MARRIOTT INTERNATIONAL, INC.
Marriott International, Inc. is a worldwide operator and franchisor of hotels and related lodging
The company develops, operates, and franchises hotels and corporate housing
properties under fourteen separate brand names, and develops, operates, and markets timeshare,
fractional ownership, and residential properties under four separate brand names.
groups its operations into the following five business segments:
% 2010 Total
North American Full-Service Lodging Segment
North American Limited-Service Lodging Segment
International Lodging Segment
Luxury Lodging Segment
Marriott operates or franchises 3,545 lodging properties worldwide, with 618,104 rooms as of
year-end 2010 inclusive of 36 home and condominium products (3,737 units) for which it
manages the related owners’ associations.
In addition, the company provides 2,043 furnished
corporate housing rental units, which are not included in the totals.
Company-Operated Lodging Property Arrangements
At year-end 2010, Marriott operated properties under a number of arrangements: long-term
management agreements with property owners, long-term lease agreements with property
owners, and company-owned properties.
The following table indicates the number of properties
and units operated under each type of arrangement:
Long-term management agreements with property owners*
Long-term lease agreements with property owners
*Includes residential products for which the company manages the
related owners’ associations.
The terms of the management agreements vary, but typically, the company earns a management
fee that includes a base fee and an incentive fee. The base management fee is a percentage of the
revenues of the hotel.
The incentive management fee is a function of the profits of the hotel. The
management agreements also typically include reimbursement of costs of operations (both direct
and indirect). These agreements are generally for initial periods of 20 to 30 years, with options to
renew for up to 50 or more additional years. The lease agreements also vary, but may include
Prepared by Prof. Clifton Brown, Department of Accountancy, University of Illinois at Urbana-Champaign.
rights reserved, 2011.
The source of all information presented in this case is the Marriott International, Inc. annual report (Form 10-K) to
the SEC for the fiscal year ended December 31, 2010.