901		$	310		$	613		$	5,227
Unallocated corporate													78
Total revenue													$	5,305

	Three Months Ended June 30, 2018
($ in millions)	North American Full-Service			North American Limited-Service			Asia Pacific			Other International			Total
Gross fee revenues	$	345		$	250		$	110		$	128		$	833
Contract investment amortization	(7		)	(3		)	(1		)	(2		)	(13		)
Net fee revenues	338			247			109			126			820
Owned, leased, and other revenue	140			37			48			178			403
Cost reimbursement revenue	2,878			576			111			303			3,868
Total segment revenue	$	3,356		$	860		$	268		$	607		$	5,091
Unallocated corporate													318
Total revenue													$	5,409

	Six Months Ended June 30, 2019
($ in millions)	North American Full-Service			North American Limited-Service			Asia Pacific			Other International			Total
Gross fee revenues	$	665		$	476		$	230		$	271		$	1,642
Contract investment amortization	(16		)	(6		)	(1		)	(6		)	(29		)
Net fee revenues	649			470			229			265			1,613
Owned, leased, and other revenue	294			69			91			312			766
Cost reimbursement revenue	5,765			1,131			260			565			7,721
Total segment revenue	$	6,708		$	1,670		$	580		$	1,142		$	10,100
Unallocated corporate													217
Total revenue													$	10,317

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	Six Months Ended June 30, 2018
($ in millions)	North American Full-Service			North American Limited-Service			Asia Pacific			Other International			Total
Gross fee revenues	$	644		$	446		$	227		$	250		$	1,567
Contract investment amortization	(18		)	(6		)	(1		)	(6		)	(31		)
Net fee revenues	626			440			226			244			1,536
Owned, leased, and other revenue	295			70			95			336			796
Cost reimbursement revenue	5,734			1,090			222			554			7,600
Total segment revenue	$	6,655		$	1,600		$	543		$	1,134		$	9,932
Unallocated corporate													486
Total revenue													$	10,418

Segment Profits

	Three Months Ended						Six Months Ended
($ in millions)	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018
North American Full-Service	$	338		$	394		$	627		$	671
North American Limited-Service	253			252			455			434
Asia Pacific	92			140			195			252
Other International	118			160			213			319
Unallocated corporate	(391		)	7			(557		)	(121		)
Interest expense, net of interest income	(96		)	(79		)	(187		)	(149		)
Income taxes	(82		)	(207		)	(139		)	(319		)
Net Income	$	232		$	667		$	607		$	1,087

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

We make forward-looking statements in Management’s Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this report based on the beliefs and assumptions of our management and on information currently available to us. Forward-looking statements include information about our possible or assumed future results of operations, which follow under the headings “Business and Overview,” “Liquidity and Capital Resources,” and other statements throughout this report preceded by, followed by, or that include the words “believes,” “expects,” “anticipates,” “intends,” “plans,” “estimates,” or similar expressions.

Any number of risks and uncertainties could cause actual results to differ materially from those we express in our forward-looking statements, including the risks and uncertainties we describe below and other factors we describe from time to time in our periodic filings with the U.S. Securities and Exchange Commission (the “SEC”). We therefore caution you not to rely unduly on any forward-looking statement. The forward-looking statements in this report speak only as of the date of this report, and we undertake no obligation to update or revise any forward-looking statement, whether due to new information, future developments, or otherwise.

In addition, see the “Item 1A. Risk Factors” caption in the “Part II-OTHER INFORMATION” section of this report.

BUSINESS AND OVERVIEW

We are a worldwide operator, franchisor, and licensor of hotel, residential, and timeshare properties in 132 countries and territories under 30 brands at the end of the 2019 second quarter. Under our asset-light business model, we typically manage or franchise hotels, rather than own them. We discuss our operations in the following reportable business segments: North American Full-Service, North American Limited-Service, and Asia Pacific. Our Europe, Middle East and Africa, and Caribbean and Latin America operating segments do not individually meet the criteria for separate disclosure as reportable segments.

We earn base management fees and in many cases incentive management fees from the properties that we manage, and we earn franchise fees on the properties that others operate under franchise agreements with us. In most markets, base management and franchise fees typically consist of a percentage of property-level revenue, or certain property-level revenue in the case of franchise fees, while incentive management fees typically consist of a percentage of net house profit after a specified owner return. In our Middle East and Africa and Asia Pacific regions, incentive management fees typically consist of a percentage of gross operating profit without adjustment for a specified owner return. Net house profit is calculated as gross operating profit (also referred to as “house profit,” which we discuss under the “Performance Measures” section below) less non-controllable expenses such as property insurance, real estate taxes, and capital spending reserves.

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Our emphasis on long-term management contracts and franchising tends to provide more stable earnings in periods of economic softness, while adding new hotels to our system generates growth, typically with little or no investment by the Company. This strategy has driven substantial growth while minimizing financial leverage and risk in a cyclical industry. In addition, we believe minimizing our capital investments and adopting a strategy of recycling our investments maximizes and maintains our financial flexibility.

We remain focused on doing the things that we do well; that is, selling rooms, taking care of our guests, and making sure we control costs both at company-operated properties and at the corporate level (“above-property”). We provide our guests new and memorable experiences through our portfolio of brands, innovative technology, personalized guest recognition, and access to travel experiences through our Marriott Bonvoy Tours & Activities program. Our brands remain strong due to our skilled management teams, dedicated associates, superior guest service with an emphasis on guest and associate satisfaction, significant distribution, Loyalty Program, multichannel reservation systems, and desirable property amenities. We strive to effectively leverage our size and broad distribution. We believe that Marriott Bonvoy (our “Loyalty Program”) generates substantial repeat business that might otherwise go to competing hotels, and we strategically market to its large and growing member base to generate revenue.

We, along with owners and franchisees, continue to invest in our brands by means of new, refreshed, and reinvented properties, new room and public space designs, and enhanced amenities, technology offerings, and guest experiences. We address, through various means, hotels in our system that do not meet our standards. We continue to enhance the appeal of our proprietary, information-rich, and easy-to-use websites, and of our associated mobile smartphone applications, through functionality and service improvements.

Our profitability, as well as that of owners and franchisees, has benefited from our approach to property-level and above-property productivity. Managed properties in our system continue to maintain tight cost controls. We also control above-property costs, some of which we allocate to hotels, by remaining focused on systems, processing, and support areas.

Data Security Incident

On November 30, 2018, we announced a data security incident involving unauthorized access to the Starwood reservations database (the “Data Security Incident”). The Starwood reservations database is no longer used for business operations.

To date, we have not seen a meaningful impact on demand as a result of the Data Security Incident.

On July 9, 2019, we announced that the ICO had communicated its intent to issue a fine in the amount of £99 million against the Company in relation to the Data Security Incident (the “Proposed ICO Fine”). See Footnote 6. Commitments and Contingencies for additional information.

We are currently unable to estimate the range of total possible financial impact to the Company from the Data Security Incident in excess of the expenses already incurred. However, we do not believe this incident will impact our long-term financial health. Although our insurance program includes coverage designed to limit our exposure to losses such as those related to the Data Security Incident, that insurance may not be sufficient or available to cover all of our expenses or other losses (including the final amount of the Proposed ICO Fine and any other fines) related to the Data Security Incident. As we expected, the cost of such insurance increased for our current policy period, which recently renewed, and the cost of such insurance could continue to increase in future years. We expect to incur significant expenses associated with the Data Security Incident in future periods, primarily related to legal proceedings and regulatory investigations (including possible fines and penalties), increased expenses and capital investments for IT and information security and data privacy, and increased expenses for insurance, compliance activities, and to meet increased legal and regulatory requirements. See Footnote 6. Commitments and Contingencies for information related to expenses incurred in the 2019 second quarter and 2019 first half, insurance recoveries, and legal proceedings and governmental investigations related to the Data Security Incident.

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Acquisition of Starwood Hotels & Resorts Worldwide

On September 23, 2016 (the “Merger Date”), we completed the acquisition of Starwood Hotels & Resorts Worldwide, LLC, formerly known as Starwood Hotels & Resorts Worldwide, Inc. (“Starwood”), through a series of

transactions (the “Starwood Combination”), after which Starwood became an indirect wholly-owned subsidiary of the Company.

Performance Measures

We believe Revenue per Available Room (“RevPAR”), which we calculate by dividing room sales for comparable properties by room nights available for the period, is a meaningful indicator of our performance because it measures the period-over-period change in room revenues for comparable properties. RevPAR may not be comparable to similarly titled measures, such as revenues, and should not be viewed as necessarily correlating with our fee revenue. We also believe occupancy and average daily rate (“ADR”), which are components of calculating RevPAR, are meaningful indicators of our performance. Occupancy, which we calculate by dividing occupied rooms by total rooms available, measures the utilization of a property’s available capacity. ADR, which we calculate by dividing property room revenue by total rooms sold, measures average room price and is useful in assessing pricing levels. Comparisons to the prior year period are on a constant U.S. dollar basis. We calculate constant dollar statistics by applying exchange rates for the current period to the prior comparable period.

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

We also believe company-operated house profit margin, which is the ratio of property-level gross operating profit to total property-level revenue, is a meaningful indicator of our performance because this ratio measures our overall ability as the operator to produce property-level profits by generating sales and controlling the operating expenses over which we have the most direct control. House profit includes room, food and beverage, and other revenue and the related expenses including payroll and benefits expenses, as well as repairs and maintenance, utility, general and administrative, and sales and marketing expenses. House profit does not include the impact of management fees, furniture, fixtures and equipment replacement reserves, insurance, taxes, or other fixed expenses.

Business Trends

Our 2019 first half results reflected a year-over-year increase in the number of properties in our system, favorable demand for our brands in many markets around the world, and generally favorable economic conditions. For the three months ended June 30, 2019, comparable worldwide systemwide RevPAR increased 1.2 percent to $124.16, ADR increased 1.1 percent on a constant dollar basis to $163.23, and occupancy remained unchanged at 76.1 percent, compared to the same period a year ago. For the six months ended June 30, 2019, comparable worldwide systemwide RevPAR increased 1.2 percent to $117.27, ADR increased 1.3 percent on a constant dollar basis to $161.76, and occupancy decreased 0.1 percentage points to 72.5 percent, compared to the same period a year ago.

In North America, RevPAR increased modestly in the 2019 first half, driven by higher demand at our full-service properties, partially constrained by new lodging supply in certain markets, the partial shutdown of the U.S. federal government in January 2019, and hurricane recovery demand in 2018. In our Asia Pacific segment in the 2019 first half, RevPAR growth was driven by India, Indonesia, Japan, and most markets in Greater China, but was partially constrained by lower demand in South Korea, Thailand, and Hainan Island, China. Our Europe region experienced higher demand in the 2019 first half, led by the U.K. and Spain, partially constrained by comparison to strong prior year demand in Russia from the World Cup. In our Middle East and Africa region, RevPAR declined due to ongoing geopolitical and economic instability and supply growth in the Middle East, partially offset by RevPAR growth in Egypt. RevPAR grew across our Caribbean and Latin America region, driven by higher ADR, but was partially constrained by lower demand in Mexico, particularly in resort markets.

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For our company-operated properties, we continue to focus on enhancing property-level house profit margins and making productivity improvements despite modest RevPAR growth and higher labor costs. In the 2019 first half, compared to the 2018 first half, North American company-operated house profit margins at comparable properties decreased by 10 basis points, primarily due to low RevPAR growth and wage increases, partially offset by revenue synergies and procurement savings. International company-operated house profit margins at comparable properties remained unchanged, primarily due to RevPAR declines in our Middle East and Africa region, partially offset by margin improvements in our Asia Pacific segment and Europe region.

System Growth and Pipeline

During the 2019 first half, we added 226 properties (35,023 rooms) while 30 properties (5,014 rooms) exited our system, increasing our total properties to 7,100 (1,345,906 rooms). Approximately 44 percent of added rooms are located outside North America, and 18 percent of the room additions are conversions from competitor brands.

Since the end of the 2018 second quarter, we added 478 properties (77,086 rooms), while 92 properties (16,722 rooms) exited our system.

At the end of the 2019 second quarter, we had more than 487,000 rooms in our development pipeline, which includes hotel rooms under construction, hotel rooms under signed contracts, and approximately 40,000 hotel rooms approved for development but not yet under signed contracts. Approximately 213,000 rooms in our development pipeline were under construction at the end of the 2019 second quarter. Over half of the rooms in our development pipeline are outside North America.

Properties and Rooms

At June 30, 2019, we operated, franchised, and licensed the following properties and rooms:

	Managed		Franchised/Licensed		Owned/Leased		Total
	Properties	Rooms	Properties	Rooms	Properties	Rooms	Properties	Rooms
North American Full-Service	407	182,784	723	206,573	9	5,275	1,139	394,632
North American Limited-Service	403	63,703	3,599	418,698	20	3,006	4,022	485,407
Asia Pacific	629	183,068	111	29,513	2	410	742	212,991
Other International	597	130,124	479	92,045	32	8,410	1,108	230,579
Timeshare	—	—	89	22,297	—	—	89	22,297
Total	2,036	559,679	5,001	769,126	63	17,101	7,100	1,345,906

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Segment and Brand Statistics

The following tables present RevPAR, occupancy, and ADR statistics for comparable properties. Systemwide statistics include data from our franchised properties, in addition to our company-operated properties.

Comparable Company-Operated Properties
	Three Months Ended June 30, 2019 and Change vs. Three Months Ended June 30, 2018
	RevPAR				Occupancy					Average Daily Rate
	2019		vs. 2018		2019		vs. 2018			2019		vs. 2018
North American Luxury (1)	$	275.85	1.1	%	79.7	%	(0.3	)%	pts.	$	346.25	1.4	%
North American Upper Upscale (2)	$	166.44	—	%	80.6	%	(0.3	)%	pts.	$	206.52	0.4	%
North American Full-Service (3)	$	185.28	0.3	%	80.4	%	(0.3	)%	pts.	$	230.35	0.6	%
North American Limited-Service (4)	$	119.48	(0.7	)%	78.9	%	(0.9	)%	pts.	$	151.53	0.5	%
North American - All (5)	$	164.36	0.1	%	79.9	%	(0.5	)%	pts.	$	205.63	0.7	%
Greater China	$	86.00	2.5	%	69.7	%	2.0	%	pts.	$	123.48	(0.4	)%
Rest of Asia Pacific	$	116.01	5.5	%	73.3	%	3.1	%	pts.	$	158.35	1.0	%
Asia Pacific	$	98.71	3.9	%	71.2	%	2.4	%	pts.	$	138.68	0.4	%
Caribbean & Latin America	$	125.25	0.6	%	65.0	%	0.8	%	pts.	$	192.59	(0.6	)%
Europe	$	164.67	4.3	%	78.7	%	1.2	%	pts.	$	209.25	2.7	%
Middle East & Africa	$	97.58	(0.7	)%	64.0	%	2.8	%	pts.	$	152.51	(5.1	)%
International - All (6)	$	115.69	3.1	%	71.2	%	2.1	%	pts.	$	162.54	—	%
Worldwide (7)	$	140.01	1.3	%	75.5	%	0.8	%	pts.	$	185.32	0.2	%

Comparable Systemwide Properties
	Three Months Ended June 30, 2019 and Change vs. Three Months Ended June 30, 2018
	RevPAR				Occupancy					Average Daily Rate
	2019		vs. 2018		2019		vs. 2018			2019		vs. 2018
North American Luxury (1)	$	262.53	1.0	%	79.7	%	(0.5	)%	pts.	$	329.31	1.6	%
North American Upper Upscale (2)	$	145.11	1.2	%	77.7	%	(0.3	)%	pts.	$	186.70	1.6	%
North American Full-Service (3)	$	156.53	1.2	%	77.9	%	(0.3	)%	pts.	$	200.90	1.5	%
North American Limited-Service (4)	$	108.32	0.1	%	78.2	%	(0.7	)%	pts.	$	138.59	1.0	%
North American - All (5)	$	128.80	0.7	%	78.1	%	(0.5	)%	pts.	$	165.01	1.3	%
Greater China	$	85.34	2.6	%	69.3	%	2.1	%	pts.	$	123.22	(0.5	)%
Rest of Asia Pacific	$	116.27	4.4	%	73.0	%	2.3	%	pts.	$	159.29	1.1	%
Asia Pacific	$	100.36	3.6	%	71.1	%	2.2	%	pts.	$	141.21	0.4	%
Caribbean & Latin America	$	99.13	0.5	%	62.6	%	(0.6	)%	pts.	$	158.27	1.5	%
Europe	$	143.33	3.6	%	77.3	%	0.9	%	pts.	$	185.38	2.4	%
Middle East & Africa	$	92.83	(0.7	)%	63.6	%	2.4	%	pts.	$	145.86	(4.4	)%
International - All (6)	$	112.26	2.8	%	71.0	%	1.5	%	pts.	$	158.21	0.6	%
Worldwide (7)	$	124.16	1.2	%	76.1	%	—	%	pts.	$	163.23	1.1	%

⁽¹⁾  Includes JW Marriott, The Ritz-Carlton, W Hotels, The Luxury Collection, St. Regis, and EDITION.

⁽²⁾  Includes Marriott Hotels, Sheraton, Westin, Renaissance, Autograph Collection, Delta Hotels, Gaylord Hotels, and Le Méridien. Systemwide also includes Tribute Portfolio.

⁽³⁾  Includes North American Luxury and North American Upper Upscale.

⁽⁴⁾  Includes Courtyard, Residence Inn, Fairfield by Marriott, SpringHill Suites, TownePlace Suites, Four Points, Aloft, Element, and AC Hotels by Marriott. Systemwide also includes Moxy.

⁽⁵⁾  Includes North American Full-Service and North American Limited-Service.  

⁽⁶⁾  Includes Asia Pacific, Caribbean & Latin America, Europe, and Middle East & Africa.

⁽⁷⁾  Includes North American - All and International - All.

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Comparable Company-Operated Properties
	Six Months Ended June 30, 2019 and Change vs. Six Months Ended June 30, 2018
	RevPAR				Occupancy					Average Daily Rate
	2019		vs. 2018		2019		vs. 2018			2019		vs. 2018
North American Luxury (1)	$	281.07	1.4	%	77.8	%	(1.3	)%	pts.	$	361.37	3.1	%
North American Upper Upscale (2)	$	154.15	0.6	%	76.6	%	(0.3	)%	pts.	$	201.31	1.0	%
North American Full-Service (3)	$	176.00	0.8	%	76.8	%	(0.5	)%	pts.	$	229.22	1.4	%
North American Limited-Service (4)	$	111.06	(1.1	)%	74.2	%	(1.5	)%	pts.	$	149.64	1.0	%
North American - All (5)	$	155.36	0.4	%	76.0	%	(0.8	)%	pts.	$	204.51	1.4	%
Greater China	$	84.60	2.7	%	67.2	%	1.8	%	pts.	$	125.85	(0.1	)%
Rest of Asia Pacific	$	122.86	4.9	%	74.6	%	2.9	%	pts.	$	164.74	0.7	%
Asia Pacific	$	100.80	3.8	%	70.3	%	2.3	%	pts.	$	143.31	0.4	%
Caribbean & Latin America	$	143.12	2.1	%	66.0	%	0.5	%	pts.	$	216.70	1.3	%
Europe	$	139.77	3.1	%	71.9	%	0.6	%	pts.	$	194.40	2.3	%
Middle East & Africa	$	107.05	(2.2	)%	67.3	%	2.3	%	pts.	$	159.15	(5.6	)%
International - All (6)	$	114.05	2.4	%	69.8	%	1.8	%	pts.	$	163.34	(0.2	)%
Worldwide (7)	$	134.71	1.2	%	72.9	%	0.5	%	pts.	$	184.79	0.6	%

Comparable Systemwide Properties
	Six Months Ended June 30, 2019 and Change vs. Six Months Ended June 30, 2018
	RevPAR				Occupancy					Average Daily Rate
	2019		vs. 2018		2019		vs. 2018			2019		vs. 2018
North American Luxury (1)	$	263.48	1.4	%	77.5	%	(1.3	)%	pts.	$	340.16	3.0	%
North American Upper Upscale (2)	$	135.92	1.5	%	73.7	%	(0.3	)%	pts.	$	184.33	1.9	%
North American Full-Service (3)	$	148.33	1.5	%	74.1	%	(0.4	)%	pts.	$	200.18	2.0	%
North American Limited-Service (4)	$	99.81	(0.1	)%	73.6	%	(0.8	)%	pts.	$	135.57	1.0	%
North American - All (5)	$	120.42	0.8	%	73.8	%	(0.6	)%	pts.	$	163.12	1.6	%
Greater China	$	83.89	2.8	%	66.8	%	2.0	%	pts.	$	125.59	(0.3	)%
Rest of Asia Pacific	$	121.24	4.1	%	73.8	%	2.2	%	pts.	$	164.30	1.0	%
Asia Pacific	$	102.03	3.6	%	70.2	%	2.1	%	pts.	$	145.35	0.5	%
Caribbean & Latin America	$	111.16	2.2	%	64.0	%	(0.4	)%	pts.	$	173.73	2.8	%
Europe	$	122.27	3.1	%	70.6	%	0.6	%	pts.	$	173.24	2.2	%
Middle East & Africa	$	101.66	(1.9	)%	66.6	%	2.1	%	pts.	$	152.62	(5.0	)%
International - All (6)	$	109.17	2.5	%	69.1	%	1.3	%	pts.	$	158.02	0.5	%
Worldwide (7)	$	117.27	1.2	%	72.5	%	(0.1	)%	pts.	$	161.76	1.3	%

⁽¹⁾  Includes JW Marriott, The Ritz-Carlton, W Hotels, The Luxury Collection, St. Regis, and EDITION.

⁽²⁾  Includes Marriott Hotels, Sheraton, Westin, Renaissance, Autograph Collection, Delta Hotels, Gaylord Hotels, and Le Méridien. Systemwide also includes Tribute Portfolio.

⁽³⁾  Includes North American Luxury and North American Upper Upscale.

⁽⁴⁾  Includes Courtyard, Residence Inn, Fairfield by Marriott, SpringHill Suites, TownePlace Suites, Four Points, Aloft, Element, and AC Hotels by Marriott. Systemwide also includes Moxy.

⁽⁵⁾  Includes North American Full-Service and North American Limited-Service.  

⁽⁶⁾  Includes Asia Pacific, Caribbean & Latin America, Europe, and Middle East & Africa.

⁽⁷⁾  Includes North American - All and International - All.  

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CONSOLIDATED RESULTS

The following discussion presents an analysis of our consolidated results of operations for the 2019 second quarter compared to the 2018 second quarter and for the 2019 first half compared to the 2018 first half.

Fee Revenues

	Three Months Ended											Six Months Ended
($ in millions)	June 30, 2019			June 30, 2018			Change 2019 vs. 2018					June 30, 2019			June 30, 2018			Change 2019 vs. 2018
Base management fees	$	309		$	300		$	9		3	%	$	591		$	573		$	18		3	%
Franchise fees	525			475			50			11	%	975			892			83			9	%
Incentive management fees	165			176			(11		)	(6	)%	328			331			(3		)	(1	)%
Gross fee revenues	999			951			48			5	%	1,894			1,796			98			5	%
Contract investment amortization	(15		)	(13		)	2			15	%	(29		)	(31		)	(2		)	(6	)%
Net fee revenues	$	984		$	938		$	46		5	%	$	1,865		$	1,765		$	100		6	%

Second Quarter

The $9 million increase in base management fees primarily reflected $12 million from unit and RevPAR growth, partially offset by $6 million from properties that were terminated or converted from managed to franchised.

The $50 million increase in franchise fees primarily reflected $23 million from unit growth and $12 million of higher branding fees.

The $11 million decrease in incentive management fees primarily reflected lower net house profits at North American managed hotels and $4 million from net unfavorable foreign exchange rates.

First Half

The $18 million increase in base management fees primarily reflected $16 million from unit growth and $6 million from RevPAR growth, partially offset by lower fees of $7 million from properties that were terminated.

The $83 million increase in franchise fees primarily reflected $42 million from unit growth, $16 million of higher branding fees, $11 million from AC Hotels by Marriott properties previously presented in the “Equity in earnings” caption of our Income Statements, $7 million from properties that converted from managed to franchised, and $6 million from RevPAR growth, partially offset by lower fees of $6 million from properties that were terminated.

The $3 million decrease in incentive management fees primarily reflected $8 million from net unfavorable foreign exchange rates, partially offset by $5 million from International unit growth.

Owned, Leased, and Other

	Three Months Ended									Six Months Ended
($ in millions)	June 30, 2019		June 30, 2018		Change 2019 vs. 2018					June 30, 2019		June 30, 2018		Change 2019 vs. 2018
Owned, leased, and other revenue	$	418	$	423	$	(5	)	(1	)%	$	793	$	829	$	(36	)	(4	)%
Owned, leased, and other - direct expenses	331		334		(3		)	(1	)%	656		670		(14		)	(2	)%
	$	87	$	89	$	(2	)	(2	)%	$	137	$	159	$	(22	)	(14	)%

Second Quarter

Owned, leased, and other revenue, net of direct expenses decreased by $2 million, primarily due to $6 million of higher other programs expenses, offset by $7 million of higher termination fees.

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First Half

Owned, leased, and other revenue, net of direct expenses decreased by $22 million, primarily due to $14 million of lower termination fees, $9 million of higher other programs expenses, $7 million of lower owned and leased profits attributable to properties under renovation, and $5 million of lower revenue at a property temporarily closed due to flooding, partially offset by $13 million of profits attributable to the Sheraton Phoenix Downtown, which we purchased in June 2018.

Cost Reimbursements

	Three Months Ended										Six Months Ended
($ in millions)	June 30, 2019			June 30, 2018		Change 2019 vs. 2018					June 30, 2019			June 30, 2018		Change 2019 vs. 2018
Cost reimbursement revenue	$	3,903		$	4,048	$	(145	)	(4	)%	$	7,659		$	7,824	$	(165	)	(2	)%
Reimbursed expenses	4,107			3,964		143			4	%	7,999			7,772		227			3	%
	$	(204	)	$	84	$	(288	)	(343	)%	$	(340	)	$	52	$	(392	)	(754	)%

Cost reimbursement revenue, net of reimbursed expenses, decreased by $288 million for the 2019 second quarter compared to the 2018 second quarter, and decreased by $392 million for the 2019 first half compared to the 2018 first half, primarily due to lower Loyalty Program revenues net of expenses, which include the change in estimates discussed in Footnote 11. Contracts with Customers and higher point redemption costs. Cost reimbursement revenue, net of reimbursed expenses, varies due to temporary timing differences between the costs we incur for centralized programs and services and the related reimbursements we receive from hotel owners and franchisees. Over the long term, our centralized programs and services are not designed to impact our economics, either positively or negatively.

Other Operating Expenses

	Three Months Ended									Six Months Ended
($ in millions)	June 30, 2019		June 30, 2018		Change 2019 vs. 2018					June 30, 2019		June 30, 2018		Change 2019 vs. 2018
Depreciation, amortization, and other	$	56	$	58	$	(2	)	(3	)%	$	110	$	112	$	(2	)	(2	)%
General, administrative, and other	229		217		12			6	%	451		464		(13		)	(3	)%
Merger-related costs and charges	173		18		155			861	%	182		52		130			250	%

Second Quarter

General, administrative, and other expenses increased by $12 million, primarily due to higher administrative costs.

Merger-related costs and charges increased by $155 million, primarily due to the $126 million accrual for the loss contingency related to the Proposed ICO Fine discussed in Footnote 6. Commitments and Contingencies and a $34 million impairment charge of a legacy-Starwood office building accounted for as a finance lease.

First Half

General, administrative, and other expenses decreased by $13 million, primarily due to $37 million expensed in 2018 for the company-funded supplemental retirement savings plan contributions and $8 million of lower foreign exchange losses, partially offset by $18 million of higher administrative costs.

Merger-related costs and charges increased by $130 million, primarily for the same reasons described in the preceding “Second Quarter” discussion.

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Non-Operating Income (Expense)

	Three Months Ended											Six Months Ended
($ in millions)	June 30, 2019			June 30, 2018			Change 2019 vs. 2018					June 30, 2019			June 30, 2018			Change 2019 vs. 2018
Gains and other income, net	$	1		$	114		$	(113	)	(99	)%	$	6		$	173		$	(167	)	(97	)%
Interest expense	(102		)	(85		)	17			20	%	(199		)	(160		)	39			24	%
Interest income	6			6			—			—	%	12			11			1			9	%
Equity in earnings	—			21			(21		)	(100	)%	8			34			(26		)	(76	)%

Second Quarter

Gains and other income, net decreased by $113 million, primarily due to the 2018 gains on our property sales ($67 million) and the 2018 gains on the sales of our interest in three equity method investments ($42 million).

Interest expense increased by $17 million, primarily due to higher interest on Senior Note issuances, net of maturities ($14 million) and higher commercial paper interest rates and average borrowings ($5 million).

Equity in earnings decreased by $21 million, primarily due to the 2018 gain on an equity method investee’s sale of a property ($10 million) and lower earnings as a result of the AC Hotels by Marriott transaction, which we discussed in Footnote 2. Acquisitions, and dispositions of other investments ($7 million).

First Half

Gains and other income, net decreased by $167 million, primarily due to the 2018 gains on our property sales ($120 million) and the 2018 gains on the sales of our interest in three equity method investments ($42 million).

Interest expense increased by $39 million, primarily due to higher interest on Senior Note issuances, net of maturities ($29 million) and higher commercial paper interest rates and average borrowings ($11 million).

Equity in earnings decreased by $26 million, primarily due to lower earnings as a result of the AC Hotels by Marriott transaction, which we discussed in Footnote 2. Acquisitions, and dispositions of other investments ($12 million) and the 2018 gain on an equity method investee’s sale of a property ($10 million).

Income Taxes

	Three Months Ended											Six Months Ended
($ in millions)	June 30, 2019			June 30, 2018			Change 2019 vs. 2018					June 30, 2019			June 30, 2018			Change 2019 vs. 2018
Provision for income taxes	$	(82	)	$	(207	)	$	(125	)	(60	)%	$	(139	)	$	(319	)	$	(180	)	(56	)%

Second Quarter

Provision for income taxes decreased by $125 million, primarily due to lower operating income ($68 million), shift in earnings to jurisdictions with lower tax rates ($34 million), and prior year tax expense on dispositions ($26 million).

First Half

Provision for income taxes decreased by $180 million, primarily due to lower operating income ($78 million), shift in earnings to jurisdictions with lower tax rates ($40 million), the prior year tax expense on dispositions ($40 million), the prior year tax expense incurred for uncertain tax positions relating to legacy-Starwood operations ($30 million), and the prior year state income tax expense due to a change in our position regarding the future remittance of accumulated earnings of non-U.S. subsidiaries ($27 million). The decrease was partially offset by the prior year release of tax reserves due to the completion of certain examinations ($34 million).

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BUSINESS SEGMENTS

The following discussion presents an analysis of the operating results of our reportable business segments: North American Full-Service, North American Limited-Service, and Asia Pacific, for the 2019 second quarter compared to the 2018 second quarter and for the 2019 first half compared to the 2018 first half. See Footnote 12. Business Segments for other information about each segment, including revenues and a reconciliation of segment profits to net income.

North American Full-Service

Since the end of the 2018 second quarter, across our North American Full-Service segment, we added 37 properties (8,834 rooms), and 13 properties (4,873 rooms) left our system.

	Three Months Ended									Six Months Ended
($ in millions)	June 30, 2019		June 30, 2018		Change 2019 vs. 2018					June 30, 2019		June 30, 2018		Change 2019 vs. 2018
Segment revenues	$	3,403	$	3,356	$	47		1	%	$	6,708	$	6,655	$	53		1	%
Segment profits	$	338	$	394	$	(56	)	(14	)%	$	627	$	671	$	(44	)	(7	)%

Second Quarter

North American Full-Service segment profits decreased by $56 million, primarily due to the following:

• $25 million of lower cost reimbursement revenue, net of reimbursed expenses;

• $21 million of lower gains and other income, net, primarily due to the $22 million gain on the sale of two properties in 2018;

• $14 million of lower equity in earnings, primarily due to the $10 million gain on an equity method investee’s sale of a property in 2018;

• $8 million of lower incentive management fees, primarily driven by lower profits at managed hotels; and

• $12 million of higher base management and franchise fees, primarily due to unit and RevPAR growth.

First Half

North American Full-Service segment profits decreased by $44 million, primarily due to the following:

• $24 million of lower gains and other income, net, primarily due to the same reasons described in the preceding “Second Quarter” discussion;

• $22 million of lower cost reimbursement revenue, net of reimbursed expenses;

• $14 million of lower equity in earnings, primarily due to the change described in the preceding “Second Quarter” discussion;

• $6 million of lower owned, leased, and other revenue, net of direct expenses, primarily reflecting $18 million of lower termination fees, partially offset by $13 million of profits attributable to the Sheraton Phoenix Downtown, which we purchased in June 2018; and

• $23 million of higher base management and franchise fees, primarily reflecting $16 million from unit growth and $8 million from RevPAR growth.

North American Limited-Service

Since the end of the 2018 second quarter, across our North American Limited-Service segment, we added 271 properties (33,002 rooms), and 42 properties (3,705 rooms) left our system.

28

	Three Months Ended								Six Months Ended
($ in millions)	June 30, 2019		June 30, 2018		Change 2019 vs. 2018				June 30, 2019		June 30, 2018		Change 2019 vs. 2018
Segment revenues	$	901	$	860	$	41	5	%	$	1,670	$	1,600	$	70	4	%
Segment profits	$	253	$	252	$	1	—	%	$	455	$	434	$	21	5	%

Second Quarter

North American Limited-Service segment profits increased by $1 million, primarily due to the following:

• $19 million of higher base management and franchise fees, primarily reflecting $15 million from unit growth and $5 million from AC Hotels by Marriott properties previously presented in the “Equity in earnings” caption of our Income Statements;

• $12 million of lower cost reimbursement revenue, net of reimbursed expenses; and

• $5 million of lower incentive management fees, primarily driven by lower fees from a few portfolios of managed hotels.

First Half

North American Limited-Service segment profits increased by $21 million, primarily due to the following:

• $33 million of higher base management and franchise fees, primarily reflecting $28 million from unit growth and $8 million from AC Hotels by Marriott properties previously presented in the “Equity in earnings” caption of our Income Statements; and

• $6 million of lower cost reimbursement revenue, net of reimbursed expenses.

Asia Pacific

Since the end of the 2018 second quarter, across our Asia Pacific segment, we added 82 properties (18,805 rooms), and 11 properties (3,235 rooms) left our system.

	Three Months Ended									Six Months Ended
($ in millions)	June 30, 2019		June 30, 2018		Change 2019 vs. 2018					June 30, 2019		June 30, 2018		Change 2019 vs. 2018
Segment revenues	$	310	$	268	$	42		16	%	$	580	$	543	$	37		7	%
Segment profits	$	92	$	140	$	(48	)	(34	)%	$	195	$	252	$	(57	)	(23	)%

Second Quarter

Asia Pacific segment profits decreased by $48 million, primarily due to the following:

• $54 million of lower gains and other income, net, primarily due to the $45 million gain on the sale of two properties in 2018 and the $9 million gain on the sale of our interest in an equity method investment in 2018;

• $5 million of lower cost reimbursement revenue, net of reimbursed expenses; and

• $7 million of higher owned, leased, and other revenue, net of direct expenses, primarily reflecting higher termination fees.

First Half

Asia Pacific segment profits decreased by $57 million, primarily due to the following:

• $53 million of lower gains and other income, net, primarily due to the same reasons described in the preceding “Second Quarter” discussion;

• $9 million of lower cost reimbursement revenue, net of reimbursed expenses; and

29

• $4 million of higher owned, leased, and other revenue, net of direct expenses, primarily reflecting higher termination fees.

SHARE-BASED COMPENSATION

See Footnote 4. Share-Based Compensation for more information.

NEW ACCOUNTING STANDARDS

See Footnote 1. Basis of Presentation for information on our adoption of new accounting standards.

LIQUIDITY AND CAPITAL RESOURCES

Cash Requirements and Our Credit Facility

In the 2019 second quarter, we amended and restated our multicurrency revolving credit agreement (the “Credit Facility”) to extend the maturity date of the Credit Facility and increase the aggregate amount of available borrowings to up to $4.5 billion. The available borrowings support our commercial paper program and general corporate needs. Borrowings under the Credit Facility generally bear interest at LIBOR (the London Interbank Offered 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. While any outstanding commercial paper borrowings and/or borrowings under our Credit Facility generally have short-term maturities, we classify the outstanding borrowings as long-term based on our ability and intent to refinance the outstanding borrowings on a long-term basis. The Credit Facility expires on June 28, 2024.

The Credit Facility contains certain covenants, including a single financial covenant that limits our maximum leverage (consisting of the ratio of Adjusted Total Debt to EBITDA, each as defined in the Credit Facility) to not more than 4 to 1. The Credit Facility defines EBITDA as net income less cost reimbursement revenue, plus reimbursed expenses, plus the sum of interest expense, income taxes, depreciation, amortization, non-recurring non-cash charges, and extraordinary, non-recurring or unusual cash charges, expenses or losses up to a certain amount.

Our outstanding public debt does not contain a corresponding financial covenant or a requirement that we maintain certain financial ratios. We currently satisfy the covenants in our Credit Facility and public debt instruments, including the leverage covenant under the Credit Facility, and do not expect the covenants will restrict our ability to meet our anticipated borrowing and guarantee levels or increase those levels should we decide to do so in the future.

We believe the Credit Facility and our access to capital markets, together with cash we expect to generate from operations, remain adequate to meet our short-term and long-term liquidity requirements, finance our long-term growth plans, meet debt service, and fulfill other cash requirements.

We issue commercial paper in the U.S. We do not have purchase commitments from buyers for our commercial paper; therefore, our ability to issue commercial paper is subject to market demand. We reserve unused capacity under our Credit Facility to repay outstanding commercial paper borrowings if the commercial paper market is not available to us for any reason when outstanding borrowings mature. We do not expect that fluctuations in the demand for commercial paper will affect our liquidity, given our borrowing capacity under the Credit Facility.

At June 30, 2019, our available borrowing capacity amounted to $1,708 million and reflected borrowing capacity of $1,424 million under our Credit Facility and our cash balance of $284 million. We calculated that borrowing capacity by taking $4,500 million of effective aggregate bank commitments under our Credit Facility and subtracting $3,076 million of outstanding commercial paper (there being no outstanding letters of credit under our Credit Facility).

We monitor the status of the capital markets and regularly evaluate the effect that changes in capital market conditions may have on our ability to execute our announced growth plans and fund our liquidity needs. We expect to continue meeting part of our financing and liquidity needs primarily through commercial paper borrowings, issuances of Senior Notes, and access to long-term committed credit facilities. If conditions in the lodging industry

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deteriorate, or if disruptions in the capital markets take place as they did in the immediate aftermath of both the 2008 worldwide financial crisis and the events of September 11, 2001, we may be unable to place some or all of our commercial paper on a temporary or extended basis and may have to rely more on borrowings under the Credit Facility, which we believe will be adequate to fund our liquidity needs, including repayment of debt obligations, but which may carry a higher cost than commercial paper. Since we continue to have ample flexibility under the Credit Facility’s covenants, we expect that undrawn bank commitments under the Credit Facility will remain available to us even if business conditions were to deteriorate markedly.

Our financial objectives include diversifying our financing sources, optimizing the mix and maturity of our long-term debt, and reducing our working capital. At the end of the 2019 second quarter, our long-term debt had a weighted average interest rate of 3.3 percent and a weighted average maturity of approximately 5.0 years. The ratio of fixed-rate long-term debt to total long-term debt was 0.6 to 1.0 at the end of the 2019 second quarter.

Cash, cash equivalents, and restricted cash totaled $320 million at June 30, 2019, a decrease of $40 million from year-end 2018, primarily reflecting purchase of treasury stock ($1,228 million), dividend payments ($298 million), capital expenditures ($142 million), and financing outflows for employee share-based compensation withholding taxes ($123 million). The following cash inflows partially offset these cash outflows: higher commercial paper borrowings ($823 million), net cash provided by operating activities ($738 million), and long-term debt issuances, net of repayments ($224 million). Net cash provided by operating activities in the 2019 first half includes a net cash outflow from working capital changes of $379 million, primarily due to a net outflow for accrued payroll and benefits of $272 million, driven by the timing of payment of the company’s match of prior year retirement savings plan contributions and the payment of the 2018 supplemental retirement savings plan contributions.

Our ratio of current assets to current liabilities was 0.5 to 1.0 at the end of the 2019 second quarter. We minimize working capital through cash management, strict credit-granting policies, and aggressive collection efforts. We also have significant borrowing capacity under our Credit Facility should we need additional working capital.

We made capital expenditures of $142 million in the 2019 first half and $388 million in the 2018 first half, a decrease of $246 million, primarily reflecting the 2018 acquisition of the Sheraton Phoenix Downtown. We expect spending on capital expenditures and other investments will total approximately $650 million to $750 million for the 2019 full year, including contract acquisition costs, equity and other investments, loan advances, and various capital expenditures (including approximately $225 million for maintenance capital spending).

Over time, we have sold hotels, both completed and under development, subject to long-term management agreements. The ability of third-party purchasers to raise the debt and equity capital necessary to acquire such properties depends in part on the perceived risks in the lodging industry and other constraints inherent in the capital markets. We monitor the status of the capital markets and regularly evaluate the potential impact of changes in capital market conditions on our business operations. In the Starwood Combination, we acquired various hotels and joint venture interests in various hotels, many of which we have sold or are seeking to sell, and in 2018, we acquired the Sheraton Phoenix Downtown, which we expect to renovate and sell subject to a long-term management agreement. We also expect to continue making selective and opportunistic investments to add units to our lodging business, which may include property acquisitions, new construction, loans, guarantees, and noncontrolling equity investments. Over time, we seek to minimize capital invested in our business through asset sales subject to long-term management or franchise agreements.

Share Repurchases

We purchased 3.7 million shares of our common stock during the 2019 second quarter at an average price of $132.39 per share. As of June 30, 2019, 25.3 million shares remained available for repurchase under Board approved authorizations. For additional information, see “Issuer Purchases of Equity Securities” in Part II, Item 2.

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Dividends

Our Board of Directors declared the following quarterly cash dividends in 2019: (1) $0.41 per share declared on February 15, 2019 and paid on March 29, 2019 to shareholders of record on March 1, 2019, and (2) $0.48 per share declared on May 10, 2019 and paid on June 28, 2019 to shareholders of record on May 24, 2019.

Contractual Obligations and Off-Balance Sheet Arrangements

As of the end of the 2019 second quarter, there have been no significant changes to our “Contractual Obligations” table, “Other Commitments” table, or “Letters of Credit” paragraph in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of our 2018 Form 10-K, other than the change in debt described below.

Total debt increased $1,067 million to $10,414 million at June 30, 2019 from $9,347 million at December 31, 2018, reflecting the issuance of our Series BB and CC Notes and higher commercial paper borrowings, partially offset by the maturity of our Series K Notes. See Footnote 8. Long-Term Debt for more information on our total debt at June 30, 2019.

At June 30, 2019, future Transition Tax payments under the 2017 Tax Act totaled $465 million.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect reported amounts and related disclosures. We have discussed those policies and estimates that we believe are critical and require the use of complex judgment in their application in our 2018 Form 10-K. Since the date of our 2018 Form 10-K, we have made no material changes to our critical accounting policies or the methodologies or assumptions that we apply under them.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our exposure to market risk has not materially changed since December 31, 2018.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

As of the end of the period covered by this quarterly report, we evaluated, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”)). Management necessarily applied its judgment in assessing the costs and benefits of those controls and procedures, which by their nature, can provide only reasonable assurance about management’s control objectives. You should note that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and we cannot assure you that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. Based upon this evaluation, our Chief Executive Officer and the Chief Financial Officer concluded that our disclosure controls and procedures were not effective because of the previously reported material weakness in internal control over financial reporting, which we describe in Part II, Item 9A of our 2018 Form 10-K.

Remediation of Material Weakness

We continue to implement our remediation plan for the previously reported material weakness in internal control over financial reporting, described in Part II, Item 9A of our 2018 Form 10-K, which includes steps to increase dedicated personnel, improve reporting processes, and enhance related supporting technology. We are committed to maintaining a strong internal control environment and implementing measures designed to help ensure that control deficiencies contributing to the material weakness are remediated as soon as possible. We will consider the material weakness remediated after the applicable controls operate for a sufficient period of time, and management has concluded, through testing, that the controls are operating effectively.

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Changes in Internal Control Over Financial Reporting

Other than the changes related to our remediation efforts described above, we made no changes in internal control over financial reporting during the 2019 second quarter that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings

See the information under the “Litigation, Claims, and Government Investigations” caption in Footnote 6. Commitments and Contingencies, which we incorporate here by reference.

From time to time, we are also subject to other legal proceedings and claims in the ordinary course of business, including adjustments proposed during governmental examinations of the various tax returns we file. While management presently believes that the ultimate outcome of these proceedings, individually and in aggregate, will not materially harm our financial position, cash flows, or overall trends in results of operations, legal proceedings are inherently uncertain, and unfavorable rulings could, individually or in aggregate, have a material adverse effect on our business, financial condition, or operating results.

Item 1A. Risk Factors

Risks and Uncertainties

We are subject to various risks that could have a negative effect on us or on our financial condition. You should understand that these risks could cause results to differ materially from those we express in forward-looking statements contained in this report or in other Company communications. Because there is no way to determine in advance whether, or to what extent, any present uncertainty will ultimately impact our business, you should give equal weight to each of the following:

Our industry is highly competitive, which may impact our ability to compete successfully for guests with other hotel properties and home sharing or rental services. We operate in markets that contain many competitors. Each of our hotel brands and our home rental offering competes with major hotel chains, regional hotel chains, independent hotels, and home sharing and rental services across national and international venues. Our ability to remain competitive and attract and retain business and leisure travelers depends on our success in distinguishing the quality, value, and efficiency of our lodging products and services, including our Loyalty Program, direct booking channels, and consumer-facing technology platforms and services, from those offered by others. If we cannot compete successfully in these areas, our operating margins could contract, our market share could decrease, and our earnings could decline. Further, new lodging supply in individual markets could have a negative impact on the hotel industry and hamper our ability to increase room rates or occupancy in those markets.

Economic downturns could impact our financial results and growth. Weak economic conditions in one or more parts of the world, changes in oil prices and currency values, disruptions in national, regional, or global economies generally and the travel business in particular that might result from changing governmental policies in areas such as trade, travel, immigration, healthcare, and related issues, political instability in some areas, and the uncertainty over how long any of these conditions could continue, could have a negative impact on the lodging industry. Because of such uncertainty, we continue to experience weakened demand for our hotel rooms in some markets. Our future financial results and growth could be further harmed or constrained if economic or these other conditions worsen. U.S. government travel and travel associated with U.S. government operations are also a significant part of our business, and this aspect of our business has suffered and could in the future suffer due to U.S. federal spending cuts, or government hiring restrictions and any further limitations that may result from presidential or congressional action or inaction, including for example, a U.S. federal government shutdown, such as the partial shutdown that occurred in December 2018 and January 2019.

Risks Relating to Our Integration of Starwood

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

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Some of the anticipated benefits of combining Starwood and Marriott may still not be realized. We decided to acquire Starwood with the expectation that the Starwood Combination would result in various benefits. Although we have already achieved substantial benefits, others remain subject to several uncertainties, including whether we can achieve certain revenue synergies.

Integration has involved and could continue to involve unexpected costs. Disruptions of each legacy company’s ongoing businesses, processes, and systems could adversely affect the combined company. We have encountered challenges in harmonizing our different reservations and other systems, our Loyalty Program, and other business practices, and we may encounter additional or increased challenges related to integration. Because of these or other factors, we cannot assure you when or that we will be able to fully realize additional benefits from the Starwood Combination in the form of enhancing revenues or achieving other operating efficiencies, cost savings, or benefits, or that challenges encountered with our harmonization efforts will not have adverse effects on our business or reputation.

Program changes associated with our integration efforts could have a negative effect on guest preference or behavior. Our integration efforts involved significant changes to certain of our guest programs and services, including our Loyalty Program, co-brand credit card arrangements, and consumer-facing technology platforms and services. While we believe such changes enhance these programs and services for our guests and will drive guest preference and satisfaction, these changes remain subject to various uncertainties, including whether the changes could be negatively perceived by certain guests and consumers, could affect guest preference or could alter reservation, spending or other guest or consumer behavior, all of which could adversely affect our market share, reputation, business, financial condition, or results of operations.

Risks Relating to Our Business

Operational Risks

Premature termination of our management or franchise agreements could hurt our financial performance. Our hotel management and franchise agreements may be subject to premature termination in certain circumstances, such as the bankruptcy of a hotel owner or franchisee, or a failure under some agreements to meet specified financial or performance criteria that are subject to the risks described in this section, which we fail or elect not to cure. Some courts have also applied agency law principles and related fiduciary standards to managers of third-party hotel properties, including us (or have interpreted hotel management agreements to be “personal services contracts”). Property owners may assert the right to terminate management agreements even where the agreements provide otherwise, and some courts have upheld such assertions about our management agreements and may do so in the future. If terminations occur for these or other reasons, we may need to enforce our right to damages for breach of contract and related claims, which may cause us to incur significant legal fees and expenses. Any damages we ultimately collect could be less than the projected future value of the fees and other amounts we would have otherwise collected under the management or franchise agreement. A significant loss of agreements due to premature terminations could hurt our financial performance or our ability to grow our business.

Our lodging operations are subject to global, national, and regional conditions. Because we conduct our business on a global platform, changes in global and regional economies and governmental policies impact our activities. In recent years, decreases in travel resulting from weak economic conditions, heightened travel security measures, and concerns over violence or terrorism have hurt our business. Our future performance could be similarly affected by the economic, political and security environment in each of our operating regions, the resulting unknown pace of both business and leisure travel, and any future incidents or changes in those regions.

The growing significance of our operations outside of the U.S. makes us increasingly susceptible to the risks of doing business internationally, which could lower our revenues, increase our costs, reduce our profits, disrupt our business, or damage our reputation. More than a third of the rooms in our system are located outside of the U.S. and its territories. We expect that our international operations, and resulting revenues, will continue to grow. This increasingly exposes us to the challenges and risks of doing business outside the U.S., many of which are outside of our control, and which could reduce our revenues or profits, increase our costs, result in significant liabilities or sanctions, disrupt our business, or damage our reputation. These challenges include: (1) compliance with complex

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

Any failure by our international operations to comply with anti-corruption laws or trade sanctions could increase our costs, reduce our profits, limit our growth, harm our reputation, or subject us to broader liability. We are subject to restrictions imposed by the U.S. Foreign Corrupt Practices Act and anti-corruption laws and regulations of other countries applicable to our operations, such as the UK Bribery Act. Anti-corruption laws and regulations generally prohibit companies and their intermediaries from making certain payments to government officials or other persons in order to influence official acts or decisions or to obtain or retain business. These laws also require us to maintain adequate internal controls and accurate books and records. We have properties in many parts of the world where corruption is common, and our compliance with anti-corruption laws may potentially conflict with local customs and practices. The compliance programs, internal controls and policies we maintain and enforce to promote compliance with applicable anti-bribery and anti-corruption laws may not prevent our associates, contractors or agents from acting in ways prohibited by these laws and regulations. We are also subject to trade sanctions administered by the U.S. Office of Foreign Assets Control and the U.S. Department of Commerce, and authorities in other countries where we do business. Our compliance programs and internal controls also may not prevent conduct that is prohibited under these rules. The U.S. or other countries may impose additional sanctions at any time against any country in which or with whom we do business. Depending on the nature of the sanctions imposed, our operations in the relevant country could be restricted or otherwise adversely affected. Any violations of anti-corruption laws and regulations or trade sanctions could result in significant civil and criminal penalties, reduce our profits, disrupt or have a material adverse effect on our business, damage our reputation, or result in lawsuits or regulatory actions being brought against the Company or its officers or directors. In addition, the operation of these laws or an imposition of further restrictions in these areas could increase our cost of operations, reduce our profits or cause us to forgo development opportunities, or cease operations in certain countries, that would otherwise support growth.

Exchange rate fluctuations and foreign exchange hedging arrangements could result in significant foreign currency gains and losses and affect our business results. We earn revenues and incur expenses in foreign currencies as part of our operations outside of the U.S. Accordingly, fluctuations in currency exchange rates may significantly increase the amount of U.S. dollars required for foreign currency expenses or significantly decrease the U.S. dollars we receive from foreign currency revenues. We are also exposed to currency translation risk because the results of our non-U.S. business are generally reported in local currency, which we then translate to U.S. dollars for inclusion in our Financial Statements. As a result, changes between the foreign exchange rates and the U.S. dollar affect the amounts we record for our foreign assets, liabilities, revenues and expenses, and could have a negative effect on our financial results. We expect that our exposure to foreign currency exchange rate fluctuations will grow as the relative contribution of our non-U.S. operations increases. We enter into foreign exchange hedging agreements with financial institutions to reduce exposures to some of the principal currencies in which we receive management and franchise fees, but these efforts may not be successful. These hedging agreements also do not cover all currencies in which we do business, do not eliminate foreign currency risk entirely for the currencies that they do cover, and involve costs and risks of their own in the form of transaction costs, credit requirements and counterparty risk.

Some of our management agreements and related contracts require us to make payments to owners if the hotels do not achieve specified levels of operating profit. Some of our contracts with hotel owners require that we fund shortfalls if the hotels do not attain specified levels of operating profit. We may not be able to recover any fundings of such performance guarantees, which could lower our profits and reduce our cash flows.

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Our new programs and new branded products may not be successful. We cannot assure you that new or newly acquired brands, such as those we acquired as a result of the Starwood Combination, our investments in PlacePass and the joint venture with Alibaba, our Homes & Villas by Marriott International™ home rental offering, or any other new programs or products we may launch in the future, will be accepted by hotel owners, potential franchisees, or the traveling public or other guests. We also cannot be certain that we will recover the costs we incurred in developing or acquiring the brands or any new programs or products, or that those brands, programs, or products will be successful. In addition, some of our new or newly acquired brands involve or may involve cooperation and/or consultation with one or more third parties, including some shared control over product design and development, sales and marketing, and brand standards. Disagreements with these third parties could slow the development of these brands and/or impair our ability to take actions we believe to be advisable for the success and profitability of such brands. Our home rental offering relies on third-party property management companies to provide sufficient inventory that meets our criteria and to service guests in accordance with our standards, and challenges or disagreements related to these arrangements could impact the growth and success of this offering.

Risks relating to natural or man-made disasters, contagious disease, terrorist activity, and war could reduce the demand for lodging, which may adversely affect our revenues. So called “Acts of God,” such as hurricanes, earthquakes, tsunamis, floods, volcanic activity, wildfires, and other natural disasters, as well as man-made disasters and the potential spread of contagious diseases in locations where we own, manage, or franchise significant properties and areas of the world from which we draw a large number of guests, have in the past caused and could in the future cause a decline in business or leisure travel and reduce demand for lodging to an extent and for durations that we are not able to predict. Actual or threatened war, terrorist activity, political unrest, or civil strife, and other geopolitical uncertainty could have a similar effect. Any one or more of these events may reduce the overall demand for lodging or limit the prices that we can obtain, both of which could adversely affect our profits. If a terrorist event were to involve one or more of our branded properties, demand for our properties in particular could suffer, which could further hurt our revenues and profits.

Disagreements with owners of hotels that we manage or franchise may result in litigation or delay implementation of product or service initiatives. Consistent with our focus on management and franchising, we own very few of our lodging properties. The nature of our responsibilities under our management agreements to manage each hotel and enforce the standards required for our brands under both management and franchise agreements may be subject to interpretation and will from time to time give rise to disagreements, which may include disagreements over the need for or payment for new product, service or systems initiatives, the timing and amount of capital investments, and reimbursement for certain system initiatives and costs. Such disagreements may be more likely when hotel returns are weaker. We seek to resolve any disagreements to develop and maintain positive relations with current and potential hotel owners, franchisees, and joint venture partners, but we cannot always do so. Failure to resolve such disagreements has resulted in litigation, and could do so in the future. If any such litigation results in an adverse judgment, settlement, or court order, we could suffer significant losses, our profits could be reduced, or our future ability to operate our business could be constrained.

Our business depends on the quality and reputation of our company and our brands, and any deterioration could adversely impact our market share, reputation, business, financial condition, or results of operations. Certain events, including those that may be beyond our control, could affect the reputation of one or more of our properties or more generally impact the reputation of our brands. Many other factors also can influence our reputation and the value of our brands, including service, food quality and safety, availability and management of scarce natural resources, supply chain management, diversity, human rights, and support for local communities. Reputational value is also based on perceptions, and broad access to social media makes it easy for anyone to provide public feedback that can influence perceptions of us, our brands and our hotels, and it may be difficult to control or effectively manage negative publicity, regardless of whether it is accurate. While reputations may take decades to build, negative incidents can quickly erode trust and confidence, particularly if they result in adverse mainstream and social media publicity, governmental investigations or penalties, or litigation. Negative incidents could lead to tangible adverse effects on our business, including lost sales, boycotts, reduced enrollment and/or participation in our Loyalty Program, disruption of access to our websites and reservation systems, loss of development opportunities, or associate retention and recruiting difficulties. Any decline in the reputation or perceived quality of our brands or corporate image could affect our market share, reputation, business, financial condition, or results of

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

If our brands, goodwill or other intangible assets become impaired, we may be required to record significant non-cash charges to earnings. As of June 30, 2019, we had $17.7 billion of goodwill and other intangible assets. We review goodwill and indefinite-lived intangible assets for impairment annually or whenever events or circumstances indicate impairment may have occurred. Estimated fair values of our brands or reporting units could change if, for example, there are changes in the business climate, unanticipated changes in the competitive environment, adverse legal or regulatory actions or developments, changes in guests’ perception and the reputation of our brands, or changes in interest rates, operating cash flows, or market capitalization. Because of the significance of our goodwill and other intangible assets, any future impairment of these assets could require material non-cash charges to our results of operations, which could have a material adverse effect on our financial condition and results of operations.

Actions by our franchisees and licensees or others could adversely affect our image and reputation. We franchise and license many of our brand names and trademarks to third parties for lodging, timeshare, residential, and our credit card programs. Under the terms of their agreements with us, our franchisees and licensees interact directly with guests and other third parties under our brand and trade names. Our home rental offering also involves direct engagement between third-party property management companies and our guests. If these franchisees, licensees, or other companies fail to maintain or act in accordance with applicable brand standards; experience operational problems, including any data breach involving guest information; or project a brand image inconsistent with ours, our image and reputation could suffer. Although our agreements with these parties provide us with recourse and remedies in the event of a breach by the franchisee, licensee, or other company, including termination of the agreements under certain circumstances, it could be expensive or time consuming for us to pursue such remedies. We also cannot assure you that in every instance a court would ultimately enforce our contractual termination rights or that we could collect any awarded damages from the defaulting franchisee, licensee, or other company.

Collective bargaining activity and strikes could disrupt our operations, increase our labor costs, and interfere with the ability of our management to focus on executing our business strategies. A significant number of associates at our managed, leased, and owned hotels are covered by collective bargaining agreements. If relationships with our organized associates or the unions that represent them become adverse, the properties we operate could experience labor disruptions such as strikes, lockouts, boycotts, and public demonstrations, as we saw in the fourth quarter of 2018. Although we completed contract negotiations for 43 unionized hotels in 2018 following multi-week strikes by our associates at many of those hotels and completed contract negotiations for an additional 12 unionized hotels in the 2019 first half, a number of additional collective bargaining agreements are expected to be negotiated in the 2019 second half. Labor disputes and disruptions have in the past, and could in the future, result in adverse publicity and adversely affect operations and revenues at affected hotels. In addition, labor disputes and disruptions could harm our relationship with our associates, result in increased regulatory inquiries and enforcement by governmental authorities, harm our relationships with our guests and customers, divert management attention, and reduce customer demand for our services, all of which could have an adverse effect on our reputation, business, financial condition, or results of operations.

Labor regulation and the negotiation of new or existing collective bargaining agreements could lead to higher wage and benefit costs, changes in work rules that raise operating expenses, legal costs, and limitations on our ability or the ability of our third-party property owners to take cost saving measures during economic downturns. We do not have the ability to control the negotiations of collective bargaining agreements covering unionized labor employed by our third-party property owners and franchisees. Increased unionization of our workforce, new labor legislation or changes in regulations could disrupt our operations, reduce our profitability or interfere with the ability of our management to focus on executing our business strategies.

If we cannot attract and retain talented associates, or if we lose the services of senior executives, our business could suffer. We compete with other companies both within and outside of our industry for talented personnel. If we cannot recruit, train, develop, and retain sufficient numbers of talented associates, we could experience increased associate turnover, decreased guest satisfaction, low morale, inefficiency, or internal control failures. Insufficient numbers of talented associates could also limit our ability to grow and expand our businesses. A shortage of skilled

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labor could also result in higher wages that would increase our labor costs, which could reduce our profits. In addition, the efforts and abilities of our senior executives are important elements of maintaining our competitive position and driving future growth, and if we lose the services of one or more of our senior executives, we could experience challenges executing our business strategies or other adverse effects on our business.

Damage to, or losses involving, properties that we own, manage, or franchise may not be covered by insurance, or the cost of such insurance could increase. Marriott requires comprehensive property and liability insurance policies for our managed, leased, and owned properties with coverage features and insured limits that we believe are customary. We require managed hotel owners to procure such coverage or we procure such coverage on their behalf. We also require our franchisees to maintain similar levels of insurance. Market forces beyond our control may nonetheless limit the scope of the insurance coverage we, our hotel owners, or our franchisees can obtain, or our or their ability to obtain coverage at reasonable rates. Certain types of losses, generally of a catastrophic nature, such as earthquakes, hurricanes and floods, terrorist acts, or liabilities that result from breaches in the security of information systems, may result in high deductibles, low limits, or may be uninsurable or the cost of obtaining insurance may be unacceptably high. As a result, we, our hotel owners, and our franchisees may not be successful in obtaining insurance without increases in cost or decreases in coverage levels, or may not be successful in obtaining insurance at all. For example, in 2018 and 2019 substantial increases in property insurance costs occurred due to the severe and widespread damage caused by the 2017 Atlantic hurricane season and other natural disasters coupled with continued large global losses in the property market in 2018. Also, due to the Data Security Incident and the state of the cyber insurance market generally, the costs for our cyber security insurance increased for our policy period beginning in the 2019 second half, and the cost of such insurance could continue to increase in future years. Further, in the event of a substantial loss, the insurance coverage we, our hotel owners, or our franchisees carry may not be sufficient to pay the full market value or replacement cost of any lost investment or in some cases could result in certain losses being totally uninsured. As a result, we could lose some or all of any capital that we have invested in a property, as well as the anticipated future revenue from the property, and we could remain obligated for guarantees, debt, or other financial obligations for the property.

Development and Financing Risks

While we are predominantly a manager and franchisor of hotel properties, our hotel owners depend on capital to buy, develop, and improve hotels, and our hotel owners may be unable to access capital when necessary. Both we and current and potential hotel owners must periodically spend money to fund new hotel investments, as well as to refurbish and improve existing hotels. The availability of funds for new investments and improvement of existing hotels by our current and potential hotel owners depends in large measure on capital markets and liquidity factors, over which we exert little control. Obtaining financing on attractive terms may be constrained by the capital markets for hotel and real estate investments. In addition, owners of existing hotels that we franchise or manage may have difficulty meeting required debt service payments or refinancing loans at maturity.

Our growth strategy depends upon third-party owners/operators, and future arrangements with these third parties may be less favorable. Our growth strategy for adding lodging facilities entails entering into and maintaining various arrangements with property owners. The terms of our management agreements and franchise agreements for each of our lodging facilities are influenced by contract terms offered by our competitors, among other things. We cannot assure you that any of our current arrangements will continue or that we will be able to enter into future collaborations, renew agreements, or enter into new agreements in the future on terms that are as favorable to us as those that exist today.

Our ability to grow our management and franchise systems is subject to the range of risks associated with real estate investments. Our ability to sustain continued growth through management or franchise agreements for new hotels and the conversion of existing facilities to managed or franchised Marriott brands is affected, and may potentially be limited, by a variety of factors influencing real estate development generally. These include site availability, financing, planning, zoning and other local approvals, and other limitations that may be imposed by market and submarket factors, such as projected room occupancy and rate, changes in growth in demand compared to projected supply, territorial restrictions in our management and franchise agreements, costs of construction, and demand for construction resources.

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Our development and renovation activities expose us to project cost, completion, and resale risks. We occasionally develop, or acquire and renovate, hotel and residential properties, both directly and through partnerships, joint ventures, and other business structures with third parties. As demonstrated by the impairment charges that we recorded in 2014 and 2015 in connection with our development and construction of three EDITION hotels and residences, our ongoing involvement in the development of properties presents a number of risks, including that: (1) any future weakness in the capital markets may limit our ability, or that of third parties with whom we do business, to raise capital for completion of projects that have commenced or for development of future properties; (2) properties that we develop or renovate could become less attractive due to decreases in demand for hotel and residential properties, market absorption or oversupply, with the result that we may not be able to sell such properties for a profit or at the prices or selling pace we anticipate, potentially requiring additional changes in our pricing strategy that could result in further charges; (3) construction delays or cost overruns, including those due to shortages or increased costs of skilled labor and/or materials, lender financial defaults, or so called “Acts of God” such as earthquakes, hurricanes, floods, or fires may increase overall project costs or result in project cancellations; and (4) we may be unable to recover development costs we incur for any projects that we do not pursue to completion.

Our owned properties and other real estate investments subject us to numerous risks. Although we had relatively few owned and leased properties at the end of 2019 second quarter, such properties are subject to the risks that generally relate to investments in real property. While we have sold many properties in recent years and we are actively pursuing additional sales, equity real estate investments can be difficult to sell quickly, and we may not be able to do so at prices we find acceptable or at all. Moreover, the investment returns available from equity investments in real estate depend in large part on the amount of income earned and capital appreciation generated by the related properties, and the expenses incurred. A variety of other factors also affect income from properties and real estate values, including governmental regulations, insurance, zoning, tax and eminent domain laws, interest rate levels, and the availability of financing. For example, new or existing real estate zoning or tax laws can make it more expensive and/or time-consuming to develop real property or expand, modify, or renovate hotels. When interest rates increase, the cost of acquiring, developing, expanding, or renovating real property increases and real property values may decrease as the number of potential buyers decreases. Similarly, as financing becomes less available, it becomes more difficult both to acquire and to sell real property. Finally, under eminent domain laws, governments can take real property, sometimes for less compensation than the owner believes the property is worth. Despite our asset-light strategy, our real estate properties could be impacted by any of these factors, resulting in a material adverse impact on our results of operations or financial condition. If our properties do not generate revenue sufficient to meet operating expenses, including needed capital expenditures, our income could be adversely affected.

Development and other investing activities that involve our co-investment with third parties may result in disputes and may decrease our ability to manage risk. We have from time to time invested, and may continue to invest, in partnerships, joint ventures, and other business structures involving our co-investment with third parties. These investments generally include some form of shared control over the development of the asset or operations of the business and create added risks, including the possibility that other investors in such ventures could become bankrupt or otherwise lack the financial resources to meet their obligations, could have or develop business interests, policies, or objectives that are inconsistent with ours, could take action without our approval (or, conversely, prevent us from taking action without our partner’s approval), or could make requests contrary to our policies or objectives. Should a venture partner become bankrupt we could become liable for our partner’s share of the venture’s liabilities. Actions by a co-venturer might subject the assets owned by the venture or partnership to additional risk, such as increased project costs, project delays, or operational difficulties following project completion. Disagreements with our venture partners may result in litigation. These risks may be more likely to occur in difficult business environments. We cannot assure you that our investments through partnerships or joint ventures will be successful in light of these risks.

Risks associated with development and sale of residential properties associated with our lodging properties or brands may reduce our profits. We participate, through licensing agreements or directly or through noncontrolling interests, in the development and sale of residential properties associated with our brands, including residences and condominiums under many of our luxury and premium brand names and trademarks. Such projects pose further

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risks beyond those generally associated with our lodging business, which may reduce our profits or compromise our brand equity, including risks that (1) weakness in residential real estate and demand generally may reduce our profits and could make it more difficult to convince future development partners of the value added by our brands; (2) increases in interest rates, reductions in mortgage availability or the tax benefits of mortgage financing or residential ownership generally, or increases in the costs of residential ownership could prevent potential customers from buying residential products or reduce the prices they are willing to pay; and (3) residential construction may be subject to warranty and liability claims or claims related to purchaser deposits, and the costs of resolving such claims may be significant.

Some hotel openings in our development pipeline and approved projects may be delayed or not result in new hotels, which could adversely affect our growth prospects. We report a significant number of hotels in our development pipeline, including hotels under construction and under signed contracts, as well as hotels approved for development but not yet under contract. The eventual opening of such pipeline hotels and, in particular, the approved hotels that are not yet under contract, is subject to numerous risks, including in some cases the owner’s or developer’s ability to obtain adequate financing or governmental or regulatory approvals, increased construction costs or changes in lodging supply dynamics in individual markets. Competition for skilled construction labor and disruption in the supply chain for materials has in the past and could in the future cause construction timelines for pipeline hotels to lengthen. Accordingly, we cannot assure you that all of our development pipeline will result in new hotels entering our system, or that those hotels will open when we anticipate.

If we incur losses on loans or loan guarantees that we have made to third parties, our profits could decline. At times, we make loans for hotel development or renovation expenditures when we enter into or amend management or franchise agreements. From time to time we also provide third-party lenders with financial guarantees for the timely repayment of all or a portion of debt related to hotels that we manage or franchise, generally subject to an obligation that the owner reimburse us for any fundings. We could suffer losses if hotel owners or franchisees default on loans that we provide or fail to reimburse us for loan guarantees that we have funded.

If owners of hotels that we manage or franchise cannot repay or refinance mortgage loans secured by their properties, our revenues and profits could decrease and our business could be harmed. The owners of many of our managed or franchised properties have pledged their hotels as collateral for mortgage loans that they entered into when those properties were purchased or refinanced. If those owners cannot repay or refinance maturing indebtedness on favorable terms or at all, the lenders could declare a default, accelerate the related debt, and repossess the property. Such sales or repossessions could, in some cases, result in the termination of our management or franchise agreements and eliminate our anticipated income and cash flows, which could negatively affect our results of operations.

Technology, Information Protection, and Privacy Risks

A failure to keep pace with developments in technology could impair our operations or competitive position. The lodging industry continues to demand the use of sophisticated technology and systems, including those used for our reservation, revenue management, property management, human resources and payroll systems, our Loyalty Program, and technologies we make available to our guests and for our associates. These technologies and systems must be refined, updated, and/or replaced with more advanced systems on a regular basis, and our business could suffer if we cannot do that as quickly or effectively as our competitors or within budgeted costs and time frames. We also may not achieve the benefits that we anticipate from any new technology or system, and a failure to do so could result in higher than anticipated costs or could impair our operating results.

An increase in the use of third-party Internet services to book online hotel reservations could adversely impact our business. Some of our hotel rooms are booked through Internet travel intermediaries such as Expedia.com^®, Priceline.com^®, Booking.com™, Travelocity.com^®, and Orbitz.com^®, as well as lesser-known online travel service providers. These intermediaries initially focused on leisure travel, but now also provide offerings for corporate travel and group meetings. Although our Best Rate Guarantee and Member Rate programs have helped limit guest preference shift to intermediaries and greatly reduced the ability of intermediaries to undercut the published rates at our hotels, intermediaries continue to use a variety of aggressive online marketing methods to attract guests, including the purchase by certain companies of trademarked online keywords such as “Marriott” from Internet

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search engines such as Google^®, Bing^®, Yahoo^®, and Baidu^® to steer guests toward their websites (a practice that has been challenged by various trademark owners in federal court). Although we have successfully limited these practices through contracts with key online intermediaries, the number of intermediaries and related companies that drive traffic to intermediaries’ websites is too large to permit us to eliminate this risk entirely. Our business and profitability could be harmed if online intermediaries succeed in significantly shifting loyalties from our lodging brands to their travel services, diverting bookings away from our direct online channels, or through their fees, increase the overall cost of Internet bookings for our hotels. In addition, if we are not able to negotiate new agreements on satisfactory terms when our existing contracts with intermediaries (which generally have 2- to 3- year terms) come up for renewal, our business and prospects could be negatively impacted in a number of ways. For example, if newly negotiated agreements are on terms less favorable to our hotels than the expiring agreements, or if we are not able to negotiate new agreements and our hotels no longer appear on intermediary websites, our bookings could decline, our profits (and the operating profits of hotels in our system) could decline, and customers and owners may be less attracted to our brands. We may not be able to recapture or offset any such loss of business through actions we take to enhance our direct marketing and reservation channels or to rely on other channels or other intermediary websites.

We are exposed to risks and costs associated with protecting the integrity and security of company, associate, and guest data. In the operation of our business, we collect, store, use, and transmit large volumes of data regarding associates, guests, customers, owners, licensees, franchisees, and our own business operations, including credit card numbers, reservation and loyalty data, and other personal information, in various information systems that we maintain and in systems maintained by third parties, including our owners, franchisees, licensees, and service providers. The integrity and protection of this data is critical to our business. If this data is inaccurate or incomplete, we could make faulty decisions.

Our guests and associates also have a high expectation that we, as well as our owners, franchisees, licensees, and service providers, will adequately protect and appropriately use their personal information. The information, security, and privacy requirements imposed by laws and governmental regulation, our contractual obligations, and the requirements of the payment card industry are also increasingly demanding in the U.S., the European Union, Asia, and other jurisdictions where we operate. Our systems and the systems maintained or used by our owners, franchisees, licensees, and service providers may not be able to satisfy these changing legal and regulatory requirements and associate and guest expectations, or may require significant additional investments or time to do so. We may incur significant additional costs to meet these requirements, obligations, and expectations, and in the event of alleged or actual noncompliance we may experience increased operating costs, increased exposure to fines and litigation, and increased risk of damage to our reputation and brand.

The Data Security Incident could have numerous adverse effects on our business. As a result of the Data Security Incident, we are a party to numerous lawsuits, primarily putative class actions, brought by consumers and others in the U.S. and Canada, one securities class action lawsuit in the U.S., and two shareholder derivative lawsuits in the U.S. We may be named as a party in additional lawsuits and other claims may be asserted by or on behalf of guests, customers, hotel owners, shareholders or others seeking monetary damages or other relief. A number of federal, state and foreign governmental authorities have also made inquiries, opened investigations, or requested information and/or documents related to the Data Security Incident, including under various data protection and privacy regulations, such as the European Union’s General Data Protection Regulation. Responding to and resolving these lawsuits, claims and investigations could result in material remedial and other expenses which may not be covered by insurance, including fines. For example, the Information Commissioner’s Office in the United Kingdom (“ICO”) recently communicated its intent to issue a fine in the amount of £99 million against the Company in relation to the Data Security Incident. Although we have the right to respond to the ICO before the amount of the fine is finally determined and the fine can be issued by the ICO, and we intend to respond and vigorously defend our position, we are unable to predict the amount of any fine the ICO may ultimately determine to issue. Governmental authorities investigating the Data Security Incident also may seek to impose undertakings, injunctive relief, consent decrees, or other civil or criminal penalties, which could, among other things, materially increase our data security costs or otherwise require us to alter how we operate our business. Card issuers or payment card networks may seek to attribute losses or other expenses to the Data Security Incident, and we cannot currently determine to what extent those losses and expenses may be our legal responsibility. Significant

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management time and Company resources have been, and may continue to be, devoted to the Data Security Incident. The Data Security Incident and publicity related to it could have a range of other adverse effects on our business or prospects, including causing or contributing to loss of consumer confidence, reduced consumer demand, reduced enrollment and/or participation in our Loyalty Program, loss of development opportunities, and associate retention and recruiting difficulties. These expenses and other adverse effects could have a material effect on our market share, reputation, business, financial condition, or results of operations. Although our insurance program includes coverage designed to limit our exposure to losses such as those related to the Data Security Incident, that insurance may not be sufficient or available to cover all of our expenses or other losses (including the final amount of the Proposed ICO Fine and any other fines) related to the Data Security Incident. Further, as a result market forces beyond our control and experiences such as the Data Security Incident, relevant insurance coverage may not be available in the future on commercially reasonable terms or at all.

Our remediation efforts related to the Data Security Incident will be costly and may not be effective. Following the Data Security Incident, we implemented additional technical measures on our network designed to contain and remove the threats identified during our investigation, secure the Starwood reservations database, and monitor for any further unauthorized activity. We also accelerated ongoing security enhancements to our network. We have incurred costs in connection with these remediation efforts to date, and we could incur additional significant costs as we take further steps designed to prevent unauthorized access to our network. The technical measures we have taken are based on our investigation of the causes of the Data Security Incident, but additional measures may be needed to prevent a similar incident in the future and such measures may not be sufficient to prevent other types of incidents. We cannot assure you that all potential causes of the incident have been identified and remediated and will not occur again.

Additional cybersecurity incidents could have adverse effects on our business. The Data Security Incident was significant, went undetected for a long period of time, and could have numerous adverse effects on our business, as discussed above. If we experience additional cybersecurity incidents or fail to detect and appropriately respond to additional cybersecurity incidents, the severity of the adverse effects on our business could be magnified. We have implemented security measures to safeguard our systems and data, and we intend to continue implementing additional measures in the future, but, as with the Data Security Incident, our measures may not be sufficient to maintain the confidentiality, security, or availability of the data we collect, store, and use to operate our business. Measures taken by our service providers or our owners, franchisees, licensees, and their service providers also may not be sufficient. Efforts to hack or circumvent security measures, efforts to gain unauthorized access to data, failures of systems or software to operate as designed or intended, viruses, “ransomware” or other malware, “phishing” or other types of business email compromises, operator error, or inadvertent releases of data have impacted, and may in the future impact, our information systems and records or those of our owners, franchisees, licensees, or service providers. Our reliance on computer, Internet-based, and mobile systems and communications, and the frequency and sophistication of efforts by third parties to gain unauthorized access or prevent authorized access to such systems, have greatly increased in recent years. We have experienced cyber-attacks, attempts to disrupt access to our systems and data, and attempts to affect the integrity of our data, and the frequency and sophistication of such efforts could continue to increase. In addition to the consequences of the Data Security Incident discussed above, any significant theft of, unauthorized access to, loss of, loss of access to, or fraudulent use of guest, associate, owner, franchisee, licensee, or company data could adversely impact our reputation and could result in legal, regulatory and other consequences, including remedial and other expenses, fines, or litigation. Depending on the nature and scope of the event, compromises in the security of our information systems or those of our owners, franchisees, licensees, or service providers or other disruptions in data services could lead to an interruption in the operation of our systems, resulting in operational inefficiencies and a loss of profits, and could result in negative publicity and other adverse effects on our business, including lost sales, boycotts, reduced enrollment and/or participation in our Loyalty Program, litigation, loss of development opportunities, or associate retention and recruiting difficulties, all of which could affect our market share, reputation, business, financial condition, or results of operations. The techniques used to obtain unauthorized access, disable or degrade service, or sabotage information systems change frequently, can be difficult to detect for long periods of time, and can involve difficult or prolonged assessment or remediation periods even once detected, which could magnify the severity of these adverse effects. In addition, although we carry cyber/privacy liability insurance that is designed to protect us against certain losses related to cyber risks, that insurance coverage may not be sufficient to cover all expenses or

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other losses (including fines) or all types of claims that may arise in connection with cyber-attacks, security compromises, and other related incidents. Furthermore, in the future such insurance may not be available on commercially reasonable terms, or at all.

Changes in privacy and data security laws could increase our operating costs, increase our exposure to fines and litigation, and adversely affect our ability to market our products effectively. We are subject to numerous, complex, and frequently changing laws, regulations, and contractual obligations designed to protect personal information, including in the U.S., the European Union, Asia, and other jurisdictions. Non-U.S. data privacy and data security laws, various U.S. federal and state laws, payment card industry security standards, and other information privacy and security standards are all applicable to us. Significant legislative or regulatory changes could be adopted in the future, including in reaction to the Data Security Incident or data breaches experienced by other companies. Compliance with changes in applicable data privacy laws and regulations and contractual obligations, including responding to investigations into our compliance, may restrict our business operations, increase our operating costs, increase our exposure to fines and litigation in the event of alleged non-compliance, and adversely affect our reputation. Following the Data Security Incident, the ICO notified us that it had opened an investigation into our online privacy policy and related practices and an investigation into the Company’s handling of data subject access requests. These investigations are separate from the ICO’s investigation specifically related to the Data Security Incident. As a result of these investigations, we could be exposed to significant fines and remediation costs in addition to any imposed as a result of the Data Security Incident, and adverse publicity related to the investigations could adversely affect our reputation.

Additionally, we rely on a variety of direct marketing techniques, including email marketing, online advertising, and postal mailings. Any further restrictions in laws such as the CANSPAM Act, and various U.S. state laws (such as the California Consumer Privacy Act), or new federal laws on marketing and solicitation or international privacy, e-privacy, and anti-spam laws that govern these activities could adversely affect the continuing effectiveness of email, online advertising, and postal mailing techniques and could force further changes in our marketing strategy. If this occurs, we may not be able to develop adequate alternative marketing strategies, which could impact the amount and timing of our sales of certain products. We also obtain access to potential guests and customers from travel service providers or other companies with whom we have substantial relationships, and we market to some individuals on these lists directly or by including our marketing message in the other companies’ marketing materials. If access to these lists were to be prohibited or otherwise restricted, our ability to develop new guests and customers and introduce them to our products could be impaired.

Any disruption in the functioning of our reservation systems could adversely affect our performance and results. We manage global reservation systems that communicate reservations to our hotels from individuals who book reservations directly with us online, through our mobile apps, through our telephone call centers, or through intermediaries like travel agents, Internet travel websites, and other distribution channels. The cost, speed, accuracy and efficiency of our reservation systems are critical aspects of our business and are important considerations for hotel owners when choosing our brands. Our business may suffer if we fail to maintain, upgrade, or prevent disruption to our reservation systems. Disruptions in or changes to our reservation systems could result in a disruption to our business and the loss of important data.

Other Risks

Ineffective internal control over financial reporting could result in errors in our financial statements, reduce investor confidence, and adversely impact our stock price. As discussed in Part II, Item 8 “Management’s Report on Internal Control Over Financial Reporting” of our 2018 Form 10-K, in the 2018 fourth quarter, we identified a material weakness in internal control related to our accounting for our Loyalty Program, which resulted in errors in our previously issued financial statements for the 2018 first, second, and third quarters. Internal controls related to the implementation of ASU 2014-09 and the accounting for our Loyalty Program are important to accurately reflect our financial position and results of operations in our financial reports. We are in the process of remediating the material weakness and responding to requests from the SEC for documents and information related to these matters. If we are unable to remediate the material weakness in an appropriate and timely manner, or if we identify additional control deficiencies that individually or together constitute significant deficiencies or material weaknesses, our ability to accurately record, process, and report financial information and consequently, our ability

44

to prepare financial statements within required time periods, could be adversely affected. Failure to properly remediate the material weakness or the discovery of additional control deficiencies could result in violations of applicable securities laws, stock exchange listing requirements, and the covenants under our debt agreements, subject us to litigation and investigations, negatively affect investor confidence in our financial statements, and adversely impact our stock price and ability to access capital markets.

Changes in laws and regulations could reduce our profits or increase our costs. We are subject to a wide variety of laws, regulations, and policies in jurisdictions around the world, including those for financial reporting, taxes, healthcare, cybersecurity, privacy, climate change, and the environment. Changes to such laws, regulations, or policies could reduce our profits. We also anticipate that many of the jurisdictions where we do business will continue to review taxes and other revenue raising measures, and any resulting changes could impose new restrictions, costs, or prohibitions on our current practices or reduce our profits. In particular, governments may revise tax laws, regulations, or official interpretations in ways that could significantly impact us, and other modifications could reduce the profits that we can effectively realize from our operations or could require costly changes to those operations or the way in which they are structured.

We could be subject to additional tax liabilities. We are subject to a variety of taxes in the U.S. (federal and state) and numerous foreign jurisdictions. We may recognize additional tax expense and be subject to additional tax liabilities due to changes in laws, regulations, administrative practices, principles, and interpretations related to tax, including changes to the global tax framework, competition, and other laws and accounting rules in various jurisdictions. Such changes could come about as a result of economic, political, and other conditions.

Our tax expense and liabilities may also be affected by other factors, such as changes in our business operations, acquisitions, investments, entry into new businesses and geographies, intercompany transactions, the relative amount of our foreign earnings, losses incurred in jurisdictions for which we are not able to realize related tax benefits, the applicability of special tax regimes, changes in foreign currency exchange rates, changes in our stock price, and changes in our deferred tax assets and liabilities and their valuation. Significant judgment is required in evaluating and estimating our tax expense and liabilities. In the ordinary course of our business, there are many transactions and calculations for which the ultimate tax determination is uncertain. For example, the legislation known as the U.S. Tax Cuts and Jobs Act of 2017 (the “2017 Tax Act”) requires complex computations to be performed that were not previously required by U.S. tax law, significant judgments to be made in interpretation of the provisions of the 2017 Tax Act, significant estimates in calculations, and the preparation and analysis of information not previously relevant or regularly produced. The U.S. Treasury Department, the U.S. Internal Revenue Service, and other standard-setting bodies will continue to interpret or issue guidance on how provisions of the 2017 Tax Act will be applied or otherwise administered. As future guidance is issued, we may make adjustments to amounts that we have previously recorded that may materially impact our financial statements in the period in which the adjustments are made.

We are also currently subject to tax controversies in various jurisdictions, and these jurisdictions may assess additional tax liabilities against us. Developments in an audit, investigation, or other tax controversy could have a material effect on our operating results or cash flows in the period or periods for which that development occurs, as well as for prior and subsequent periods. We regularly assess the likelihood of an adverse outcome resulting from these proceedings to determine the adequacy of our tax accruals. Although we believe our tax estimates are reasonable, the final outcome of audits, investigations, and any other tax controversies could be materially different from our historical tax accruals.

Delaware law and our governing corporate documents contain, and our Board of Directors could implement, anti-takeover provisions that could deter takeover attempts. Under the Delaware business combination statute, a shareholder holding 15 percent or more of our outstanding voting stock could not acquire us without Board of Director consent for at least three years after the date the shareholder first held 15 percent or more of the voting stock. Our governing corporate documents also, among other things, require supermajority votes for mergers and similar transactions. In addition, our Board of Directors could, without shareholder approval, implement other anti-takeover defenses, such as a shareholder rights plan.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) Unregistered Sale of Securities

None.

(b) Use of Proceeds

None.

(c) Issuer Purchases of Equity Securities

(in millions, except per share amounts)
Period	Total Number of Shares Purchased	Average Price per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs (1)
April 1, 2019 - April 30, 2019	1.2	$	133.60	1.2	27.8
May 1, 2019 - May 31, 2019	1.4	$	130.10	1.4	26.4
June 1, 2019 - June 30, 2019	1.1	$	134.05	1.1	25.3

⁽¹⁾  On November 9, 2017 and February 15, 2019, we announced that our Board of Directors increased our common stock repurchase authorization by 30 million shares and 25 million shares, respectively. As of June 30, 2019, 25.3 million shares remained available for repurchase under Board approved authorizations. We repurchase shares in the open market and in privately negotiated transactions.

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Item 6. Exhibits

Exhibit No.	Description	Incorporation by Reference (where a report is indicated below, that document has been previously filed with the SEC and the applicable exhibit is incorporated by reference thereto)
3.1	Restated Certificate of Incorporation.	Exhibit No. 3.(i) to our Form 8-K filed August 22, 2006 (File No. 001-13881).
3.2	Amended and Restated Bylaws.	Exhibit No. 3.(ii) to our Form 8-K filed February 14, 2017 (File No. 001-13881).
10.1	Amendment dated May 10, 2019 to the Marriott International, Inc. Stock and Cash Incentive Plan.	Filed with this report.
10.2	U.S. $4,500,000 Fifth Amended and Restated Credit Agreement dated as of June 28, 2019 with Bank of America, N.A. as administrative agent and certain banks.	Exhibit No. 10 to our Form 8-K filed July 1, 2019 (File No. 001-13881).
31.1	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a).	Filed with this report.
31.2	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a).	Filed with this report.
32	Section 1350 Certifications.	Furnished with this report.
101.INS	XBRL Instance Document - the instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.	Submitted electronically with this report.
101.SCH	XBRL Taxonomy Extension Schema Document.	Submitted electronically with this report.
101.CAL	XBRL Taxonomy Calculation Linkbase Document.	Submitted electronically with this report.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.	Submitted electronically with this report.
101.LAB	XBRL Taxonomy Label Linkbase Document.	Submitted electronically with this report.
101.PRE	XBRL Taxonomy Presentation Linkbase Document.	Submitted electronically with this report.
104	The cover page from Marriott International, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, formatted in inline XBRL.	Submitted electronically with this report.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

MARRIOTT INTERNATIONAL, INC.

6^th day of August, 2019

/s/ Bao Giang Val Bauduin

Bao Giang Val Bauduin

Controller and Chief Accounting Officer
(Duly Authorized Officer)

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EX-10.1

Exhibit 10.1

BOARD OF DIRECTORS

OF

MARRIOTT INTERNATIONAL, INC.

NO:BOARD 2019 - 20

DATE:May 10, 2019

Approval of Amendments to the

Marriott International, Inc. Stock and Cash Incentive Plan

WHEREAS, Marriott International, Inc. (the “Company”) maintains the Marriott International, Inc. Stock and Cash Incentive Plan, as amended (the “Plan”); and

WHEREAS, pursuant to Article 17.1 of the Plan, the Company’s Board of Directors (the “Board”) may amend the Plan at any time; and

Amendment to Director Share Awards and Fee Deferral Provisions

Director Share Awards

WHEREAS, Article 12.2 of the Plan provides that, on the first full trading day immediately following each annual meeting of Company stockholders at which directors are elected (“Annual Meeting”), each non-employee member of the Board (“Non-Employee Director”) designated by the Board will receive a fully vested award of shares (“Shares”) of the Company’s Class A common stock (“Share Award”); and

WHEREAS, the Compensation Policy Committee (the “Committee”) of the Board has recommended that the Board amend Article 12.2 of the Plan to provide that Shares subject to a Share Award will be distributed in a lump sum following the Non-Employee Director terminating service on the Board, unless the Non-Employee Director makes an advance election designating another time or form of distribution in a manner prescribed by the Committee; and

Director Fee Deferrals

WHEREAS, Article 12.3(a) of the Plan provides procedures pursuant to which Non-Employee Directors may elect to defer receipt of all or part of their cash retainer and/or fees (“Fees”) payable to them during the director term commencing at the next following Annual Meeting (such election, a “Fee Deferral Election”); and

WHEREAS, Article 12.3(b) of the Plan provides that Fees deferred pursuant to a Fee Deferral Election will be credited as fully vested Stock Units to a Stock Unit Account (as such terms are defined in the Plan) as of the date of deferral, with the number of Stock Units credited based on the Fair Market Value (as defined in the Plan) of a Share on the date on which the Fees would have been paid but for the Fee Deferral Election; and

WHEREAS, for administrative convenience, the Committee has recommended that the Board amend Article 12.3(b) of the Plan to provide that Fees deferred pursuant to a Fee Deferral Election will be credited as fully vested Stock Units to a Stock Unit Account as of the end of the calendar quarter for which the Fees were payable, with the number of Stock Units credited based on the Fair Market Value of a Share on such date.

1748230_1

Exhibit 10.1

NOW THEREFORE, BE IT RESOLVED that the Board hereby approves and adopts the amendments to Article 12 of the Plan, and conforming amendments elsewhere in the Plan, substantially in the form attached hereto as Exhibit A.

Amendment to Share Withholding Provision

WHEREAS, Article 18.2 of the Plan provides that the Company may require, or the Committee may permit a participant to elect, that the tax withholding required in connection with any Award (as defined in the Plan) be wholly or partially satisfied by having the Company withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax which could be withheld on the transaction; and

WHEREAS, to facilitate tax compliance, the Committee has recommended that the Board amend Article 18.2 of the Plan to provide that the tax withholding required in connection with any Award may be wholly or partially satisfied by having the Company withhold from Shares to be issued pursuant to such Award a number of Shares having an aggregate Fair Market Value on the date of withholding that would satisfy the withholding amount due, provided that the amount withheld does not exceed the maximum statutory tax rates in the participant’s applicable jurisdiction.

NOW THEREFORE, BE IT RESOLVED that the Board hereby approves and adopts the amendments to Article 18.2 of the Plan substantially in the form attached hereto as Exhibit A.

General Authorization

BE IT FURTHER RESOLVED, that the Chairman, Chief Executive Officer, and any Vice President of the Company, or their designees, are authorized in the name of, and on behalf of, the Company to take any and all such actions and to expend such funds as shall be necessary or appropriate, in their judgment, to carry out the intent and purposes of these resolutions; and

Ratification of Prior Acts

BE IT FURTHER RESOLVED that any and all actions heretofore taken by any officer, director or manager of the Company consistent with the foregoing resolutions are hereby ratified, approved and confirmed in all respects as fully as if such actions had been presented to the Board for its approval prior to such actions being taken.

1748230_1

Exhibit 10.1

By the Board of Directors

Bancroft S. Gordon

Corporate Secretary

1748230_1

Exhibit 10.1

EXHIBIT A

AMENDMENT TO THE

MARRIOTT INTERNATIONAL, INC. STOCK AND CASH INCENTIVE PLAN

THIS AMENDMENT to the Marriott International, Inc. Stock and Cash Incentive Plan, as amended and restated effective January 1, 2008, and as subsequently amended from time to time (the “Plan”), is made this 10th day of May, 2019, as follows (new language underlined and deleted language struck):

1. Article 2.3 of the Plan is hereby amended to read as follows:

2.3“Award” means, individually or collectively, a grant under this Plan of MI Shares, SARs, Nonqualified Stock Options, Incentive Stock Options, Restricted Stock, Deferred Stock Bonus Awards, Deferred Stock Agreements, Special Recognition Stock Awards, 1998 Conversion Awards, Other Share-Based Awards, Other Cash Performance-Based Awards, Non-Employee Director Deferred Share Awards, Stock Units, and Director SARs and Options.

2. Article 2.36 of the Plan is hereby amended to read as follows:

2.36“Non-Employee Director Deferred Share Award” shall mean an award of Shares to a Non-Employee Director for which distribution of the subject Shares is deferred, as described in Article 12.2 herein.

3. Article 12.1 of the Plan is hereby amended to read as follows:

12.1Eligibility. Only Non-Employee Directors shall be eligible to receive Non-Employee Director Deferred Share Awards and Director SARs and Options and to make Fee Deferral Elections.

4. Article 12.2 of the Plan is hereby amended to read as follows:

12.2Non-Employee Director Deferred Share Awards. On the first (1st) full trading day immediately following each Annual Meeting, each Non-Employee Director designated by the Board shall receive a Non-Employee Director Deferred Share Award of a number of Shares determined by the Board before such Annual Meeting. Each Non-Employee Director Deferred Share Award shall be fully vested and nonforfeitable when granted and the subject Shares shall be distributed to the Non-Employee Director in a lump sum within 30 days following the Non-Employee Director’s Termination of Service, unless the Non-Employee Director makes an advance election designating another time or form of distribution. Any such advance election must be made in writing on a form and in a manner prescribed by the Committee (or its delegate(s)) and delivered to the Company on or before (and become irrevocable by) the last day of the calendar year that immediately precedes the year of grant of the Non-Employee Director Deferred Share Award. The Non-Employee Director shall have no voting, transfer, liquidation, dividend or other rights of a stockholder of the Company with respect to Non-Employee Director Deferred Share Awards prior to such time that the subject Shares are distributed to the Non-Employee Director.

1748230_1

Exhibit 10.1

5. Articles 12.3(a) and (b) of the Plan are hereby amended to read as follows:

12.3Fee Deferral Elections.

(a)Elections to Defer Payment of Fees. Payment of all or any part of any Fees payable to a Non-Employee Director may be deferred by election of the Non-Employee Director. Each such election must be made in writing on a form and in a manner prescribed by the Committee (or its delegate(s)) and irrevocably delivered to the Company in the year preceding the yearterm of the Non-Employee Director which commences with the next Annual Meeting (the “Election Year”) and must be irrevocable for such Election Year. No election may be made under this Article 12.3(a) with respect to Fees for which an election is made under Article 12.5.

(b)Crediting Stock Units to Accounts. Amounts deferred pursuant to a Fee Deferral Election shall be credited as of the date of deferralthe end of the calendar quarter for which the Fees were payable (the “Credit Date”) to a Stock Unit Account in Stock Units. The number of Stock Units credited to a Stock Unit Account with respect to any Non-Employee Director shall equal (i) the amount deferred pursuant to the Fee Deferral Election divided by (ii) the Fair Market Value of a Share on the date on which the Fees subject to the Fee Deferral Election would have been paid but for the Fee Deferral ElectionCredit Date, with fractional units calculated to at least three (3) decimal places. Notwithstanding the foregoing, in the event that the Credit Date is a Saturday, Sunday or other day on which stock of the Company is not traded on the Nasdaq or another national exchange, then the Credit Date shall be the immediately preceding day on which the stock of the Company is traded on the Nasdaq or another national exchange.

6. Article 18.2 of the Plan is hereby amended to read as follows:

18.2Share Withholding. With respect to withholding required in connection with any Award, the Company may require, or the Committee may permit a Participant to elect, that the withholding requirement be satisfied, in whole or in part, by having the Company withhold from Shares to be issued pursuant to such Award a number of Shares having an aggregate Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax which could withheld on the transactionof withholding that would satisfy the withholding amount due; provided, however, that the amount withheld does not exceed the maximum statutory tax rates in such Participant’s applicable jurisdiction for Federal, state, local and foreign income, employment or other related tax purposes that are applicable to such taxable income. Any election by a Participant shall be irrevocable, made in writing, signed by the Participant, and shall be subject to any restrictions or limitations that the Committee, in its sole discretion, deems appropriate. For purposes of Share withholding, the Fair Market Value of the withheld Shares shall be determined consistent with the applicable provisions of the Code, together with the regulations and official guidance promulgated thereunder.

1748230_1

EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer

Pursuant to Rule 13a-14(a)

I, Arne M. Sorenson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Marriott International, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

6th day of August, 2019	/s/ Arne M. Sorenson
	Arne M. Sorenson   President and   Chief Executive Officer   (Principal Executive Officer)

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer

Pursuant to Rule 13a-14(a)

I, Kathleen K. Oberg, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Marriott International, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

6th day of August, 2019	/s/ Kathleen K. Oberg
	Kathleen K. Oberg   Executive Vice President and   Chief Financial Officer   (Principal Financial Officer)

EX-32

Exhibit 32

Certification

Pursuant to Rule 13a-14(b) and Section 906 of the Sarbanes-Oxley Act of 2002

(18 U.S.C. Sections 1350(a) and (b))

I, Arne M. Sorenson, President and Chief Executive Officer of Marriott International, Inc. (the “Company”) certify that:

(1) the quarterly report on Form 10-Q of the Company for the period ended June 30, 2019, (the “Quarterly Report”) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(2) the information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

6th day of August, 2019	/s/ Arne M. Sorenson
	Arne M. Sorenson   President and   Chief Executive Officer   (Principal Executive Officer)

I, Kathleen K. Oberg, Executive Vice President and Chief Financial Officer of Marriott International, Inc. (the “Company”) certify that:

(1) the quarterly report on Form 10-Q of the Company for the period ended June 30, 2019, (the “Quarterly Report”) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(2) the information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

6th day of August, 2019	/s/ Kathleen K. Oberg
	Kathleen K. Oberg   Executive Vice President and   Chief Financial Officer   (Principal Financial Officer)

XML

Cover Page - shares	6 Months Ended
	Jun. 30, 2019	Jul. 26, 2019
Entity Information [Line Items]
Document Transition Report	false
Document Quarterly Report	true
Entity Incorporation, State or Country Code	DE
Entity File Number	1-13881
City Area Code	301
Local Phone Number	380-3000
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2019
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Shell Company	false
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2
Entity Registrant Name	MARRIOTT INTERNATIONAL INC /MD/
Entity Central Index Key	0001048286
Entity Address, Postal Zip Code	20817
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Common Stock, Shares Outstanding		329,358,821
Entity Tax Identification Number	52-2055918
Entity Address, Address Line One	10400 Fernwood Road
Entity Address, City or Town	Bethesda
Entity Address, State or Province	MD
Nasdaq Global Select Market
Entity Information [Line Items]
Title of 12(b) Security	Class A Common Stock, $0.01 par value
Trading Symbol	MAR
Security Exchange Name	NASDAQ
Chicago Stock Exchange
Entity Information [Line Items]
Title of 12(b) Security	Class A Common Stock, $0.01 par value
Trading Symbol	MAR
Security Exchange Name	CHX

XML

CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
REVENUES
Revenues	$ 5,305	$ 5,409	$ 10,317	$ 10,418
OPERATING COSTS AND EXPENSES
Depreciation, amortization, and other	56	58	110	112
General, administrative, and other	229	217	451	464
Merger-related costs and charges	173	18	182	52
Costs and expenses	4,896	4,591	9,398	9,070
OPERATING INCOME	409	818	919	1,348
Gains and other income, net	1	114	6	173
Interest expense	(102)	(85)	(199)	(160)
Interest income	6	6	12	11
Equity in earnings	0	21	8	34
INCOME BEFORE INCOME TAXES	314	874	746	1,406
Provision for income taxes	(82)	(207)	(139)	(319)
NET INCOME	$ 232	$ 667	$ 607	$ 1,087
EARNINGS PER SHARE
Earnings per share - basic (in USD per share)	$ 0.70	$ 1.89	$ 1.80	$ 3.06
Earnings per share - diluted (in USD per share)	$ 0.69	$ 1.87	$ 1.79	$ 3.02
Base management fees
REVENUES
Gross revenues	$ 309	$ 300	$ 591	$ 573
Franchise fees
REVENUES
Gross revenues	525	475	975	892
Incentive management fees
REVENUES
Gross revenues	165	176	328	331
Fee revenues
REVENUES
Gross revenues	999	951	1,894	1,796
Contract investment amortization	(15)	(13)	(29)	(31)
Revenues	984	938	1,865	1,765
Owned, leased, and other
REVENUES
Revenues	418	423	793	829
OPERATING COSTS AND EXPENSES
Operating costs	331	334	656	670
Reimbursements
REVENUES
Revenues	3,903	4,048	7,659	7,824
OPERATING COSTS AND EXPENSES
Operating costs	$ 4,107	$ 3,964	$ 7,999	$ 7,772

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Statement of Comprehensive Income [Abstract]
Net income	$ 232	$ 667	$ 607	$ 1,087
Other comprehensive income (loss):
Foreign currency translation adjustments	38	(399)	71	(247)
Derivative instrument adjustments and other, net of tax	(1)	11	(2)	8
Reclassification of (income) loss, net of tax	(3)	3	(4)	16
Net other comprehensive income (loss)	34	(385)	65	(223)
Comprehensive income	$ 266	$ 282	$ 672	$ 864

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions	Jun. 30, 2019	Dec. 31, 2018
Current assets
Cash and equivalents	$ 284	$ 316
Accounts and notes receivable, net	2,328	2,133
Prepaid expenses and other	257	257
Assets, current, total	2,869	2,706
Property and equipment, net	1,945	1,956
Intangible assets
Goodwill	9,067	9,039
Goodwill and intangible assets, net, total	17,681	17,419
Equity method investments	580	732
Notes receivable, net	97	125
Deferred tax assets	171	171
Operating lease assets	977
Other noncurrent assets	573	587
Total assets	24,893	23,696
Current liabilities
Current portion of long-term debt	229	833
Accounts payable	927	767
Accrued payroll and benefits	1,067	1,345
Accrued expenses and other	1,244	963
Liabilities, current, total	5,624	6,437
Long-term debt	10,185	8,514
Deferred tax liabilities	359	485
Operating lease liabilities	893	0
Other noncurrent liabilities	2,294	2,372
Shareholders’ equity
Class A Common Stock	5	5
Additional paid-in-capital	5,729	5,814
Retained earnings	9,292	8,982
Treasury stock, at cost	(13,460)	(12,185)
Accumulated other comprehensive loss	(326)	(391)
Stockholders' equity (deficit) attributable to parent	1,240	2,225
Liabilities and equity (deficit), total	24,893	23,696
Brands
Intangible assets
Intangible assets	5,968	5,790
Contract acquisition costs and other
Intangible assets
Intangible assets	2,646	2,590
Liability for guest loyalty program
Current liabilities
Liability for guest loyalty program	2,157	2,529
Contract with customer liabilities	3,530	2,932
Deferred revenue
Current liabilities
Contract with customer liabilities	$ 768	$ 731

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions		6 Months Ended
		Jun. 30, 2019	Jun. 30, 2018
OPERATING ACTIVITIES
Net income		$ 607	$ 1,087
Adjustments to reconcile to cash provided by operating activities:
Depreciation, amortization, and other		139	143
Share-based compensation		90	93
Income taxes		(102)	(170)
Contract acquisition costs		(93)	(71)
Merger-related charges		142	(23)
Working capital changes		(379)	(166)
Gain on asset dispositions		(6)	(173)
Other		114	49
Net cash provided by (used in) operating activities		738	1,129
INVESTING ACTIVITIES
Capital expenditures		(142)	(388)
Dispositions		2	436
Loan advances		(10)	(13)
Loan collections		6	29
Other		(30)	50
Net cash (used in) provided by investing activities		(174)	114
FINANCING ACTIVITIES
Commercial paper/Credit Facility, net		823	707
Issuance of long-term debt		841	443
Repayment of long-term debt		(617)	(387)
Issuance of Class A Common Stock		6	4
Dividends paid		(298)	(262)
Purchase of treasury stock		(1,228)	(1,673)
Share-based compensation withholding taxes		(123)	(101)
Other		(8)	0
Net cash provided by (used in) financing activities		(604)	(1,269)
(DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH		(40)	(26)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period	[1]	360	429
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period	[1]	320	403
Liability for guest loyalty program
Adjustments to reconcile to cash provided by operating activities:
Liability for guest loyalty program		$ 226	$ 360

[1] The 2019 amounts include beginning restricted cash of $44 million at December 31, 2018, and ending restricted cash of $36 million at June 30, 2019, which we present in the “Prepaid expenses and other” and “Other noncurrent assets” captions of our Balance Sheets.

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Millions	Jun. 30, 2019	Dec. 31, 2018
Statement of Cash Flows [Abstract]
Restricted cash	$ 36	$ 44

XML

Basis of Presentation

6 Months Ended

Jun. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

BASIS OF PRESENTATION

The condensed consolidated financial statements present the results of operations, financial position, and cash flows of Marriott International, Inc. and subsidiaries (referred to in this report as “we,” “us,” “Marriott,” or “the Company”). In order to make this report easier to read, we also refer throughout to (i) our Condensed Consolidated Financial Statements as our “Financial Statements,” (ii) our Condensed Consolidated Statements of Income as our “Income Statements,” (iii) our Condensed Consolidated Balance Sheets as our “Balance Sheets,” (iv) our Condensed Consolidated Statements of Cash Flows as our “Statements of Cash Flows,” (v) our properties, brands, or markets in the United States (“U.S.”) and Canada as “North America” or “North American,” and (vi) our properties, brands, or markets in our Caribbean and Latin America, Europe, and Middle East and Africa regions as “Other International,” and together with those in our Asia Pacific segment, as “International.” In addition, references throughout to numbered “Footnotes” refer to the numbered Notes in these Notes to Condensed Consolidated Financial Statements, unless otherwise noted.

These Financial Statements have not been audited. We have condensed or omitted certain information and footnote disclosures normally included in financial statements presented in accordance with U.S. generally accepted accounting principles (“GAAP”). The financial statements in this report should be read in conjunction with the consolidated financial statements and notes thereto in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018 (“2018 Form 10-K”). Certain terms not otherwise defined in this Form 10-Q have the meanings specified in our 2018 Form 10-K.

Preparation of financial statements that conform with 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 as of June 30, 2019 and December 31, 2018, the results of our operations for the three and six months ended June 30, 2019 and June 30, 2018, and cash flows for the six months ended June 30, 2019 and June 30, 2018. As described in Part II, Item 8 of our 2018 Form 10-K, in the 2018 fourth quarter, we identified errors related to our Loyalty Program, which resulted in the understatement of cost reimbursement revenue, net of reimbursed expenses. We presented revised information for the 2018 first, second, and third quarters in our 2018 Form 10-K, and the accompanying Income Statement for the three and six months ended June 30, 2018 reflects the revised information. Interim results may not be indicative of fiscal year performance because of seasonal and short-term variations. We have eliminated all material intercompany transactions and balances between entities consolidated in these Financial Statements.

The accompanying Financial Statements also reflect our adoption of ASU 2016-02. See the “New Accounting Standards Adopted” caption below for additional information.

New Accounting Standards Adopted

Accounting Standards Update (“ASU”) No. 2016-02 - “Leases” (Topic 842). ASU 2016-02 introduces a lessee model that brings substantially all leases onto the balance sheet. Under the standard, a lessee recognizes on its balance sheet a lease liability and a right-of-use asset for most leases, including operating leases. The new standard also distinguishes leases as either finance leases or operating leases. This distinction affects how leases are measured and presented in the income statement and statement of cash flows. We adopted ASU 2016-02 in the 2019 first quarter using the modified retrospective transition method. Our accounting for finance leases remained substantially unchanged. Adoption of the standard resulted in the recording of $1,013 million of operating lease assets and $1,053 million of operating lease liabilities, as of January 1, 2019. We did not adjust our prior period Balance Sheets. Adoption of the standard did not impact our Income Statements or our Statements of Cash Flows.

When we adopted ASU 2016-02, we applied the package of practical expedients allowed by the standard, and therefore, we did not reassess:

• Whether any expired or existing contracts are or contain leases under the new definition;

• The lease classification for any expired or existing leases; or

• Whether previously capitalized costs continue to qualify as initial direct costs.

See Footnote 7. Leases for disclosures required by ASU 2016-02.

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Acquisitions

6 Months Ended

Jun. 30, 2019

Asset Acquisitions [Abstract]

Acquisitions

ACQUISITIONS

In the 2019 first quarter, we accelerated our option to acquire our partner’s remaining interests in two joint ventures. As a result of the transaction, we recognized an indefinite-lived brand asset for AC Hotels by Marriott of $156 million and management and franchise contract assets, with a weighted-average term of 24 years, totaling $34 million.

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Earnings Per Share

6 Months Ended

Jun. 30, 2019

Earnings Per Share [Abstract]

Earnings Per Share

EARNINGS PER SHARE

The table below presents the reconciliation of the earnings and number of shares used in our calculations of basic and diluted earnings per share:

	Three Months Ended				Six Months Ended
(in millions, except per share amounts)	June 30, 2019		June 30, 2018		June 30, 2019		June 30, 2018
Computation of Basic Earnings Per Share
Net income	$	232	$	667	$	607	$	1,087
Shares for basic earnings per share	333.8		353.4		336.7		355.9
Basic earnings per share	$	0.70	$	1.89	$	1.80	$	3.06
Computation of Diluted Earnings Per Share
Net income	$	232	$	667	$	607	$	1,087
Shares for basic earnings per share	333.8		353.4		336.7		355.9
Effect of dilutive securities
Share-based compensation	2.6		3.9		2.9		4.4
Shares for diluted earnings per share	336.4		357.3		339.6		360.3
Diluted earnings per share	$	0.69	$	1.87	$	1.79	$	3.02

XML

Share-Based Compensation

6 Months Ended

Jun. 30, 2019

Share-based Payment Arrangement [Abstract]

Share-Based Compensation

SHARE-BASED COMPENSATION

RSUs and PSUs

We granted 1.6 million restricted stock units (“RSUs”) during the 2019 first half to certain officers and key employees, and those units vest generally over four years in equal annual installments commencing one year after the grant date. We also granted 0.1 million performance-based RSUs (“PSUs”) in the 2019 first half to certain executive officers, which are earned, subject to continued employment and the satisfaction of certain performance conditions based on achievement of pre-established targets for gross room openings, Marriott Bonvoy™ loyalty member penetration, and adjusted operating income growth over, or at the end of, a three-year performance period. RSUs, including PSUs, granted in the 2019 first half had a weighted average grant-date fair value of $117.

We recorded share-based compensation expense for RSUs and PSUs of $48 million in the 2019 second quarter and $49 million in the 2018 second quarter, $86 million for the 2019 first half, and $88 million for the 2018 first half. Deferred compensation costs for unvested awards for RSUs and PSUs totaled $266 million at June 30, 2019 and $167 million at December 31, 2018.

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Income Taxes

6 Months Ended

Jun. 30, 2019

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

Our effective tax rate increased to 26.2 percent for the 2019 second quarter from 23.6 percent for the 2018 second quarter, primarily due to the unfavorable impact of the non-tax deductible accrual for the Proposed ICO Fine discussed in Footnote 6. Commitments and Contingencies. The increase was partially offset by a shift in earnings to jurisdictions with lower tax rates and prior year tax expenses for dispositions.

Our effective tax rate decreased to 18.7 percent for the 2019 first half from 22.6 percent for the 2018 first half, primarily due to the prior year tax expense incurred for uncertain tax positions relating to legacy-Starwood operations, the prior year state income tax expense due to a change in our position regarding the future remittance of accumulated earnings of non-U.S. subsidiaries, prior year tax expenses for dispositions, and a shift in earnings to jurisdictions with lower tax rates. The decrease was partially offset by the 2018 release of tax reserves due to the completion of certain examinations and the unfavorable impact in the 2019 second quarter of the non-tax deductible accrual for the loss contingency related to the Proposed ICO Fine discussed in Footnote 6. Commitments and Contingencies.

We paid cash for income taxes, net of refunds, of $241 million in the 2019 first half and $489 million in the 2018 first half.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

COMMITMENTS AND CONTINGENCIES

Guarantees

We present the maximum potential amount of our future guarantee fundings and the carrying amount of our liability for our debt service, operating profit, and other guarantees (excluding contingent purchase obligations) for which we are the primary obligor at June 30, 2019 in the following table:

($ in millions) Guarantee Type	Maximum Potential Amount of Future Fundings		Recorded Liability for Guarantees
Debt service	$	109	$	11
Operating profit	198		92
Other	8		1
	$	315	$	104

Our guarantees listed in the preceding table include $46 million of guarantees that will not be in effect until the underlying properties open and we begin to operate the properties or certain other events occur.

Contingent Purchase Obligation

Sheraton Grand Chicago. We granted the owner a one-time right, exercisable in 2022, to require us to purchase the leasehold interest in the land and the hotel for $300 million in cash (the “put option”). If the owner exercises the put option, we have the option to purchase, at the same time the put transaction closes, the fee simple interest in the underlying land for an additional $200 million in cash. We accounted for the put option as a guarantee, and our recorded liability at June 30, 2019 was $57 million.

Data Security Incident

Description of Event

On November 30, 2018, we announced a data security incident involving unauthorized access to the Starwood reservations database (the “Data Security Incident”). Working with leading security experts, we determined that there was unauthorized access to the Starwood network since 2014 and that an unauthorized party had copied information from the Starwood reservations database and taken steps towards removing it. While our forensic review of the incident is now complete, certain data analytics work continues. The Starwood reservations database is no longer used for business operations.

Expenses and Insurance Recoveries

We recorded $148 million of expenses, partially offset by $22 million of accrued insurance recoveries, related to the Data Security Incident during the 2019 second quarter, and $192 million of expenses, partially offset by $68 million of accrued insurance recoveries, related to the Data Security Incident during the 2019 first half, which we recorded in either the “Reimbursed expenses” or “Merger-related costs and charges” captions of our Income Statements. Expenses for the quarter and year-to-date primarily included the accrual for the loss contingency related to the Proposed ICO Fine discussed below, along with customer care and legal costs. 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.

Litigation, Claims, and Government Investigations

To date, approximately 100 lawsuits have been filed by consumers and others against us in U.S. federal, U.S. state and Canadian courts related to the Data Security Incident. The vast majority of these cases are putative consumer class actions, in which the plaintiffs, who 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. All of the U.S. cases, except for a single case filed in small claims court in Minnesota, have been consolidated and transferred to the U.S. District Court for the District of Maryland, pursuant to orders of the U.S. Judicial Panel on Multidistrict Litigation (MDL). In addition, a putative class action lawsuit was filed against us and certain of our current officers and directors on December 1, 2018, alleging violations of the federal securities laws in connection with statements regarding our cybersecurity systems and controls, and seeking certification of a class of affected persons, unspecified monetary damages, costs and attorneys’ fees, and other related relief. Two shareholder derivative complaints were also filed on February 26, 2019 and March 15, 2019, respectively, against the Company, certain of its officers and certain of the members of our Board of Directors, alleging, among other claims, breach of fiduciary duty, corporate waste, unjust enrichment, mismanagement and violations of the federal securities laws, and seeking unspecified monetary damages and restitution, changes to the Company’s corporate governance and internal procedures, costs and attorneys’ fees, and other related relief. These cases are also covered by the MDL order. We dispute the allegations in the lawsuits described above and intend to defend vigorously against such claims. In addition, in April 2019, we received a letter purportedly on behalf of a shareholder of the Company (also one of the named plaintiffs in the putative securities class action described above) demanding that our Board of Directors take action against the Company’s current and certain former officers and directors to recover damages for alleged breaches of fiduciary duties and related claims arising from the Data Security Incident. The Board of Directors has constituted a demand review committee to investigate the claims made in the demand letter, and the committee has retained independent counsel to assist with the investigation. The committee’s investigation is ongoing.

In addition, numerous U.S. federal, U.S. state and foreign governmental authorities are investigating, or otherwise seeking information and/or documents related to, the Data Security Incident and related matters, including Attorneys General offices from all 50 states and the District of Columbia, the Federal Trade Commission, the Securities and Exchange Commission, certain committees of the U.S. Senate and House of Representatives, the Information Commissioner’s Office in the United Kingdom (“ICO”) as lead supervisory authority in the European Economic Area, and regulatory authorities in various other jurisdictions. On July 9, 2019, we announced that the

ICO had communicated its intent to issue a fine in the amount of £99 million against the Company in relation to the Data Security Incident (the “Proposed ICO Fine”). In the 2019 second quarter, we recorded an accrual in the amount of $126 million for this loss contingency. The accrual was recorded in the “Accrued expenses and other” caption of our Balance Sheets and in the “Merger-related costs and charges” caption of our Income Statements. We have the right to respond to the ICO before the amount of the fine is finally determined and the fine can be issued by the ICO, and we intend to respond and vigorously defend our position. Following the Data Security Incident, the ICO also notified us that it had opened an investigation into the Company’s online privacy policy and related practices and an investigation into the Company’s handling of data subject access requests. These investigations are separate from the ICO’s investigation related to the Data Security Incident and the Proposed ICO Fine does not relate to either of these separate investigations.

While we believe it is reasonably possible that we may incur additional losses associated with the above described proceedings and investigations, it is not possible to estimate the amount of loss or range of loss, if any, in excess of the amounts already incurred that might result from adverse judgments, settlements, fines, penalties, or other resolution of these proceedings and investigations based on the stage of these proceedings and investigations, the absence of specific allegations as to alleged damages, the uncertainty as to the certification of a class or classes and the size of any certified class, if applicable, and/or the lack of resolution of significant factual and legal issues.

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Leases

6 Months Ended

Jun. 30, 2019

Leases [Abstract]

Leases

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- to 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. In addition, our leases generally contain fixed and variable components. The variable components of leases of land or building facilities 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. We calculate the present value of future payments using a discount rate equal to our incremental borrowing rate.

The following table details the composition of lease expense for the 2019 second quarter and 2019 first half:

	June 30, 2019
($ in millions)	Three Months Ended		Six Months Ended
Operating lease cost	$	46	$	91
Variable lease cost	31		58

Additionally, in the 2019 second quarter, we recorded an expense of $34 million in the “Merger-related costs and charges” caption of our Income Statements due to the impairment of a legacy-Starwood office building accounted for as a finance lease.

The following tables present our future minimum lease payments and additional information about our lease obligations as of June 30, 2019:

($ in millions)	Operating Leases			Finance Leases
2019, remaining	$	90		$	6
2020	164			13
2021	148			13
2022	142			13
2023	114			13
Thereafter	680			165
Total minimum lease payments	$	1,338		$	223
Less: Amount representing interest	(318		)	(63		)
Present value of minimum lease payments	$	1,020		$	160

As of June 30, 2019, we had entered into an agreement that we expect to account for as an operating lease with a 20-year term for our new headquarters office, which is not reflected in our Balance Sheets or in the table above as the lease has not commenced.

	June 30, 2019
Weighted Average Remaining Lease Term (in years)
Operating leases	11
Finance leases	15
Weighted Average Discount Rate
Operating leases	5.0	%
Finance leases	4.4	%

The following table details the classification of lease liabilities in our Balance Sheets:

($ in millions)	Caption	June 30, 2019
Operating lease liabilities
Current	Accrued expenses and other	$	127
Noncurrent	Operating lease liabilities	893
		$	1,020
Finance lease liabilities
Current	Current portion of long-term debt	$	6
Noncurrent	Long-term debt	154
		$	160

The following table presents supplemental cash flow information for the 2019 first half:

	Six Months Ended
($ in millions)	June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows for operating leases	$	89
Operating cash outflows for finance leases	4
Financing cash outflows for finance leases	3

Leases

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- to 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. In addition, our leases generally contain fixed and variable components. The variable components of leases of land or building facilities 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. We calculate the present value of future payments using a discount rate equal to our incremental borrowing rate.

The following table details the composition of lease expense for the 2019 second quarter and 2019 first half:

	June 30, 2019
($ in millions)	Three Months Ended		Six Months Ended
Operating lease cost	$	46	$	91
Variable lease cost	31		58

Additionally, in the 2019 second quarter, we recorded an expense of $34 million in the “Merger-related costs and charges” caption of our Income Statements due to the impairment of a legacy-Starwood office building accounted for as a finance lease.

The following tables present our future minimum lease payments and additional information about our lease obligations as of June 30, 2019:

($ in millions)	Operating Leases			Finance Leases
2019, remaining	$	90		$	6
2020	164			13
2021	148			13
2022	142			13
2023	114			13
Thereafter	680			165
Total minimum lease payments	$	1,338		$	223
Less: Amount representing interest	(318		)	(63		)
Present value of minimum lease payments	$	1,020		$	160

As of June 30, 2019, we had entered into an agreement that we expect to account for as an operating lease with a 20-year term for our new headquarters office, which is not reflected in our Balance Sheets or in the table above as the lease has not commenced.

	June 30, 2019
Weighted Average Remaining Lease Term (in years)
Operating leases	11
Finance leases	15
Weighted Average Discount Rate
Operating leases	5.0	%
Finance leases	4.4	%

The following table details the classification of lease liabilities in our Balance Sheets:

($ in millions)	Caption	June 30, 2019
Operating lease liabilities
Current	Accrued expenses and other	$	127
Noncurrent	Operating lease liabilities	893
		$	1,020
Finance lease liabilities
Current	Current portion of long-term debt	$	6
Noncurrent	Long-term debt	154
		$	160

The following table presents supplemental cash flow information for the 2019 first half:

	Six Months Ended
($ in millions)	June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows for operating leases	$	89
Operating cash outflows for finance leases	4
Financing cash outflows for finance leases	3

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Long-Term Debt

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Long-Term Debt

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 the end of the 2019 second quarter and year-end 2018:

	At Period End
($ in millions)	June 30, 2019			December 31, 2018
Senior Notes:
Series K Notes, interest rate of 3.0%, face amount of $600, matured March 1, 2019 (effective interest rate of 4.4%)	$	—		$	600
Series L Notes, interest rate of 3.3%, face amount of $350, maturing September 15, 2022 (effective interest rate of 3.4%)	349			349
Series M Notes, interest rate of 3.4%, face amount of $350, maturing October 15, 2020 (effective interest rate of 3.6%)	349			349
Series N Notes, interest rate of 3.1%, face amount of $400, maturing October 15, 2021 (effective interest rate of 3.4%)	398			397
Series O Notes, interest rate of 2.9%, face amount of $450, maturing March 1, 2021 (effective interest rate of 3.1%)	449			448
Series P Notes, interest rate of 3.8%, face amount of $350, maturing October 1, 2025 (effective interest rate of 4.0%)	345			345
Series Q Notes, interest rate of 2.3%, face amount of $750, maturing January 15, 2022 (effective interest rate of 2.5%)	746			745
Series R Notes, interest rate of 3.1%, face amount of $750, maturing June 15, 2026 (effective interest rate of 3.3%)	744			743
Series T Notes, interest rate of 7.2%, face amount of $181, maturing December 1, 2019 (effective interest rate of 2.3%)	184			188
Series U Notes, interest rate of 3.1%, face amount of $291, maturing February 15, 2023 (effective interest rate of 3.1%)	291			291
Series V Notes, interest rate of 3.8%, face amount of $318, maturing March 15, 2025 (effective interest rate of 2.8%)	334			335
Series W Notes, interest rate of 4.5%, face amount of $278, maturing October 1, 2034 (effective interest rate of 4.1%)	291			292
Series X Notes, interest rate of 4.0%, face amount of $450, maturing April 15, 2028 (effective interest rate of 4.2%)	444			443
Series Y Notes, floating rate, face amount of $550, maturing December 1, 2020 (effective interest rate of 3.1% at June 30, 2019)	548			547
Series Z Notes, interest rate of 4.2%, face amount of $350, maturing December 1, 2023 (effective interest rate of 4.4%)	347			347
Series AA Notes, interest rate of 4.7%, face amount of $300, maturing December 1, 2028 (effective interest rate of 4.8%)	297			297
Series BB Notes, floating rate, face amount of $300, maturing March 8, 2021 (effective interest rate of 3.1% at June 30, 2019)	299			—
Series CC Notes, interest rate of 3.6%, face amount of $550, maturing April 15, 2024 (effective interest rate of 3.9%)	564			—
Commercial paper	3,069			2,245
Credit Facility	—			—
Finance lease obligations	160			163
Other	206			223
	$	10,414		$	9,347
Less: Current portion of long-term debt	(229		)	(833		)
	$	10,185		$	8,514

We paid cash for interest, net of amounts capitalized, of $176 million in the 2019 first half and $144 million in the 2018 first half.

In the 2019 second quarter, we amended and restated our multicurrency revolving credit agreement (the “Credit Facility”) to extend the maturity date of the Credit Facility and increase the aggregate amount of available borrowings to up to $4.5 billion. The available borrowings support our commercial paper program and general corporate needs. Borrowings under the Credit Facility generally bear interest at LIBOR (the London Interbank

Offered 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. While any outstanding commercial paper borrowings and/or borrowings under our Credit Facility generally have short-term maturities, we classify the outstanding borrowings as long-term based on our ability and intent to refinance the outstanding borrowings on a long-term basis. The Credit Facility expires on June 28, 2024. See the “Cash Requirements and Our Credit Facility” caption later in this report in the “Liquidity and Capital Resources” section of Item 2 below for further information on our Credit Facility and available borrowing capacity at June 30, 2019.

In the 2019 first quarter, we issued $300 million aggregate principal amount of LIBOR plus 0.650 percent Series BB Notes due March 8, 2021 (the “Series BB Notes”) and $550 million aggregate principal amount of 3.600 percent Series CC Notes due April 15, 2024 (the “Series CC Notes”). We pay interest on the Series BB Notes in March, June, September, and December of each year, commencing in June 2019, and will pay interest on the Series CC Notes in April and October of each year, commencing in October 2019. We received net proceeds of approximately $841 million from the offering of the Series BB Notes and Series CC Notes, after deducting the underwriting discount and estimated expenses, which were made available for general corporate purposes, which may include working capital, capital expenditures, acquisitions, stock repurchases, or repayment of outstanding commercial paper or other borrowings.

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Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

FAIR VALUE OF FINANCIAL INSTRUMENTS

We believe that the fair values of our current assets and current liabilities approximate their reported carrying amounts. We present the carrying values and the fair values of noncurrent financial assets and liabilities that qualify as financial instruments, determined under current guidance for disclosures on the fair value of financial instruments, in the following table:

	June 30, 2019						December 31, 2018
($ in millions)	Carrying Amount			Fair Value			Carrying Amount			Fair Value
Senior, mezzanine, and other loans	$	97		$	94		$	125		$	116
Total noncurrent financial assets	$	97		$	94		$	125		$	116
Senior Notes	$	(6,795	)	$	(6,994	)	$	(5,928	)	$	(5,794	)
Commercial paper	(3,069		)	(3,069		)	(2,245		)	(2,245		)
Other long-term debt	(167		)	(175		)	(184		)	(182		)
Other noncurrent liabilities	(143		)	(143		)	(153		)	(153		)
Total noncurrent financial liabilities	$	(10,174	)	$	(10,381	)	$	(8,510	)	$	(8,374	)

See the “Fair Value Measurements” caption of Footnote 2. Summary of Significant Accounting Policies of our 2018 Form 10-K for more information on the input levels we use in determining fair value.

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Accumulated Other Comprehensive Loss and Shareholders' Equity

6 Months Ended

Jun. 30, 2019

Equity [Abstract]

Accumulated Other Comprehensive Loss and Shareholders' Equity

ACCUMULATED OTHER COMPREHENSIVE LOSS AND SHAREHOLDERS’ EQUITY

The following tables detail the accumulated other comprehensive loss activity for the 2019 first half and 2018 first half:

($ in millions)	Foreign Currency Translation Adjustments			Derivative Instrument and Other Adjustments			Accumulated Other Comprehensive Loss
Balance at year-end 2018	$	(403	)	$	12		$	(391	)
Other comprehensive income (loss) before reclassifications (1)	71			(2		)	69
Reclassification of income	—			(4		)	(4		)
Net other comprehensive income (loss)	71			(6		)	65
Balance at June 30, 2019	$	(332	)	$	6		$	(326	)

($ in millions)	Foreign Currency Translation Adjustments			Derivative Instrument and Other Adjustments			Accumulated Other Comprehensive Loss
Balance at year-end 2017	$	(23	)	$	6		$	(17	)
Other comprehensive income (loss) before reclassifications (1)	(247		)	8			(239		)
Reclassification of losses	8			8			16
Net other comprehensive income	(239		)	16			(223		)
Adoption of ASU 2016-01	—			(4		)	(4		)
Balance at June 30, 2018	$	(262	)	$	18		$	(244	)

⁽¹⁾  Other comprehensive (loss) income before reclassifications for foreign currency translation adjustments includes intra-entity foreign currency transactions that are of a long-term investment nature, which resulted in gains of $2 million for the 2019 first half and $38 million for the 2018 first half.

The following tables detail the changes in common shares outstanding and shareholders’ equity for the 2019 first half and 2018 first half:

(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
339.1		Balance at year-end 2018	$	2,225		$	5	$	5,814		$	8,982		$	(12,185	)	$	(391	)
—		Adoption of ASU 2016-02	1			—		—			1			—			—
—		Net income	375			—		—			375			—			—
—		Other comprehensive income	31			—		—			—			—			31
—		Dividends ($0.41 per share)	(139		)	—		—			(139		)	—			—
1.7		Share-based compensation plans	(62		)	—		(108		)	—			46			—
(6.7	)	Purchase of treasury stock	(828		)	—		—			—			(828		)	—
334.1		Balance at March 31, 2019	1,603			5		5,706			9,219			(12,967		)	(360		)
—		Net income	232			—		—			232			—			—
—		Other comprehensive income	34			—		—			—			—			34
—		Dividends ($0.48 per share)	(159		)	—		—			(159		)	—			—
0.2		Share-based compensation plans	30			—		23			—			7			—
(3.7	)	Purchase of treasury stock (1)	(500		)	—		—			—			(500		)	—
330.6		Balance at June 30, 2019	$	1,240		$	5	$	5,729		$	9,292		$	(13,460	)	$	(326	)

⁽¹⁾  At the end of the 2019 second quarter, we made purchases of shares of our common stock totaling $100 million, which settled in cash in the 2019 third quarter.

(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
359.1		Balance at year-end 2017 (as previously reported)	$	3,731		$	5	$	5,770		$	7,391		$	(9,418	)	$	(17	)
—		Adoption of ASU 2014-09	(149		)	—		—			(149		)	—			—
359.1		Balance at year-end 2017 (as adjusted)	3,582			5		5,770			7,242			(9,418		)	(17		)
—		Adoption of ASU 2016-01	—			—		—			4			—			(4		)
—		Adoption of ASU 2016-16	372			—		—			372			—			—
—		Net income	420			—		—			420			—			—
—		Other comprehensive income	162			—		—			—			—			162
—		Dividends ($0.33 per share)	(118		)	—		—			(118		)	—			—
1.3		Share-based compensation plans	(48		)	—		(85		)	—			37			—
(5.6	)	Purchase of treasury stock	(782		)	—		—			—			(782		)	—
354.8		Balance at March 31, 2018	3,588			5		5,685			7,920			(10,163		)	141
—		Net income	667			—		—			667			—			—
—		Other comprehensive income	(385		)	—		—			—			—			(385		)
—		Dividends ($0.41 per share)	(145		)	—		—			(145		)	—			—
0.1		Share-based compensation plans	45			—		43			—			2			—
(6.2	)	Purchase of treasury stock	(850		)	—		—			—			(850		)	—
348.7		Balance at June 30, 2018	$	2,920		$	5	$	5,728		$	8,442		$	(11,011	)	$	(244	)

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Contracts with Customers

6 Months Ended

Jun. 30, 2019

Revenue from Contract with Customer [Abstract]

Contracts with Customers

CONTRACTS WITH CUSTOMERS

Our current and noncurrent Loyalty Program liability increased by $226 million, to $5,687 million at June 30, 2019, from $5,461 million at December 31, 2018, primarily reflecting an increase in points earned, partially offset by deferred revenue of $997 million that we recognized in the 2019 first half. 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 the 2019 second quarter, the updated estimates resulted in an increase in deferred revenue, and a corresponding reduction of revenue of approximately $147 million ($111 million net of tax).

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Business Segments

6 Months Ended

Jun. 30, 2019

Segment Reporting [Abstract]

Business Segments

BUSINESS SEGMENTS

We are a diversified global lodging company with operations in the following reportable business segments:

• North American Full-Service, which includes our Luxury and Premium brands located in the U.S. and Canada;

• North American Limited-Service, which includes our Select brands located in the U.S. and Canada; and

• Asia Pacific, which includes all brand tiers in our Asia Pacific region.

The following operating segments do not meet the applicable accounting criteria for separate disclosure as reportable business segments: Caribbean and Latin America, Europe, and Middle East and Africa. We present these operating segments together as “Other International” in the tables below.

We evaluate the performance of our operating segments using “segment profits” which is based largely on the results of the segment without allocating corporate expenses, income taxes, indirect general, administrative, and other expenses, or merger-related costs and charges. We assign gains and losses, equity in earnings or losses from our joint ventures, and direct general, administrative, and other expenses to each of our segments. “Unallocated corporate” represents a portion of our revenues, including license fees we receive from our credit card programs and

fees from vacation ownership licensing agreements, general, administrative, and other expenses, merger-related costs and charges, equity in earnings or losses, and other gains or losses that we do not allocate to our segments.

Our President and Chief Executive Officer, who is our chief operating decision maker, monitors assets for the consolidated company but does not use assets by operating segment when assessing performance or making operating segment resource allocations.

Segment Revenues

The following tables present our revenues disaggregated by segment and major revenue stream for the 2019 second quarter, 2018 second quarter, 2019 first half, and 2018 first half:

	Three Months Ended June 30, 2019
($ in millions)	North American Full-Service			North American Limited-Service			Asia Pacific			Other International			Total
Gross fee revenues	$	349		$	264		$	112		$	142		$	867
Contract investment amortization	(8		)	(3		)	(1		)	(3		)	(15		)
Net fee revenues	341			261			111			139			852
Owned, leased, and other revenue	147			38			50			168			403
Cost reimbursement revenue	2,915			602			149			306			3,972
Total segment revenue	$	3,403		$	901		$	310		$	613		$	5,227
Unallocated corporate													78
Total revenue													$	5,305

	Three Months Ended June 30, 2018
($ in millions)	North American Full-Service			North American Limited-Service			Asia Pacific			Other International			Total
Gross fee revenues	$	345		$	250		$	110		$	128		$	833
Contract investment amortization	(7		)	(3		)	(1		)	(2		)	(13		)
Net fee revenues	338			247			109			126			820
Owned, leased, and other revenue	140			37			48			178			403
Cost reimbursement revenue	2,878			576			111			303			3,868
Total segment revenue	$	3,356		$	860		$	268		$	607		$	5,091
Unallocated corporate													318
Total revenue													$	5,409

	Six Months Ended June 30, 2019
($ in millions)	North American Full-Service			North American Limited-Service			Asia Pacific			Other International			Total
Gross fee revenues	$	665		$	476		$	230		$	271		$	1,642
Contract investment amortization	(16		)	(6		)	(1		)	(6		)	(29		)
Net fee revenues	649			470			229			265			1,613
Owned, leased, and other revenue	294			69			91			312			766
Cost reimbursement revenue	5,765			1,131			260			565			7,721
Total segment revenue	$	6,708		$	1,670		$	580		$	1,142		$	10,100
Unallocated corporate													217
Total revenue													$	10,317

	Six Months Ended June 30, 2018
($ in millions)	North American Full-Service			North American Limited-Service			Asia Pacific			Other International			Total
Gross fee revenues	$	644		$	446		$	227		$	250		$	1,567
Contract investment amortization	(18		)	(6		)	(1		)	(6		)	(31		)
Net fee revenues	626			440			226			244			1,536
Owned, leased, and other revenue	295			70			95			336			796
Cost reimbursement revenue	5,734			1,090			222			554			7,600
Total segment revenue	$	6,655		$	1,600		$	543		$	1,134		$	9,932
Unallocated corporate													486
Total revenue													$	10,418

Segment Profits

	Three Months Ended						Six Months Ended
($ in millions)	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018
North American Full-Service	$	338		$	394		$	627		$	671
North American Limited-Service	253			252			455			434
Asia Pacific	92			140			195			252
Other International	118			160			213			319
Unallocated corporate	(391		)	7			(557		)	(121		)
Interest expense, net of interest income	(96		)	(79		)	(187		)	(149		)
Income taxes	(82		)	(207		)	(139		)	(319		)
Net Income	$	232		$	667		$	607		$	1,087

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Basis of Presentation (Policies)

6 Months Ended

Jun. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

New Accounting Standards

New Accounting Standards Adopted

Accounting Standards Update (“ASU”) No. 2016-02 - “Leases” (Topic 842). ASU 2016-02 introduces a lessee model that brings substantially all leases onto the balance sheet. Under the standard, a lessee recognizes on its balance sheet a lease liability and a right-of-use asset for most leases, including operating leases. The new standard also distinguishes leases as either finance leases or operating leases. This distinction affects how leases are measured and presented in the income statement and statement of cash flows. We adopted ASU 2016-02 in the 2019 first quarter using the modified retrospective transition method. Our accounting for finance leases remained substantially unchanged. Adoption of the standard resulted in the recording of $1,013 million of operating lease assets and $1,053 million of operating lease liabilities, as of January 1, 2019. We did not adjust our prior period Balance Sheets. Adoption of the standard did not impact our Income Statements or our Statements of Cash Flows.

When we adopted ASU 2016-02, we applied the package of practical expedients allowed by the standard, and therefore, we did not reassess:

• Whether any expired or existing contracts are or contain leases under the new definition;

• The lease classification for any expired or existing leases; or

•

Whether previously capitalized costs continue to qualify as initial direct costs.

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Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2019

Earnings Per Share [Abstract]

Reconciliation of the Earnings and Number of Shares Used in Calculations of Basic and Diluted Earnings Per Share

The table below presents the reconciliation of the earnings and number of shares used in our calculations of basic and diluted earnings per share:

	Three Months Ended				Six Months Ended
(in millions, except per share amounts)	June 30, 2019		June 30, 2018		June 30, 2019		June 30, 2018
Computation of Basic Earnings Per Share
Net income	$	232	$	667	$	607	$	1,087
Shares for basic earnings per share	333.8		353.4		336.7		355.9
Basic earnings per share	$	0.70	$	1.89	$	1.80	$	3.06
Computation of Diluted Earnings Per Share
Net income	$	232	$	667	$	607	$	1,087
Shares for basic earnings per share	333.8		353.4		336.7		355.9
Effect of dilutive securities
Share-based compensation	2.6		3.9		2.9		4.4
Shares for diluted earnings per share	336.4		357.3		339.6		360.3
Diluted earnings per share	$	0.69	$	1.87	$	1.79	$	3.02

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Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

Maximum Potential Amount of Future Fundings as the Primary Obligor for Guarantees and the Liability for Expected Future Fundings

We present the maximum potential amount of our future guarantee fundings and the carrying amount of our liability for our debt service, operating profit, and other guarantees (excluding contingent purchase obligations) for which we are the primary obligor at June 30, 2019 in the following table:

($ in millions) Guarantee Type	Maximum Potential Amount of Future Fundings		Recorded Liability for Guarantees
Debt service	$	109	$	11
Operating profit	198		92
Other	8		1
	$	315	$	104

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Leases (Tables)

6 Months Ended

Jun. 30, 2019

Leases [Abstract]

Composition of Lease Expense and Supplemental Cash Flows

The following table details the composition of lease expense for the 2019 second quarter and 2019 first half:

	June 30, 2019
($ in millions)	Three Months Ended		Six Months Ended
Operating lease cost	$	46	$	91
Variable lease cost	31		58

The following table presents supplemental cash flow information for the 2019 first half:

	Six Months Ended
($ in millions)	June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows for operating leases	$	89
Operating cash outflows for finance leases	4
Financing cash outflows for finance leases	3

Maturities of Finance Lease Liabilities

The following tables present our future minimum lease payments and additional information about our lease obligations as of June 30, 2019:

($ in millions)	Operating Leases			Finance Leases
2019, remaining	$	90		$	6
2020	164			13
2021	148			13
2022	142			13
2023	114			13
Thereafter	680			165
Total minimum lease payments	$	1,338		$	223
Less: Amount representing interest	(318		)	(63		)
Present value of minimum lease payments	$	1,020		$	160

Maturities of Operating Lease Liabilities

The following tables present our future minimum lease payments and additional information about our lease obligations as of June 30, 2019:

($ in millions)	Operating Leases			Finance Leases
2019, remaining	$	90		$	6
2020	164			13
2021	148			13
2022	142			13
2023	114			13
Thereafter	680			165
Total minimum lease payments	$	1,338		$	223
Less: Amount representing interest	(318		)	(63		)
Present value of minimum lease payments	$	1,020		$	160

Lease Terms and Discount Rate

	June 30, 2019
Weighted Average Remaining Lease Term (in years)
Operating leases	11
Finance leases	15
Weighted Average Discount Rate
Operating leases	5.0	%
Finance leases	4.4	%

Balance Sheet Classification of Leases

The following table details the classification of lease liabilities in our Balance Sheets:

($ in millions)	Caption	June 30, 2019
Operating lease liabilities
Current	Accrued expenses and other	$	127
Noncurrent	Operating lease liabilities	893
		$	1,020
Finance lease liabilities
Current	Current portion of long-term debt	$	6
Noncurrent	Long-term debt	154
		$	160

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Long-Term Debt (Tables)

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

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 the end of the 2019 second quarter and year-end 2018:

	At Period End
($ in millions)	June 30, 2019			December 31, 2018
Senior Notes:
Series K Notes, interest rate of 3.0%, face amount of $600, matured March 1, 2019 (effective interest rate of 4.4%)	$	—		$	600
Series L Notes, interest rate of 3.3%, face amount of $350, maturing September 15, 2022 (effective interest rate of 3.4%)	349			349
Series M Notes, interest rate of 3.4%, face amount of $350, maturing October 15, 2020 (effective interest rate of 3.6%)	349			349
Series N Notes, interest rate of 3.1%, face amount of $400, maturing October 15, 2021 (effective interest rate of 3.4%)	398			397
Series O Notes, interest rate of 2.9%, face amount of $450, maturing March 1, 2021 (effective interest rate of 3.1%)	449			448
Series P Notes, interest rate of 3.8%, face amount of $350, maturing October 1, 2025 (effective interest rate of 4.0%)	345			345
Series Q Notes, interest rate of 2.3%, face amount of $750, maturing January 15, 2022 (effective interest rate of 2.5%)	746			745
Series R Notes, interest rate of 3.1%, face amount of $750, maturing June 15, 2026 (effective interest rate of 3.3%)	744			743
Series T Notes, interest rate of 7.2%, face amount of $181, maturing December 1, 2019 (effective interest rate of 2.3%)	184			188
Series U Notes, interest rate of 3.1%, face amount of $291, maturing February 15, 2023 (effective interest rate of 3.1%)	291			291
Series V Notes, interest rate of 3.8%, face amount of $318, maturing March 15, 2025 (effective interest rate of 2.8%)	334			335
Series W Notes, interest rate of 4.5%, face amount of $278, maturing October 1, 2034 (effective interest rate of 4.1%)	291			292
Series X Notes, interest rate of 4.0%, face amount of $450, maturing April 15, 2028 (effective interest rate of 4.2%)	444			443
Series Y Notes, floating rate, face amount of $550, maturing December 1, 2020 (effective interest rate of 3.1% at June 30, 2019)	548			547
Series Z Notes, interest rate of 4.2%, face amount of $350, maturing December 1, 2023 (effective interest rate of 4.4%)	347			347
Series AA Notes, interest rate of 4.7%, face amount of $300, maturing December 1, 2028 (effective interest rate of 4.8%)	297			297
Series BB Notes, floating rate, face amount of $300, maturing March 8, 2021 (effective interest rate of 3.1% at June 30, 2019)	299			—
Series CC Notes, interest rate of 3.6%, face amount of $550, maturing April 15, 2024 (effective interest rate of 3.9%)	564			—
Commercial paper	3,069			2,245
Credit Facility	—			—
Finance lease obligations	160			163
Other	206			223
	$	10,414		$	9,347
Less: Current portion of long-term debt	(229		)	(833		)
	$	10,185		$	8,514

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Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

Carrying Values and Fair Values of Non-Current Financial Assets and Liabilities

We present the carrying values and the fair values of noncurrent financial assets and liabilities that qualify as financial instruments, determined under current guidance for disclosures on the fair value of financial instruments, in the following table:

	June 30, 2019						December 31, 2018
($ in millions)	Carrying Amount			Fair Value			Carrying Amount			Fair Value
Senior, mezzanine, and other loans	$	97		$	94		$	125		$	116
Total noncurrent financial assets	$	97		$	94		$	125		$	116
Senior Notes	$	(6,795	)	$	(6,994	)	$	(5,928	)	$	(5,794	)
Commercial paper	(3,069		)	(3,069		)	(2,245		)	(2,245		)
Other long-term debt	(167		)	(175		)	(184		)	(182		)
Other noncurrent liabilities	(143		)	(143		)	(153		)	(153		)
Total noncurrent financial liabilities	$	(10,174	)	$	(10,381	)	$	(8,510	)	$	(8,374	)

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Accumulated Other Comprehensive Loss and Shareholders' Equity (Tables)

6 Months Ended

Jun. 30, 2019

Equity [Abstract]

Accumulated Other Comprehensive Income (Loss) Activity

The following tables detail the accumulated other comprehensive loss activity for the 2019 first half and 2018 first half:

($ in millions)	Foreign Currency Translation Adjustments			Derivative Instrument and Other Adjustments			Accumulated Other Comprehensive Loss
Balance at year-end 2018	$	(403	)	$	12		$	(391	)
Other comprehensive income (loss) before reclassifications (1)	71			(2		)	69
Reclassification of income	—			(4		)	(4		)
Net other comprehensive income (loss)	71			(6		)	65
Balance at June 30, 2019	$	(332	)	$	6		$	(326	)

($ in millions)	Foreign Currency Translation Adjustments			Derivative Instrument and Other Adjustments			Accumulated Other Comprehensive Loss
Balance at year-end 2017	$	(23	)	$	6		$	(17	)
Other comprehensive income (loss) before reclassifications (1)	(247		)	8			(239		)
Reclassification of losses	8			8			16
Net other comprehensive income	(239		)	16			(223		)
Adoption of ASU 2016-01	—			(4		)	(4		)
Balance at June 30, 2018	$	(262	)	$	18		$	(244	)

⁽¹⁾ 

Other comprehensive (loss) income before reclassifications for foreign currency translation adjustments includes intra-entity foreign currency transactions that are of a long-term investment nature, which resulted in gains of $2 million for the 2019 first half and $38 million for the 2018 first half.

Changes in Shareholders' Equity

The following tables detail the changes in common shares outstanding and shareholders’ equity for the 2019 first half and 2018 first half:

(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
339.1		Balance at year-end 2018	$	2,225		$	5	$	5,814		$	8,982		$	(12,185	)	$	(391	)
—		Adoption of ASU 2016-02	1			—		—			1			—			—
—		Net income	375			—		—			375			—			—
—		Other comprehensive income	31			—		—			—			—			31
—		Dividends ($0.41 per share)	(139		)	—		—			(139		)	—			—
1.7		Share-based compensation plans	(62		)	—		(108		)	—			46			—
(6.7	)	Purchase of treasury stock	(828		)	—		—			—			(828		)	—
334.1		Balance at March 31, 2019	1,603			5		5,706			9,219			(12,967		)	(360		)
—		Net income	232			—		—			232			—			—
—		Other comprehensive income	34			—		—			—			—			34
—		Dividends ($0.48 per share)	(159		)	—		—			(159		)	—			—
0.2		Share-based compensation plans	30			—		23			—			7			—
(3.7	)	Purchase of treasury stock (1)	(500		)	—		—			—			(500		)	—
330.6		Balance at June 30, 2019	$	1,240		$	5	$	5,729		$	9,292		$	(13,460	)	$	(326	)

⁽¹⁾  At the end of the 2019 second quarter, we made purchases of shares of our common stock totaling $100 million, which settled in cash in the 2019 third quarter.

(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
359.1		Balance at year-end 2017 (as previously reported)	$	3,731		$	5	$	5,770		$	7,391		$	(9,418	)	$	(17	)
—		Adoption of ASU 2014-09	(149		)	—		—			(149		)	—			—
359.1		Balance at year-end 2017 (as adjusted)	3,582			5		5,770			7,242			(9,418		)	(17		)
—		Adoption of ASU 2016-01	—			—		—			4			—			(4		)
—		Adoption of ASU 2016-16	372			—		—			372			—			—
—		Net income	420			—		—			420			—			—
—		Other comprehensive income	162			—		—			—			—			162
—		Dividends ($0.33 per share)	(118		)	—		—			(118		)	—			—
1.3		Share-based compensation plans	(48		)	—		(85		)	—			37			—
(5.6	)	Purchase of treasury stock	(782		)	—		—			—			(782		)	—
354.8		Balance at March 31, 2018	3,588			5		5,685			7,920			(10,163		)	141
—		Net income	667			—		—			667			—			—
—		Other comprehensive income	(385		)	—		—			—			—			(385		)
—		Dividends ($0.41 per share)	(145		)	—		—			(145		)	—			—
0.1		Share-based compensation plans	45			—		43			—			2			—
(6.2	)	Purchase of treasury stock	(850		)	—		—			—			(850		)	—
348.7		Balance at June 30, 2018	$	2,920		$	5	$	5,728		$	8,442		$	(11,011	)	$	(244	)

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Business Segments (Tables)

6 Months Ended

Jun. 30, 2019

Segment Reporting [Abstract]

Segment Revenues

Segment Revenues

The following tables present our revenues disaggregated by segment and major revenue stream for the 2019 second quarter, 2018 second quarter, 2019 first half, and 2018 first half:

	Three Months Ended June 30, 2019
($ in millions)	North American Full-Service			North American Limited-Service			Asia Pacific			Other International			Total
Gross fee revenues	$	349		$	264		$	112		$	142		$	867
Contract investment amortization	(8		)	(3		)	(1		)	(3		)	(15		)
Net fee revenues	341			261			111			139			852
Owned, leased, and other revenue	147			38			50			168			403
Cost reimbursement revenue	2,915			602			149			306			3,972
Total segment revenue	$	3,403		$	901		$	310		$	613		$	5,227
Unallocated corporate													78
Total revenue													$	5,305

	Three Months Ended June 30, 2018
($ in millions)	North American Full-Service			North American Limited-Service			Asia Pacific			Other International			Total
Gross fee revenues	$	345		$	250		$	110		$	128		$	833
Contract investment amortization	(7		)	(3		)	(1		)	(2		)	(13		)
Net fee revenues	338			247			109			126			820
Owned, leased, and other revenue	140			37			48			178			403
Cost reimbursement revenue	2,878			576			111			303			3,868
Total segment revenue	$	3,356		$	860		$	268		$	607		$	5,091
Unallocated corporate													318
Total revenue													$	5,409

	Six Months Ended June 30, 2019
($ in millions)	North American Full-Service			North American Limited-Service			Asia Pacific			Other International			Total
Gross fee revenues	$	665		$	476		$	230		$	271		$	1,642
Contract investment amortization	(16		)	(6		)	(1		)	(6		)	(29		)
Net fee revenues	649			470			229			265			1,613
Owned, leased, and other revenue	294			69			91			312			766
Cost reimbursement revenue	5,765			1,131			260			565			7,721
Total segment revenue	$	6,708		$	1,670		$	580		$	1,142		$	10,100
Unallocated corporate													217
Total revenue													$	10,317

	Six Months Ended June 30, 2018
($ in millions)	North American Full-Service			North American Limited-Service			Asia Pacific			Other International			Total
Gross fee revenues	$	644		$	446		$	227		$	250		$	1,567
Contract investment amortization	(18		)	(6		)	(1		)	(6		)	(31		)
Net fee revenues	626			440			226			244			1,536
Owned, leased, and other revenue	295			70			95			336			796
Cost reimbursement revenue	5,734			1,090			222			554			7,600
Total segment revenue	$	6,655		$	1,600		$	543		$	1,134		$	9,932
Unallocated corporate													486
Total revenue													$	10,418

Segment Profits

Segment Profits

	Three Months Ended						Six Months Ended
($ in millions)	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018
North American Full-Service	$	338		$	394		$	627		$	671
North American Limited-Service	253			252			455			434
Asia Pacific	92			140			195			252
Other International	118			160			213			319
Unallocated corporate	(391		)	7			(557		)	(121		)
Interest expense, net of interest income	(96		)	(79		)	(187		)	(149		)
Income taxes	(82		)	(207		)	(139		)	(319		)
Net Income	$	232		$	667		$	607		$	1,087

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Basis of Presentation - Narrative (Details) - USD ($) $ in Millions	Jun. 30, 2019	Jan. 01, 2019
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Operating lease assets	$ 977
operating lease liability	$ 1,020
Adoption of ASU 2016-02
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Operating lease assets		$ 1,013
operating lease liability		$ 1,053

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Acquisitions - Acquisitions (Details) $ in Millions	3 Months Ended
	Mar. 31, 2019 USD ($) joint_venture
Business Acquisition [Line Items]
Number of joint ventures acquired | joint_venture	2
Management and Franchise Contracts
Business Acquisition [Line Items]
Finite lived intangible assets term	24 years
Finite lived intangible assets acquired	$ 34
Brand Assets
Business Acquisition [Line Items]
Indefinite lived intangible assets acquired	$ 156

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Earnings Per Share - Reconciliation of the Earnings (Losses) and Number of Shares Used in Calculations of Basic and Diluted Earnings Per Share (Detail) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended				6 Months Ended
	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	Mar. 31, 2018	Jun. 30, 2019	Jun. 30, 2018
Computation of Basic Earnings Per Share
Net income	$ 232	$ 375	$ 667	$ 420	$ 607	$ 1,087
Shares for basic earnings per share (in shares)	333.8		353.4		336.7	355.9
Basic earnings per share (in USD per share)	$ 0.70		$ 1.89		$ 1.80	$ 3.06
Computation of Diluted Earnings Per Share
Net income	$ 232	$ 375	$ 667	$ 420	$ 607	$ 1,087
Shares for basic earnings per share (in shares)	333.8		353.4		336.7	355.9
Effect of dilutive securities
Share-based compensation (in shares)	2.6		3.9		2.9	4.4
Shares for diluted earnings per share (in shares)	336.4		357.3		339.6	360.3
Diluted earnings per share (in USD per share)	$ 0.69		$ 1.87		$ 1.79	$ 3.02

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Share-Based Compensation - Additional Information (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense	$ 48	$ 49	$ 86	$ 88
Deferred compensation costs related to unvested awards	$ 266		$ 266		$ 167
RSUs and PSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock awards, weighted average grant-date fair value (in USD per share)			$ 117
RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock awards, granted (in shares)			1.6
Stock awards, vesting period			4 years
Stock awards, period of service after grant date			1 year
PSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock awards, granted (in shares)			0.1
Stock awards, vesting period			3 years

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Income Taxes - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Income Tax Disclosure [Abstract]
Effective income tax rate	26.20%	23.60%	18.70%	22.60%
Cash paid for income taxes, net of refunds			$ 241	$ 489

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Commitments and Contingencies - Guarantees (Details) $ in Millions	Jun. 30, 2019 USD ($)
Commitments and Contingencies Disclosure [Line Items]
Maximum Potential Amount of Future Fundings	$ 315
Recorded Liability for Guarantees	104
Guarantees not in effect until underlying properties open	46
Debt service
Commitments and Contingencies Disclosure [Line Items]
Maximum Potential Amount of Future Fundings	109
Recorded Liability for Guarantees	11
Operating profit
Commitments and Contingencies Disclosure [Line Items]
Maximum Potential Amount of Future Fundings	198
Recorded Liability for Guarantees	92
Other
Commitments and Contingencies Disclosure [Line Items]
Maximum Potential Amount of Future Fundings	8
Recorded Liability for Guarantees	$ 1

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Commitments and Contingencies - Contingent Purchase Obligations (Details) $ in Millions	Jun. 30, 2019 USD ($)
Guarantor Obligations [Line Items]
Guarantee	$ 315
Guarantee, recorded liability	104
Sheraton Grand Chicago Hotel
Guarantor Obligations [Line Items]
Guarantee, recorded liability	57
Sheraton Grand Chicago Hotel | Hotel and Leasehold
Guarantor Obligations [Line Items]
Guarantee	300
Sheraton Grand Chicago Hotel | Land
Guarantor Obligations [Line Items]
Guarantee	$ 200

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Commitments and Contingencies - Expenses and Insurance Recoveries (Details) £ in Millions, $ in Millions	1 Months Ended	3 Months Ended	6 Months Ended
	Mar. 15, 2019 lawsuit	Jun. 30, 2019 USD ($) lawsuit	Jun. 30, 2019 USD ($) lawsuit	Jun. 30, 2019 GBP (£) lawsuit
Data Security Incident
Loss Contingencies [Line Items]
Expense related to data security incident		$ 148	$ 192
Insurance recoveries related to data security incident		22	68
Data Security Incident, UK Information Commissioner's Office
Loss Contingencies [Line Items]
Estimated fine | £				£ 99
Accrual for loss contingency		$ 126	$ 126
Putative Class Action Lawsuits Related to Data Security Incident
Loss Contingencies [Line Items]
Number of lawsuits filed | lawsuit		100	100	100
Shareholder Derivative Complaints Related to Data Security Incident
Loss Contingencies [Line Items]
Number of new lawsuits filed | lawsuit	2

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Leases - Narrative (Details) $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2019 USD ($) renewal_option	Jun. 30, 2019 renewal_option
Lessee, Lease, Description [Line Items]
Number of renewals (or more than) | renewal_option	1	1
Term of lease not commenced		20 years
Minimum
Lessee, Lease, Description [Line Items]
Renewal term		5 years
Maximum
Lessee, Lease, Description [Line Items]
Lease term		20 years
Renewal term		10 years
Legacy-Starwood Office Building
Lessee, Lease, Description [Line Items]
Impairment loss from leased asset | $	$ 34

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Leases - Composition of Lease Expense (Details) - USD ($) $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2019
Leases [Abstract]
Operating lease cost	$ 46	$ 91
Variable lease cost	$ 31	$ 58

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Leases - Future Minimum Lease Payments (Details) - USD ($) $ in Millions	Jun. 30, 2019	Dec. 31, 2018
Operating Leases
2019, remaining	$ 90
2020	164
2021	148
2022	142
2023	114
Thereafter	680
Total minimum lease payments	1,338
Less: Amount representing interest	(318)
Present value of minimum lease payments	1,020
Finance Leases
2019, remaining	6
2020	13
2021	13
2022	13
2023	13
Thereafter	165
Total minimum lease payments	223
Less: Amount representing interest	(63)
Present value of minimum lease payments	$ 160	$ 163

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Leases - Lease Terms and Discount Rate (Details)	Jun. 30, 2019
Weighted Average Remaining Lease Term (in years)
Operating leases	11 years
Finance leases	15 years
Weighted Average Discount Rate
Operating leases	5.00%
Finance leases	4.40%

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Leases - Balance Sheet Classification (Details) - USD ($) $ in Millions	Jun. 30, 2019	Dec. 31, 2018
Operating lease liabilities
Current	$ 127
Noncurrent	893	$ 0
Total	1,020
Finance lease liabilities
Current	6
Noncurrent	154
Total	$ 160	$ 163

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Leases - Supplemental Cash Flows Information (Details) $ in Millions	6 Months Ended
	Jun. 30, 2019 USD ($)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows for operating leases	$ 89
Operating cash outflows for finance leases	4
Financing cash outflows for finance leases	$ 3

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Long-Term Debt (Detail) - USD ($) $ in Millions	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Credit Facility	$ 0		$ 0
Finance lease obligations	160		163
Total debt	10,414		9,347
Less: Current portion of long-term debt	(229)		(833)
Long-term debt, noncurrent	10,185		8,514
Series K Notes, interest rate of 3.0%, face amount of $600, matured March 1, 2019 (effective interest rate of 4.4%)
Debt Instrument [Line Items]
Senior notes	0		600
Series L Notes, interest rate of 3.3%, face amount of $350, maturing September 15, 2022 (effective interest rate of 3.4%)
Debt Instrument [Line Items]
Senior notes	349		349
Series M Notes, interest rate of 3.4%, face amount of $350, maturing October 15, 2020 (effective interest rate of 3.6%)
Debt Instrument [Line Items]
Senior notes	349		349
Series N Notes, interest rate of 3.1%, face amount of $400, maturing October 15, 2021 (effective interest rate of 3.4%)
Debt Instrument [Line Items]
Senior notes	398		397
Series O Notes, interest rate of 2.9%, face amount of $450, maturing March 1, 2021 (effective interest rate of 3.1%)
Debt Instrument [Line Items]
Senior notes	449		448
Series P Notes, interest rate of 3.8%, face amount of $350, maturing October 1, 2025 (effective interest rate of 4.0%)
Debt Instrument [Line Items]
Senior notes	345		345
Series Q Notes, interest rate of 2.3%, face amount of $750, maturing January 15, 2022 (effective interest rate of 2.5%)
Debt Instrument [Line Items]
Senior notes	746		745
Series R Notes, interest rate of 3.1%, face amount of $750, maturing June 15, 2026 (effective interest rate of 3.3%)
Debt Instrument [Line Items]
Senior notes	744		743
Series T Notes, interest rate of 7.2%, face amount of $181, maturing December 1, 2019 (effective interest rate of 2.3%)
Debt Instrument [Line Items]
Senior notes	184		188
Series U Notes, interest rate of 3.1%, face amount of $291, maturing February 15, 2023 (effective interest rate of 3.1%)
Debt Instrument [Line Items]
Senior notes	291		291
Series V Notes, interest rate of 3.8%, face amount of $318, maturing March 15, 2025 (effective interest rate of 2.8%)
Debt Instrument [Line Items]
Senior notes	334		335
Series W Notes, interest rate of 4.5%, face amount of $278, maturing October 1, 2034 (effective interest rate of 4.1%)
Debt Instrument [Line Items]
Senior notes	291		292
Series X Notes, interest rate of 4.0%, face amount of $450, maturing April 15, 2028 (effective interest rate of 4.2%)
Debt Instrument [Line Items]
Senior notes	444		443
Series Y Notes, floating rate, face amount of $550, maturing December 1, 2020 (effective interest rate of 3.1% at June 30, 2019)
Debt Instrument [Line Items]
Senior notes	548		547
Series Z Notes, interest rate of 4.2%, face amount of $350, maturing December 1, 2023 (effective interest rate of 4.4%)
Debt Instrument [Line Items]
Senior notes	347		347
Series AA Notes, interest rate of 4.7%, face amount of $300, maturing December 1, 2028 (effective interest rate of 4.8%)
Debt Instrument [Line Items]
Senior notes	297		297
Series BB Notes, floating rate, face amount of $300, maturing March 8, 2021 (effective interest rate of 3.1% at June 30, 2019)
Debt Instrument [Line Items]
Senior notes	299		0
Series CC Notes, interest rate of 3.6%, face amount of $550, maturing April 15, 2024 (effective interest rate of 3.9%)
Debt Instrument [Line Items]
Senior notes	$ 564		0
Senior Notes | Series K Notes, interest rate of 3.0%, face amount of $600, matured March 1, 2019 (effective interest rate of 4.4%)
Debt Instrument [Line Items]
Interest rate	3.00%
Senior notes, face amount	$ 600
Effective interest rate	4.40%
Senior Notes | Series L Notes, interest rate of 3.3%, face amount of $350, maturing September 15, 2022 (effective interest rate of 3.4%)
Debt Instrument [Line Items]
Interest rate	3.30%
Senior notes, face amount	$ 350
Effective interest rate	3.40%
Senior Notes | Series M Notes, interest rate of 3.4%, face amount of $350, maturing October 15, 2020 (effective interest rate of 3.6%)
Debt Instrument [Line Items]
Interest rate	3.40%
Senior notes, face amount	$ 350
Effective interest rate	3.60%
Senior Notes | Series N Notes, interest rate of 3.1%, face amount of $400, maturing October 15, 2021 (effective interest rate of 3.4%)
Debt Instrument [Line Items]
Interest rate	3.10%
Senior notes, face amount	$ 400
Effective interest rate	3.40%
Senior Notes | Series O Notes, interest rate of 2.9%, face amount of $450, maturing March 1, 2021 (effective interest rate of 3.1%)
Debt Instrument [Line Items]
Interest rate	2.90%
Senior notes, face amount	$ 450
Effective interest rate	3.10%
Senior Notes | Series P Notes, interest rate of 3.8%, face amount of $350, maturing October 1, 2025 (effective interest rate of 4.0%)
Debt Instrument [Line Items]
Interest rate	3.80%
Senior notes, face amount	$ 350
Effective interest rate	4.00%
Senior Notes | Series Q Notes, interest rate of 2.3%, face amount of $750, maturing January 15, 2022 (effective interest rate of 2.5%)
Debt Instrument [Line Items]
Interest rate	2.30%
Senior notes, face amount	$ 750
Effective interest rate	2.50%
Senior Notes | Series R Notes, interest rate of 3.1%, face amount of $750, maturing June 15, 2026 (effective interest rate of 3.3%)
Debt Instrument [Line Items]
Interest rate	3.10%
Senior notes, face amount	$ 750
Effective interest rate	3.30%
Senior Notes | Series T Notes, interest rate of 7.2%, face amount of $181, maturing December 1, 2019 (effective interest rate of 2.3%)
Debt Instrument [Line Items]
Interest rate	7.20%
Senior notes, face amount	$ 181
Effective interest rate	2.30%
Senior Notes | Series U Notes, interest rate of 3.1%, face amount of $291, maturing February 15, 2023 (effective interest rate of 3.1%)
Debt Instrument [Line Items]
Interest rate	3.10%
Senior notes, face amount	$ 291
Effective interest rate	3.10%
Senior Notes | Series V Notes, interest rate of 3.8%, face amount of $318, maturing March 15, 2025 (effective interest rate of 2.8%)
Debt Instrument [Line Items]
Interest rate	3.80%
Senior notes, face amount	$ 318
Effective interest rate	2.80%
Senior Notes | Series W Notes, interest rate of 4.5%, face amount of $278, maturing October 1, 2034 (effective interest rate of 4.1%)
Debt Instrument [Line Items]
Interest rate	4.50%
Senior notes, face amount	$ 278
Effective interest rate	4.10%
Senior Notes | Series X Notes, interest rate of 4.0%, face amount of $450, maturing April 15, 2028 (effective interest rate of 4.2%)
Debt Instrument [Line Items]
Interest rate	4.00%
Senior notes, face amount	$ 450
Effective interest rate	4.20%
Senior Notes | Series Y Notes, floating rate, face amount of $550, maturing December 1, 2020 (effective interest rate of 3.1% at June 30, 2019)
Debt Instrument [Line Items]
Senior notes, face amount	$ 550
Effective interest rate	3.10%
Senior Notes | Series Z Notes, interest rate of 4.2%, face amount of $350, maturing December 1, 2023 (effective interest rate of 4.4%)
Debt Instrument [Line Items]
Interest rate	4.20%
Senior notes, face amount	$ 350
Effective interest rate	4.40%
Senior Notes | Series AA Notes, interest rate of 4.7%, face amount of $300, maturing December 1, 2028 (effective interest rate of 4.8%)
Debt Instrument [Line Items]
Interest rate	4.70%
Senior notes, face amount	$ 300
Effective interest rate	4.80%
Senior Notes | Series BB Notes, floating rate, face amount of $300, maturing March 8, 2021 (effective interest rate of 3.1% at June 30, 2019)
Debt Instrument [Line Items]
Senior notes, face amount	$ 300	$ 300
Effective interest rate	3.10%
Senior Notes | Series CC Notes, interest rate of 3.6%, face amount of $550, maturing April 15, 2024 (effective interest rate of 3.9%)
Debt Instrument [Line Items]
Interest rate	3.60%	3.60%
Senior notes, face amount	$ 550	$ 550
Effective interest rate	3.90%
Commercial paper
Debt Instrument [Line Items]
Commercial paper	$ 3,069		2,245
Other
Debt Instrument [Line Items]
Other	$ 206		$ 223

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Long-Term Debt - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended	6 Months Ended
	Mar. 31, 2019	Jun. 30, 2019	Jun. 30, 2018
Debt Disclosure [Abstract]
Interest paid, net of amounts capitalized		$ 176	$ 144
Maximum borrowing capacity under credit facility		4,500
Senior Notes | Series BB Notes
Debt Instrument [Line Items]
Senior notes, face amount	$ 300	300
Senior Notes | Series CC Notes
Debt Instrument [Line Items]
Senior notes, face amount	$ 550	$ 550
Interest rate	3.60%	3.60%
Senior Notes | Series BB and Series CC Notes
Debt Instrument [Line Items]
Proceeds from debt offering	$ 841
LIBOR | Senior Notes | Series BB Notes
Debt Instrument [Line Items]
Variable interest rate	0.65%

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Fair Value of Financial Instruments - Carrying Values and Fair Values of Non-Current Financial Assets and Liabilities (Detail) - USD ($) $ in Millions	Jun. 30, 2019	Dec. 31, 2018
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Senior, mezzanine, and other loans	$ 97	$ 125
Other noncurrent liabilities	(2,294)	(2,372)
Carrying Amount
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Senior, mezzanine, and other loans	97	125
Total noncurrent financial assets	97	125
Senior Notes	(6,795)	(5,928)
Commercial paper	(3,069)	(2,245)
Other long-term debt	(167)	(184)
Other noncurrent liabilities	(143)	(153)
Total noncurrent financial liabilities	(10,174)	(8,510)
Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Senior, mezzanine, and other loans	94	116
Total noncurrent financial assets	94	116
Senior Notes	(6,994)	(5,794)
Commercial paper	(3,069)	(2,245)
Other long-term debt	(175)	(182)
Other noncurrent liabilities	(143)	(153)
Total noncurrent financial liabilities	$ (10,381)	$ (8,374)

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Accumulated Other Comprehensive Loss and Shareholders' Equity - Accumulated Other Comprehensive (Loss) Income Activity (Detail) - USD ($) $ in Millions	3 Months Ended				6 Months Ended
	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	Mar. 31, 2018	Jun. 30, 2019	Jun. 30, 2018	Jan. 01, 2018
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Balance at beginning of period	$ 1,603	$ 2,225	$ 3,588	$ 3,731	$ 2,225	$ 3,731
Other comprehensive income (loss) before reclassifications					69	(239)
Reclassification of (income) losses					(4)	16
Net other comprehensive income (loss)	34	31	(385)	162	65	(223)
Balance at end of period	1,240	1,603	2,920	3,588	1,240	2,920
Other comprehensive income (loss) before reclassification related to foreign current translation adjustment, loss on intra-equity foreign currency transaction					2	38
Foreign Currency Translation Adjustments
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Balance at beginning of period		(403)		(23)	(403)	(23)
Other comprehensive income (loss) before reclassifications					71	(247)
Reclassification of (income) losses					0	8
Net other comprehensive income (loss)					71	(239)
Balance at end of period	(332)		(262)		(332)	(262)
Derivative Instrument and Other Adjustments
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Balance at beginning of period		12		6	12	6
Other comprehensive income (loss) before reclassifications					(2)	8
Reclassification of (income) losses					(4)	8
Net other comprehensive income (loss)					(6)	16
Balance at end of period	6		18		6	18
Accumulated Other Comprehensive Loss
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Balance at beginning of period	(360)	(391)	141	(17)	(391)	(17)
Net other comprehensive income (loss)	34	31	(385)	162
Balance at end of period	$ (326)	$ (360)	$ (244)	$ 141	$ (326)	$ (244)
Adoption of ASU 2016-01
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Cumulative effect adjustment of accounting principle							$ 0
Adoption of ASU 2016-01 | Foreign Currency Translation Adjustments
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Cumulative effect adjustment of accounting principle							0
Adoption of ASU 2016-01 | Derivative Instrument and Other Adjustments
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Cumulative effect adjustment of accounting principle							(4)
Adoption of ASU 2016-01 | Accumulated Other Comprehensive Loss
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Cumulative effect adjustment of accounting principle							$ (4)

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Accumulated Other Comprehensive Loss and Shareholders' Equity - Changes in Shareholders' Equity (Deficit) (Detail) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended					6 Months Ended
	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	Mar. 31, 2018	Jun. 30, 2019	Jun. 30, 2018	Jan. 01, 2019	Dec. 31, 2018	Jan. 01, 2018
(Increase) Decrease in Shareholders' Deficit [Roll Forward]
Balance at beginning of period	$ 1,240	$ 1,603	$ 2,225	$ 3,588	$ 3,731	$ 2,225	$ 3,731
Balance at beginning of period (as adjusted)		1,240				1,240			$ 2,225
Net income		232	375	667	420	607	1,087
Other comprehensive income		34	31	(385)	162	65	(223)
Dividends		(159)	(139)	(145)	(118)
Share-based compensation plans		30	(62)	45	(48)
Purchase of treasury stock		(500)	(828)	(850)	(782)
Balance at end of period		$ 1,240	$ 1,603	$ 2,920	$ 3,588	1,240	2,920
Cash dividends (in USD per share)		$ 0.41	$ 0.33	$ 0.48	$ 0.41
Class A Common Stock
(Increase) Decrease in Shareholders' Deficit [Roll Forward]
Balance at beginning of period	$ 5	$ 5	$ 5	$ 5	$ 5	$ 5	$ 5
Balance at beginning of period (in shares)	330.6	334.1	339.1	354.8	359.1	339.1	359.1
Share-based compensation plans (in shares)		0.2	1.7	0.1	1.3
Purchase of treasury stock (in shares)		(3.7)	(6.7)	(6.2)	(5.6)
Balance at end of period		$ 5	$ 5	$ 5	$ 5	$ 5	$ 5
Balance at end of period (in shares)		330.6	334.1	348.7	354.8	330.6	348.7
Additional Paid-in- Capital
(Increase) Decrease in Shareholders' Deficit [Roll Forward]
Balance at beginning of period	$ 5,729	$ 5,706	$ 5,814	$ 5,685	$ 5,770	$ 5,814	$ 5,770
Share-based compensation plans		23	(108)	43	(85)
Balance at end of period		5,729	5,706	5,728	5,685	5,729	5,728
Retained Earnings
(Increase) Decrease in Shareholders' Deficit [Roll Forward]
Balance at beginning of period	9,292	9,219	8,982	7,920	7,391	8,982	7,391
Net income		232	375	667	420
Dividends		(159)	(139)	(145)	(118)
Balance at end of period		9,292	9,219	8,442	7,920	9,292	8,442
Treasury Stock, at Cost
(Increase) Decrease in Shareholders' Deficit [Roll Forward]
Balance at beginning of period	(13,460)	(12,967)	(12,185)	(10,163)	(9,418)	(12,185)	(9,418)
Share-based compensation plans		7	46	2	37
Purchase of treasury stock		(500)	(828)	(850)	(782)
Balance at end of period		(13,460)	(12,967)	(11,011)	(10,163)	(13,460)	(11,011)
Accumulated Other Comprehensive Loss
(Increase) Decrease in Shareholders' Deficit [Roll Forward]
Balance at beginning of period	(326)	(360)	(391)	141	(17)	(391)	(17)
Other comprehensive income		34	31	(385)	162
Balance at end of period		$ (326)	$ (360)	$ (244)	$ 141	$ (326)	$ (244)
Adoption of ASU 2016-02
(Increase) Decrease in Shareholders' Deficit [Roll Forward]
Adoption of ASU								$ 1
Adoption of ASU 2016-02 | Class A Common Stock
(Increase) Decrease in Shareholders' Deficit [Roll Forward]
Adoption of ASU								0
Adoption of ASU 2016-02 | Additional Paid-in- Capital
(Increase) Decrease in Shareholders' Deficit [Roll Forward]
Adoption of ASU								0
Adoption of ASU 2016-02 | Retained Earnings
(Increase) Decrease in Shareholders' Deficit [Roll Forward]
Adoption of ASU								1
Adoption of ASU 2016-02 | Treasury Stock, at Cost
(Increase) Decrease in Shareholders' Deficit [Roll Forward]
Adoption of ASU								0
Adoption of ASU 2016-02 | Accumulated Other Comprehensive Loss
(Increase) Decrease in Shareholders' Deficit [Roll Forward]
Adoption of ASU								$ 0
Adoption of ASU 2014-09
(Increase) Decrease in Shareholders' Deficit [Roll Forward]
Adoption of ASU										$ (149)
Balance at beginning of period (as adjusted)										3,582
Adoption of ASU 2014-09 | Class A Common Stock
(Increase) Decrease in Shareholders' Deficit [Roll Forward]
Balance at beginning of period (in shares)					359.1		359.1
Adoption of ASU										0
Balance at beginning of period (as adjusted)										5
Adoption of ASU 2014-09 | Additional Paid-in- Capital
(Increase) Decrease in Shareholders' Deficit [Roll Forward]
Adoption of ASU										0
Balance at beginning of period (as adjusted)										5,770
Adoption of ASU 2014-09 | Retained Earnings
(Increase) Decrease in Shareholders' Deficit [Roll Forward]
Adoption of ASU										(149)
Balance at beginning of period (as adjusted)										7,242
Adoption of ASU 2014-09 | Treasury Stock, at Cost
(Increase) Decrease in Shareholders' Deficit [Roll Forward]
Adoption of ASU										0
Balance at beginning of period (as adjusted)										(9,418)
Adoption of ASU 2014-09 | Accumulated Other Comprehensive Loss
(Increase) Decrease in Shareholders' Deficit [Roll Forward]
Adoption of ASU										0
Balance at beginning of period (as adjusted)										(17)
Adoption of ASU 2016-01
(Increase) Decrease in Shareholders' Deficit [Roll Forward]
Adoption of ASU										0
Adoption of ASU 2016-01 | Class A Common Stock
(Increase) Decrease in Shareholders' Deficit [Roll Forward]
Adoption of ASU										0
Adoption of ASU 2016-01 | Additional Paid-in- Capital
(Increase) Decrease in Shareholders' Deficit [Roll Forward]
Adoption of ASU										0
Adoption of ASU 2016-01 | Retained Earnings
(Increase) Decrease in Shareholders' Deficit [Roll Forward]
Adoption of ASU										4
Adoption of ASU 2016-01 | Treasury Stock, at Cost
(Increase) Decrease in Shareholders' Deficit [Roll Forward]
Adoption of ASU										0
Adoption of ASU 2016-01 | Accumulated Other Comprehensive Loss
(Increase) Decrease in Shareholders' Deficit [Roll Forward]
Adoption of ASU										(4)
Adoption of ASU 2016-16
(Increase) Decrease in Shareholders' Deficit [Roll Forward]
Adoption of ASU										372
Adoption of ASU 2016-16 | Class A Common Stock
(Increase) Decrease in Shareholders' Deficit [Roll Forward]
Adoption of ASU										0
Adoption of ASU 2016-16 | Additional Paid-in- Capital
(Increase) Decrease in Shareholders' Deficit [Roll Forward]
Adoption of ASU										0
Adoption of ASU 2016-16 | Retained Earnings
(Increase) Decrease in Shareholders' Deficit [Roll Forward]
Adoption of ASU										372
Adoption of ASU 2016-16 | Treasury Stock, at Cost
(Increase) Decrease in Shareholders' Deficit [Roll Forward]
Adoption of ASU										0
Adoption of ASU 2016-16 | Accumulated Other Comprehensive Loss
(Increase) Decrease in Shareholders' Deficit [Roll Forward]
Adoption of ASU										$ 0
Subsequent Even | Treasury Stock, at Cost
(Increase) Decrease in Shareholders' Deficit [Roll Forward]
Purchase of treasury stock	$ (100)

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Contracts with Customers (Details) - USD ($) $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2019	Dec. 31, 2018
Disaggregation of Revenue [Line Items]
Breakage, including tax	$ 147
Breakage, excluding tax	111
Loyalty Program
Disaggregation of Revenue [Line Items]
Change in contract with customer liability		$ 226
Contract with customer liability	$ 5,687	5,687	$ 5,461
Deferred revenue recognized		$ 997

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Business Segments - Segment Revenues (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenues	$ 5,305	$ 5,409	$ 10,317	$ 10,418
Total segment
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenues	5,227	5,091	10,100	9,932
Unallocated corporate
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenues	78	318	217	486
North American Full-Service | Total segment
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenues	3,403	3,356	6,708	6,655
North American Limited-Service | Total segment
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenues	901	860	1,670	1,600
Asia Pacific | Total segment
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenues	310	268	580	543
Other International | Total segment
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenues	613	607	1,142	1,134
Fee revenues
Segment Reporting, Revenue Reconciling Item [Line Items]
Gross revenues	999	951	1,894	1,796
Contract investment amortization	(15)	(13)	(29)	(31)
Revenues	984	938	1,865	1,765
Fee revenues | Total segment
Segment Reporting, Revenue Reconciling Item [Line Items]
Gross revenues	867	833	1,642	1,567
Contract investment amortization	(15)	(13)	(29)	(31)
Revenues	852	820	1,613	1,536
Fee revenues | North American Full-Service | Total segment
Segment Reporting, Revenue Reconciling Item [Line Items]
Gross revenues	349	345	665	644
Contract investment amortization	(8)	(7)	(16)	(18)
Revenues	341	338	649	626
Fee revenues | North American Limited-Service | Total segment
Segment Reporting, Revenue Reconciling Item [Line Items]
Gross revenues	264	250	476	446
Contract investment amortization	(3)	(3)	(6)	(6)
Revenues	261	247	470	440
Fee revenues | Asia Pacific | Total segment
Segment Reporting, Revenue Reconciling Item [Line Items]
Gross revenues	112	110	230	227
Contract investment amortization	(1)	(1)	(1)	(1)
Revenues	111	109	229	226
Fee revenues | Other International | Total segment
Segment Reporting, Revenue Reconciling Item [Line Items]
Gross revenues	142	128	271	250
Contract investment amortization	(3)	(2)	(6)	(6)
Revenues	139	126	265	244
Owned, leased, and other
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenues	418	423	793	829
Owned, leased, and other | Total segment
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenues	403	403	766	796
Owned, leased, and other | North American Full-Service | Total segment
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenues	147	140	294	295
Owned, leased, and other | North American Limited-Service | Total segment
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenues	38	37	69	70
Owned, leased, and other | Asia Pacific | Total segment
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenues	50	48	91	95
Owned, leased, and other | Other International | Total segment
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenues	168	178	312	336
Reimbursements
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenues	3,903	4,048	7,659	7,824
Reimbursements | Total segment
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenues	3,972	3,868	7,721	7,600
Reimbursements | North American Full-Service | Total segment
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenues	2,915	2,878	5,765	5,734
Reimbursements | North American Limited-Service | Total segment
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenues	602	576	1,131	1,090
Reimbursements | Asia Pacific | Total segment
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenues	149	111	260	222
Reimbursements | Other International | Total segment
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenues	$ 306	$ 303	$ 565	$ 554

XML

Business Segments - Segment Profits (Detail) - USD ($) $ in Millions	3 Months Ended				6 Months Ended
	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	Mar. 31, 2018	Jun. 30, 2019	Jun. 30, 2018
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Segment profits	$ 409		$ 818		$ 919	$ 1,348
Interest expense, net of interest income	(96)		(79)		(187)	(149)
Income taxes	(82)		(207)		(139)	(319)
NET INCOME	232	$ 375	667	$ 420	607	1,087
Unallocated corporate
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Segment profits	(391)		7		(557)	(121)
North American Full-Service | Total segment
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Segment profits	338		394		627	671
North American Limited-Service | Total segment
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Segment profits	253		252		455	434
Asia Pacific | Total segment
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Segment profits	92		140		195	252
Other International | Total segment
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Segment profits	$ 118		$ 160		$ 213	$ 319