2017 Annual Report

Financial Information

Jump to a Section:

PART II

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

North American Limited-Service

Financial Table

2017 Compared to 2016

In 2017, across our North American Limited-Service segment we added 270 properties (33,128 rooms) and 26 properties (2,875 rooms) left our system.

North American Limited-Service segment profits increased by $118 million, primarily due to the following:

  • $118 million of higher base management and franchise fees, primarily reflecting $51 million of higher Legacy-Starwood fees, $42 million from Legacy-Marriott unit growth, $13 million of higher Legacy-Marriott relicensing fees, and $11 million of stronger RevPAR at Legacy-Marriott hotels;
     
  • $6 million of lower incentive management fees, primarily driven by softer performance and a change in the specified owner return at a Legacy-Marriott portfolio of managed hotels; and
     
  • $5 million of higher owned, leased, and other revenue, net of direct expenses, primarily reflecting higher Global Design profits and higher Legacy-Marriott termination fees.

Cost reimbursements revenue and expenses for our North American Limited-Service segment properties totaled $3,004 million in 2017, compared to $2,688 million in 2016.

2016 Compared to 2015

In 2016, across our North American Limited-Service segment we added 451 properties (60,637 rooms), including 226 properties (34,294 rooms) from the Starwood Combination on the Merger Date, and 8 properties (880 rooms) left our system.

North American Limited-Service segment profits increased by $47 million, reflecting $9 million from the Starwood Combination and $38 million of higher Legacy-Marriott profits, primarily due to the following:

  • $14 million of higher Legacy-Marriott base management and franchise fees, primarily due to $50 million from new units and stronger RevPAR, partially offset by $24 million of lower relicensing fees and an $11 million decrease in deferred fee recognition;
     
  • $10 million of higher Legacy-Marriott incentive management fees, primarily driven by $10 million of higher incentive fees earned from a few limited-service portfolios;
     
  • $4 million of higher Legacy-Marriott owned, leased, and other revenue, net of direct expenses, primarily reflecting higher net earnings at several leased and owned properties;
     
  • $5 million of lower Legacy-Marriott general, administrative, and other expenses, primarily due to $7 million of lower reserves for guarantee funding; and
     
  • $3 million of higher Legacy-Marriott gains and other income, net, primarily due to a favorable variance to the $4 million prior year disposal loss for a North American Limited-Service segment plot of land.

Cost reimbursements revenue and expenses for our Legacy-Marriott North American Limited-Service segment properties totaled $2,646 million in 2016, compared to $2,366 million in 2015.

  NEXT