2018 Annual Report

Financial Information

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PART II

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Asia Pacific

Financial Table

2018 Compared to 2017

In 2018, across our Asia Pacific segment we added 82 properties (19,661 rooms) and 11 properties (3,399 rooms) left our system.

Asia Pacific segment profits increased by $95 million, primarily due to the following changes:

  • $26 million of higher base management and franchise fees, primarily reflecting $16 million from unit growth and $10 million from RevPAR growth;
     
  • $22 million of higher incentive management fees, primarily driven by net higher profits at managed hotels and $10 million from unit growth;
     
  • $1 million of higher owned, leased, and other revenue, net of direct expenses, primarily due to $14 million of higher termination fees, partially offset by $13 million lower owned and leased profits attributable to properties sold;
     
  • $1 million of higher general, administrative, and other expenses, primarily due to $6 million of higher bad debt reserves partially offset by administrative cost savings largely due to synergies associated with the Starwood Combination;
     
  • $71 million of higher gains and other income, net, primarily reflecting a $57 million gain on the sale of two properties and $13 million from gains on sales of our interest in two equity method investments; and
     
  • $29 million of lower cost reimbursement revenue, net of reimbursement expenses.
2017 Compared to 2016

In 2017, across our Asia Pacific segment we added 77 properties (18,035 rooms) and 10 properties (3,961 rooms) left our system.

Asia Pacific segment profits increased by $201 million, primarily due to the following:

  • $45 million of higher cost reimbursement revenue, net of reimbursement expenses;
     
  • $108 million of higher base management and franchise fees, primarily due to $88 million of higher Legacy-Starwood fees, $9 million of higher Legacy-Marriott branding fees, $6 million from Legacy-Marriott unit growth, and $5 million from stronger RevPAR at Legacy-Marriott hotels;
     
  • $92 million of higher incentive management fees, primarily due to $80 million of higher Legacy-Starwood fees, $8 million from higher net house profits at Legacy-Marriott managed hotels, and $4 million from Legacy-Marriott unit growth;
     
  • $4 million of higher owned, leased, and other revenue, net of direct expenses, primarily due to $11 million of higher Legacy-Starwood owned and leased profits, partially offset by $5 million of lower Legacy-Marriott Global Design profits;
     
  • $24 million of higher depreciation, amortization, and other expenses, primarily reflecting higher depreciation and amortization on Legacy-Starwood assets;
     
  • $31 million of higher general, administrative, and other expenses, primarily due to the Starwood Combination; and
     
  • $8 million of higher equity in earnings, primarily due to higher earnings by Legacy-Starwood investees.
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