What a difference a year makes!

Just a year ago, Marriott International was struggling through the economic uncertainty created by the financial crisis and global recession. Businesses had cut back on travel, and leisure travelers were spending less. As a result, we found ourselves battling significantly lower revenue per available room (RevPAR) and a corresponding decline in cash flow.

In response, we set goals that positioned Marriott to emerge stronger when better economic times returned. We fought for all the revenues we could, through our use of sales and marketing channels and our focus on customer service. We controlled costs at our hotels, corporate offices and timeshare business to generate as much cash flow as possible and bring our debt ratios to comfortable levels.

Now, a year later, we enter this new decade with great optimism. We’re encouraged by a modest increase in business travel and group bookings toward the end of 2009 and in the first weeks of 2010. It’s too early to claim a full recovery, but it seems reasonably clear that the freefall of a year ago has stopped and, from a new bottom, a recovery is under way. Marriott is poised for long-term success because of our longstanding competitive advantages — strong brands, customer preference, more than 80 years of experience, and a proven business model of managing and franchising hotels rather than owning them. By minimizing capital investments, we maximize financial flexibility and cash flow.

Above all, our strongest competitive advantage is our team of associates. It is through their remarkable efforts that we start this new decade in a position of strength.

PERFORMANCE HIGHLIGHTS
In 2009, revenue totaled nearly $11 billion and diluted losses per
share attributable to Marriott shareholders totaled $0.97. Revenues
from management and franchise fees declined 22 percent, reflecting
a 17 percent decline (in constant dollars) in systemwide
worldwide RevPAR.

Our results included restructuring costs and other charges of
$213 million, timeshare strategy — impairment charges of
$752 million, and certain tax expenses of $56 million (in aggregate totaling $688 million after tax or $1.94 per diluted share).

We were disappointed to have to take charges associated with our timeshare business, which we restructured based on weak demand. We reduced residential prices, converted some projects to other uses, and decided to sell some undeveloped land, among other actions. We were pleased that for the full year, the business generated over $150 million of pretax cash flow.

We strengthened our balance sheet faster than we expected, reducing debt by nearly $800 million during the year, and our public debt remains investment grade. At the end of 2009, total debt was $2.3 billion and cash balances totaled $115 million, compared to $3.1 billion of debt and $134 million of cash at year-end 2008.