Financial Information

PART II

Item 8. Financial Statements and Supplementary Data.

MARRIOTT INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3. ACQUISITIONS AND DISPOSITIONS

Acquisitions

In 2019, we completed the acquisition of Elegant Hotels Group plc (“Elegant”) for $128 million in cash and assumed Elegant’s net debt outstanding of $63 million, which we subsequently repaid in January 2020. As a result of the transaction, we added seven hotels and a beachfront restaurant on the island of Barbados to our Caribbean and Latin America owned and leased portfolio.

In 2019, we purchased the W New York – Union Square, a North American Full-Service property, for $206 million.

In 2019, 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.

Dispositions

In 2019, we sold The St. Regis New York and the Sheraton Gateway Hotel in Toronto International Airport, two North American Full-Service properties, and recognized total gains of $134 million in the “Gains and other income, net” caption of our Income Statements. We will continue to operate the hotels under long-term management agreements.

In 2018, we sold the following properties and recognized total gains of $132 million in the “Gains and other income, net” caption of our Income Statements:

• The Tremont Chicago Hotel at Magnificent Mile and Le Centre Sheraton Montreal Hotel, two North American Full-Service properties;
   
  
• The Westin Denarau Island Resort and The Sheraton Fiji Resort, two Asia Pacific properties; and
   
  
• The Sheraton Buenos Aires Hotel & Convention Center and Park Tower, A Luxury Collection Hotel, Buenos Aires, two Caribbean and Latin America properties.

In 2018, we sold our interest in three equity method investments, whose assets included a plot of land in Italy, the W Hotel Mexico City, and the Royal Orchid Sheraton Hotel & Towers in Bangkok, and we recognized total gains of $42 million in the “Gains and other income, net” caption of our Income Statements. Also in 2018, a Caribbean and Latin America investee sold the JW Marriott Mexico City, and a North American Full-Service investee sold The Ritz-Carlton Toronto, and we recorded our share of the gains of $55 million and $10 million, respectively, in the “Equity in earnings” caption of our Income Statements.

In 2017, we sold the following three North American Full-Service properties:

• The Sheraton Centre Toronto Hotel that was owned on a long-term ground lease;
   
  
• The Westin Maui that was owned on a long-term ground lease; and
   
  
• The Charlotte Marriott City Center and recognized a $24 million gain in the “Gains and other income, net” caption of our Income Statements.

In 2017, Aramark purchased Avendra LLC, in which we had a 55 percent ownership interest. We recorded a non-recurring pre-tax gain of $659 million in 2017 and $5 million in 2018, which we reflected in the “Gains and other income, net” caption of our Income Statements. After cash paid for income taxes, the gain totaled $425 million. We committed to the owners of the hotels in our system that the benefits derived from Avendra, including any dividends or sale proceeds above our original investment, would be used for the benefit of the hotels in our system. Spending funded by the sale proceeds, which we present in the “Reimbursed expenses” caption of our Income Statements, totaled $118 million ($87 million after-tax) in 2019 and $115 million ($85 million after-tax) in 2018. In conjunction with the sale of Avendra to Aramark, we entered into a new five-year procurement services agreement with Avendra for the benefit of our managed and owned properties in North America.

Planned Disposition

In 2018, we purchased the Sheraton Phoenix Downtown, formerly the Sheraton Grand Phoenix, a North American Full-Service property that we manage, for $255 million. In the 2020 first quarter, we sold this hotel for $268 million. We determined that the carrying values of those assets exceeded their fair values, based on the agreed-upon selling price. Consequently, we recorded a charge of $15 million for the expected disposal loss in the “Depreciation, amortization, and other” caption of our Income Statements, which represents the amount by which the carrying values exceeded the fair values, less our anticipated cost to sell. At year-end 2019, we held $248 million of assets classified as “Assets held for sale” related to the Sheraton Phoenix Downtown and $8 million of liabilities associated with those assets, which we recorded in the “Accrued expenses and other” caption of our Balance Sheets. We will continue to operate the hotel under a long-term management agreement.