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Marriott International

Marriott InternationalMAREarnings & Financial Report

Nasdaq · Consumer Discretionary · Hotels, Resorts & Cruise Lines

Marriott International, Inc. is an American multinational company that operates, franchises, and licenses lodging brands that include hotel, residential, and timeshare properties. Marriott International owns over 37 hotel and timeshare brands with 9,000 locations and 1,597,380 rooms across its network. Marriott International is headquartered in Bethesda, Maryland. The company is the successor to the hospitality division of the Marriott Corporation, founded by J.

What changed in Marriott International's 10-K — 2022 vs 2023

Top changes in Marriott International's 2023 10-K

225 paragraphs added · 238 removed · 178 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

49 edited+13 added−19 removed16 unchanged
Our sustainability strategy and initiatives focus on a wide range of issues, including designing resource-efficient hotels, implementing technologies to track and reduce energy and water consumption, as well as waste and food waste, increasing the use of renewable energy, managing climate and water-related risks, driving third-party certifications at the hotel-level, supporting innovative ecosystem restoration initiatives, and focusing on responsible and local sourcing.
Our sustainability strategy and initiatives focus on a wide range of issues, including designing resource-efficient hotels, implementing technologies to track and reduce energy and water consumption, as well as waste and food waste, increasing the use of renewable energy, managing water-related risks, focusing on third-party sustainability certifications at the hotel-level, supporting innovative ecosystem restoration initiatives, focusing on responsible and local sourcing, and driving climate action.
Members can redeem their points for stays at most of our properties, airline tickets, airline frequent flyer program miles, rental cars, products from Marriott Bonvoy Boutiques ® , and a variety of other awards, including experiences from Marriott Bonvoy Moments TM .
Members can redeem their points for stays at most of our properties, airline tickets, airline frequent flyer program miles, rental cars, products from Marriott Bonvoy Boutiques ® , and a variety of other awards, including experiences from Marriott Bonvoy Moments ® .
Access to Opportunity Our company-wide diversity, equity, and inclusion (“DEI”) efforts include a range of initiatives and programs to support our goal to make all stakeholders (including associates, guests, owners, and suppliers) feel welcome and valued.
Access to Opportunity Our company-wide diversity, equity, and inclusion efforts include a range of initiatives and programs to support our goal to make all stakeholders (including associates, guests, owners, and suppliers) feel welcome and valued.
Distinctive Luxury hotel brands in our portfolio include W Hotels, The Luxury Collection, EDITION, and Bvlgari. Premium offers sophisticated and thoughtful amenities and services. Our Classic Premium hotel brands include Marriott Hotels, Sheraton, Delta Hotels by Marriott, Marriott Executive Apartments, and Marriott Vacation Club.
Distinctive Luxury brands in our portfolio include The Luxury Collection, W Hotels, EDITION, and Bvlgari. Premium offers sophisticated and thoughtful amenities and services. Our Classic Premium brands include Marriott Hotels, Sheraton, Delta Hotels by Marriott, Marriott Executive Apartments, and Marriott Vacation Club.
We also license credit card programs internationally, including in Japan, Canada, the United Kingdom, United Arab Emirates, Saudi Arabia, South Korea, Mexico, and China. We generally earn fixed amounts that are payable at contract inception and variable amounts that are paid to us monthly over the term of the agreements primarily based on card usage.
We also license credit card programs internationally in Japan, Canada, the United Kingdom, United Arab Emirates, Saudi Arabia, South Korea, Mexico, China, India, and Qatar. We generally earn fixed amounts that are payable at contract inception and variable amounts that are paid to us monthly over the term of the agreements primarily based on card usage.
We make all such filings available free of charge as soon as reasonably practicable after filing. The information found on our website is not part of this or any other report we file with or furnish to the SEC.
We make all such filings available free of charge as soon as reasonably practicable after filing. The information found on our website is not part of this or any other report we file with or furnish to the SEC. 10 Table of Contents
Franchised and Licensed Properties We have franchising and licensing arrangements that permit hotel owners and operators to use many of our lodging brand names and systems.
Franchised and Licensed Properties We have franchising and licensing arrangements that permit property owners and operators to use many of our lodging brand names and systems.
Our Classic brands offer time-honored hospitality for the modern traveler, and our Distinctive brands offer memorable experiences with a unique perspective - each of which we group into three quality tiers: Luxury, Premium, and Select. Luxury offers bespoke and superb amenities and services. Our Classic Luxury hotel brands include JW Marriott, The Ritz-Carlton, and St. Regis.
Our Classic brands offer time-honored hospitality for the modern traveler, and our Distinctive brands offer memorable experiences with a unique perspective - each of which we group into four quality tiers: Luxury, Premium, Select, and Midscale. Luxury offers bespoke and superb amenities and services. Our Classic Luxury brands include JW Marriott, The Ritz-Carlton, and St. Regis.
Approximately 111,000 of the associates employed by Marriott are located in the U.S., of which approximately 18,000 belong to labor unions. Outside the U.S., some of our associates are represented by trade unions, works councils, or employee associations. These numbers do not include hotel personnel employed by our franchisees or management companies hired by our franchisees.
Approximately 117,000 of the associates employed by Marriott are located in the U.S., of which approximately 19,000 belong to labor unions. Outside the U.S., some of our associates are represented by trade unions, works councils, or employee associations. These numbers do not include hotel personnel employed by our franchisees or management companies hired by our franchisees.
Many of our Operating Agreements are subordinated to mortgages or other liens securing indebtedness of the owners. Many of our Operating Agreements also permit the owners to terminate the agreement if we do not meet certain performance metrics, financial returns fail to meet defined levels for a period of time, and we have not cured those deficiencies.
In many jurisdictions, our Operating Agreements may be subordinated to mortgages or other liens securing indebtedness of the owners. Many of our Operating Agreements also permit the owners to terminate the agreement if we do not meet certain performance metrics, financial returns fail to meet defined levels for a period of time, and we have not cured those deficiencies.
Our Distinctive Premium hotel brands include Westin, Renaissance Hotels, Le Méridien, Autograph Collection Hotels, Gaylord Hotels, Tribute Portfolio, and Design Hotels. Select offers smart and easy amenities and services, with our longer stay brands offering amenities that mirror the comforts of home.
Our Distinctive Premium brands include Westin, Autograph Collection Hotels, Renaissance Hotels, Le Méridien, Tribute Portfolio, Gaylord Hotels, Design Hotels, and Apartments by Marriott Bonvoy. Select offers smart and easy amenities and services, with our longer stay brands offering amenities that mirror the comforts of home.
On the investor relations portion of our website, Marriott.com/investor, we provide a link to our electronic filings with the SEC, including our annual report on Form 10-K, our quarterly reports on Form 10-Q, our current reports on Form 8-K, and any amendments to these reports.
Internet Address and Company SEC Filings Our primary Internet address is Marriott.com. On the investor relations portion of our website, Marriott.com/investor, we provide a link to our electronic filings with the SEC, including our annual report on Form 10-K, our quarterly reports on Form 10-Q, our current reports on Form 8-K, and any amendments to these reports.
Under our hotel franchising arrangements, we generally receive an initial application fee and continuing royalty fees, which typically range from four to seven percent of room revenues for all brands, plus two to three percent of food and beverage revenues for certain full-service brands.
Under our hotel franchising arrangements, we generally receive an initial application fee and 4 Table of Contents continuing royalty fees, which typically range from four to seven percent of room revenues for all brands, plus up to four percent of food and beverage revenues for certain full-service brands.
We refer to our Marriott Bonvoy loyalty program throughout this report as “Marriott Bonvoy” or our “Loyalty Program.” We believe that Marriott Bonvoy generates substantial repeat business that might otherwise go to competing hotels. In 2022, over half of our global room nights were booked by Marriott Bonvoy members.
We refer to our Marriott Bonvoy loyalty program throughout this report as “Marriott Bonvoy” or our “Loyalty Program.” 7 Table of Contents We believe that Marriott Bonvoy generates substantial repeat business that might otherwise go to competing hotels. In 2023, over 60% of our global room nights were booked by Marriott Bonvoy members.
We believe that the location and quality of our lodging facilities, our marketing programs, our reservation systems, Marriott Bonvoy, and our emphasis on guest service and guest and associate satisfaction contribute to guest preference across all our brands. Seasonality In general, business at company-operated and franchised properties fluctuates moderately with the seasons.
We believe that the location and quality of our lodging facilities, our marketing programs, our reservation systems, our Loyalty Program, and our emphasis on guest service and guest and associate satisfaction contribute to guest preference across all our brands. Seasonality In general, business at our properties fluctuates moderately with the seasons.
The following table shows our portfolio of brands at year-end 2022. We discuss our operations in the following two operating segments, both of which meet the applicable accounting criteria for separate disclosure as a reportable business segment: (1) U.S. & Canada and (2) International. See Note 14 for more information.
The following table shows our portfolio of brands at year-end 2023. We discuss our operations in the following two operating segments, both of which meet the applicable criteria for separate disclosure as a reportable business segment: (1) U.S. & Canada and (2) International.
At year-end 2022, Marriott managed the employment of approximately 377,000 associates. This number includes 140,000 associates employed by Marriott at properties, customer care centers, and above-property operations, as well as 237,000 associates who are employed by our property owners but whose employment is managed by Marriott (which is common outside the U.S.).
At year-end 2023, Marriott managed the employment of approximately 411,000 associates. This number includes 148,000 associates employed by Marriott at properties, customer care centers, and above-property operations, as well as 263,000 associates who are employed by our property owners but whose employment is managed by Marriott (which is common outside the U.S.).
We believe that our hotel brands are attractive to hotel owners seeking a management company or franchise affiliation because our hotels typically generate higher RevPAR than our 8 Table of Contents direct competitors in most market areas. We attribute this performance premium to our success in achieving and maintaining strong guest preference.
(based on number of rooms). We believe that our hotel brands are attractive to hotel owners seeking a management company or franchise or other licensing affiliation because our hotels typically generate higher RevPAR than our direct competitors in most market areas. We attribute this performance premium to our success in achieving and maintaining strong guest preference.
The Inclusion and Social Impact Committee of our Board of Directors (the “ISI Committee”), established 20 years ago, helps drive accountability for these efforts across the Company. The ISI Committee assists the Board in providing oversight of the Company’s strategy, efforts, and commitments related to its people-first culture, associate well-being, inclusion, and other environmental, social and governance (“ESG”) matters.
The Inclusion and Social Impact Committee (“ISIC”) of our Board of Directors (“Board”), established over 20 years ago, helps drive accountability for these efforts across the Company. The ISIC assists the Board in providing oversight of the Company’s strategy, efforts, and commitments related to our people-first culture, associate well-being, inclusion, and other environmental, social and governance matters.
Company-Operated Properties At year-end 2022, we had 2,053 company-operated properties (576,243 rooms), which included properties under long-term management or lease agreements with property owners (management and lease agreements together, the “Operating Agreements”) and properties that we own.
Company-Operated Properties At year-end 2023, we had 2,096 company-operated properties (589,078 rooms), which included properties under long-term management or lease agreements with property owners (management and lease agreements together, the “Operating Agreements”) and properties that we own.
We encourage continual feedback discussions with our associates at all levels, and measure associate satisfaction through our Associate Engagement Survey, which gives all associates the opportunity to provide feedback about their work experience, providing us with valuable insights to drive improvements in our culture.
We measure associate satisfaction through our Associate Engagement Survey, which gives all associates the opportunity to provide feedback about their work experience, providing valuable insights to drive improvements in our culture.
Our human capital strategy is based on three signature elements – Growing Great Leaders, Investing in Associates, and Access to Opportunity. Growing Great Leaders We believe that all associates, at every level, can inspire others through great leadership.
Our human capital strategy is based on three signature elements – Growing Great Leaders, Investing in Associates, and Access to Opportunity. Growing Great Leaders We believe that associates at every level can inspire others through great leadership. In 2023, we launched our new Leadership Framework, designed to help us grow great leaders.
We also deploy our Marriott Disaster Relief Fund to support associates and their families impacted by crises, such as the war in Ukraine, as well as charitable organizations providing relief on the ground.
We also deploy our Marriott Disaster Relief Fund to support associates and their families impacted by crises, such as the earthquakes in Türkiye and Syria and fires in Maui, as well as charitable organizations providing relief on the ground.
Business at some resort properties may be more seasonal depending on location. Human Capital Management Marriott’s long history of service, innovation, and growth is built on a culture of putting people first. We are committed to investing in our associates, with a focus on leadership development, recognition, compensation, career opportunity, and skills training.
Business at some resort properties may be more seasonal depending on location. Human Capital Management Marriott’s long history of service, innovation, and growth is built on a culture of putting people first. We are committed to investing in our associates , with a focus on leadership development, competitive compensation, and creating a sense of well-being and belonging for all.
Franchisees contribute to our centralized programs and services, such as our Marriott Bonvoy loyalty program, reservations, and marketing. 4 Table of Contents We also receive royalty fees under license agreements with Marriott Vacations Worldwide Corporation, our former timeshare subsidiary that we spun off in 2011, and its affiliates (collectively, “MVW”), for certain brands, including Marriott Vacation Club, Grand Residences by Marriott, The Ritz-Carlton Destination Club, Westin, Sheraton, and for certain existing properties, St.
Franchisees contribute to our centralized programs and services, such as our Marriott Bonvoy loyalty program, reservations, and marketing. We also receive royalty fees under license agreements with Marriott Vacations Worldwide Corporation, our former timeshare subsidiary that we spun off in 2011, and its affiliates (collectively, “MVW”), for certain brands.
We strategically market to this large and growing guest base to generate revenue. See the “Loyalty Program” caption in Note 2 for more information. 7 Table of Contents We have co-branded credit cards associated with Marriott Bonvoy in nine countries. In the U.S., we have multi-year agreements with JPMorgan Chase and American Express.
We strategically market to this large and growing guest base to generate revenue. We have co-branded credit cards associated with Marriott Bonvoy in 11 countries. In the U.S., we have multi-year agreements with JPMorgan Chase and American Express.
We provide our eligible U.S. associates and their families with access to health care coverage, work/life support benefits, as well as other benefits, such as a retirement savings plan, employee stock purchase plan, paid time off, paid parental leave, and financial assistance to help with adoption fees.
We provide our eligible U.S. associates and their families with access to comprehensive compensation and benefits offerings, such as health care coverage, work/life support benefits, and other offerings, such as a retirement savings and employee stock purchase plan.
Outside the U.S., we also offer comprehensive compensation and benefit programs that vary based on the geographic market. Our TakeCare program provides associates with tools and resources to support their physical, mental, and financial wellbeing.
Outside the U.S., we also offer comprehensive compensation and benefit programs that vary based on the geographic market and we regularly evaluate these programs for competitiveness against the external talent market. Our TakeCare program provides associates with tools and resources to support their physical, mental, and financial 9 Table of Contents well-being.
Our Classic Select hotel brands include Courtyard, Residence Inn, Fairfield, SpringHill Suites, Four Points, TownePlace Suites, and Protea Hotels. Our Distinctive Select hotel brands include Aloft Hotels, AC Hotels by Marriott, Element Hotels, and Moxy Hotels.
Our Classic Select hotel brands include Courtyard, Fairfield, Residence Inn, SpringHill Suites, Four Points, TownePlace Suites, and Protea Hotels. Our Distinctive Select hotel brands include Aloft Hotels, AC Hotels by Marriott, Moxy Hotels, and Element Hotels. Midscale offers limited services and essential amenities at a more affordable price point.
Some of the regulations that most affect us include those related to employment practices; environment, health, and safety; trade and economic sanctions; competition; anti-bribery and anti-corruption; cybersecurity; data privacy, data localization, and the handling of personally identifiable information; the offer and sale of franchises; and liquor sales. Internet Address and Company SEC Filings Our primary Internet address is Marriott.com.
Some of the regulations that most affect us include those related to employment practices; marketing and advertising efforts; trade and economic sanctions; anti-bribery, anti-corruption, and anti-money laundering; intellectual property; cybersecurity, data privacy, data localization, data transfers, and the handling of personally identifiable information; competition; climate and the environment; health and safety; liquor sales; and the offer and sale of franchises.
We believe that chain affiliation will continue to become more attractive in many overseas markets as local economies grow, trade barriers decline, international travel accelerates, and hotel owners seek the benefits of centralized reservation systems, marketing programs, and loyalty programs.
We believe that chain affiliation will continue to become more attractive in many overseas markets as local economies grow, trade barriers decline, international travel accelerates, and hotel owners seek the benefits of centralized reservation systems, marketing programs, and loyalty programs. 8 Table of Contents Based on lodging industry data, we have an approximately 16 percent share of the U.S. hotel market and a four percent share of the hotel market outside the U.S.
Our associate engagement scores exceeded the “Best Employer” external benchmark in 2022, as they have in 10 prior years, and we were recognized as one of the Fortune Best Companies to Work for in 2022 for the 25th consecutive year.
Our associate engagement scores exceeded the “Best Employer” external benchmark in 2023, and we were recognized as a top 10 company on the Fortune Best Companies to Work for in 2023, a list we have been on for 26 consecutive years.
Our climate action efforts include committing to set a near-term science-based emissions reduction target (“SBT”) and set a long-term science-based target to reach net-zero value chain greenhouse gas (“GHG”) emissions by no later than 2050. We are currently preparing our SBT and net-zero targets for submission and developing longer-term strategies to support those targets.
Our climate action efforts include committing to set a near-term science-based emissions reduction target and a long-term science-based target to reach net-zero value chain greenhouse gas emissions by no later than 2050. In September 2023, we submitted our emissions reduction targets to the Science Based Targets initiative and are awaiting validation of the targets, which we expect later in 2024.
(2) We exclude geographical data for Timeshare and Yacht as these offerings are captured within “Unallocated corporate and other.” Loyalty and Credit Card Programs Marriott Bonvoy ® is our travel loyalty program and marketplace through which members have access to our diverse brand portfolio, rich benefits, and travel experiences.
Loyalty and Credit Card Programs Marriott Bonvoy ® is our travel loyalty program and marketplace through which members have access to our diverse brand portfolio, rich benefits, and travel experiences.
We believe that our co-branded credit cards contribute to the success of Marriott Bonvoy and reflect the quality and value of our portfolio of brands.
We believe that our co-branded credit cards create a diverse revenue stream for the Company, reflect the quality and value of our portfolio of brands, and contribute to the strength of Marriott Bonvoy by creating value for our customers and property owners and franchisees.
Intellectual Property We operate in a highly competitive industry and our brand names, trademarks, service marks, trade names, and logos are very important to the development, sales and marketing of our properties and services.
We also typically receive continuing management fees for managing the related homeowners’ association. At year-end 2023, we had 126 branded residential communities (13,948 residential units). Intellectual Property We operate in a highly competitive industry and our brand names, trademarks, service marks, trade names, and logos are very important to the development, sales and marketing of our properties and services.
We have comprehensive compensation and benefits offerings designed to invest in our associates, and we regularly evaluate these programs for competitiveness against the external talent market. In addition, pay equity is foundational 9 Table of Contents to our compensation structures and practices. In the U.S., we conduct pay equity audits at least annually and make adjustments as needed.
In addition, pay equity is foundational to our compensation structures and practices. In the U.S., we conduct pay equity audits at least annually and make adjustments as needed.
Marriott encourages our independent franchisees to develop responsible human capital management practices. We are focused on maintaining Marriott’s position as an employer of choice both for job seekers and our existing associates. To attract talent, we are targeting new labor pools, optimizing our recruiting practices, and sharing our story of long-term career potential.
Marriott is committed to conducting its business in accordance with high ethical and legal standards and expects our independent franchisees to develop responsible human capital management practices. We are focused on maintaining Marriott’s position as an employer of choice both for job seekers and our existing associates.
Regis and The Luxury Collection. We receive license fees from MVW consisting of a fixed annual fee, adjusted for inflation, plus certain variable fees based on sales volumes. Finally, we receive royalty fees under agreements for The Ritz-Carlton Yacht Collection ® , which first set sail in 2022, combining the luxury lifestyle of The Ritz-Carlton with a yachting experience.
The license fees we receive from MVW consist of a fixed annual fee, adjusted for inflation, plus certain variable fees based on sales volumes. Finally, we receive royalty fees under agreements for The Ritz-Carlton Yacht Collection ® . At year-end 2023, we had 6,563 franchised and licensed properties (994,354 rooms and timeshare units).
In certain circumstances, some of our management agreements allow owners to convert company-operated properties to franchised properties under our brands. For the lodging facilities we operate, we generally are responsible for hiring, training, and supervising the managers and employees needed to operate the facilities and for purchasing supplies, and owners are required to reimburse us for those costs.
For the lodging properties we operate, we generally are responsible for hiring, training, and supervising the employees needed to operate the properties and for incurring operational and administrative costs related to the operation of the properties, and owners are required to reimburse us for those costs.
These programs and opportunities provide associates with career development and personal growth options and support our leadership development culture. Investing in Associates We are focused on providing our associates with the tools, resources, and support they need to thrive – both personally and professionally.
Our talent development strategy is designed to provide opportunities for our associates to develop and grow their careers with Marriott for the long term while driving the performance of our business. Investing in Associates We are focused on providing our associates with the tools, resources, and support they need to thrive – both personally and professionally.
Our direct digital channels also compete for guests with large companies that offer online travel services as part of their business model, such as Expedia.com, Priceline.com, Booking.com, Travelocity.com, and Orbitz.com and search engines such as Google, Bing, Yahoo, and Baidu.
Our direct digital channels also compete for guests with online travel services platforms, such as Expedia.com, Priceline.com, Booking.com, Travelocity.com, Orbitz.com, and Ctrip.com, and search engines such as Google, Bing, Yahoo, and Baidu. Affiliation with a brand is common in the U.S. lodging industry. In 2023, approximately 72 percent of U.S. hotel rooms were brand-affiliated.
Additionally, in collaboration with leading anti-trafficking and hospitality organizations, we donated our recently updated training to the lodging industry and made it available to other individuals and organizations outside the industry, such as travelers and non-profit organizations. 10 Table of Contents Government Regulations As a company with global operations, we are subject to a wide variety of laws, regulations, and government policies in the U.S. and in jurisdictions around the world.
Government Regulations As a company with global operations, we are subject to a wide variety of laws, regulations, and government policies in the U.S. and in jurisdictions around the world.
In the franchising business, we face many competitors that have strong brands and guest appeal, including Hilton, IHG Hotels & Resorts, Hyatt, Wyndham Hotels & Resorts, Accor, Choice Hotels, Best Western Hotels & Resorts, and others.
Although we believe that our strong brand recognition assists us in attracting and retaining guests, owners, and franchisees, we compete against many other companies with strong brands and guest appeal, including Hilton, IHG Hotels & Resorts, Hyatt, Wyndham Hotels & Resorts, Accor, Choice Hotels, Best Western Hotels & Resorts, and others.
Our framework is designed to help us grow great leaders and starts with competencies that clearly define what great leadership means at Marriott. These competencies have been integrated into our performance management process and leadership development programs. Our talent development strategy is designed to provide opportunities for our associates to develop and grow their careers.
It starts with leadership essentials that clearly define what great leadership means at Marriott, at all levels of the organization. We have also refreshed our leadership competencies, which have been integrated into our performance management process and leadership development programs.
We believe our global sales and revenue management organizations are a key competitive advantage due to our focus on optimizing our investment in people, processes, and systems. Our above-property sales deployment strategy aligns our sales efforts around how the customer wants to buy, reducing duplication of efforts by individual hotels and allowing us to cover a larger number of accounts.
We own two of the U.S. facilities and either lease the others or share space with a company-operated property. We believe our global sales and revenue management organizations are a key competitive advantage due to our focus on optimizing our investment in people, processes, and systems.
At year-end 2022, we had 6,122 franchised and licensed properties (937,683 rooms and timeshare units). Residential We use or license our trademarks for the sale of residential real estate, often in conjunction with hotel development, and receive branding fees for sales of such branded residential real estate by others.
Residential We use or license certain of our trademarks for the sale of residential real estate, often in conjunction with hotel development. We receive one-time branding fees upon the sale of each branded residential unit by the third-party developers who construct and sell the residences, with limited amounts, if any, of our capital at risk.
The following table shows the geographic distribution of our brands at year-end 2022: 5 Table of Contents U.S. & Canada Europe Middle East & Africa Asia Pacific Caribbean & Latin America Total Luxury JW Marriott ® Properties 33 7 10 47 16 113 Rooms 18,796 2,387 4,247 17,009 4,296 46,735 The Ritz-Carlton ® Properties 41 12 15 38 9 115 Rooms 12,508 2,689 3,988 9,192 2,007 30,384 W ® Hotels Properties 25 8 7 20 7 67 Rooms 7,295 1,734 2,317 5,514 1,752 18,612 The Luxury Collection ® (1) Properties 18 46 13 32 15 124 Rooms 5,484 6,616 2,493 8,268 1,542 24,403 St.
Our Midscale brands, which are Classic brands, include City Express by Marriott and Four Points Express by Sheraton, which opened its first hotel in the 2024 first quarter . 5 Table of Contents The following table shows the geographic distribution of our brands at year-end 2023: U.S. & Canada Europe Middle East & Africa Asia Pacific Excluding China Greater China Caribbean & Latin America Total Luxury JW Marriott ® Properties 35 8 11 28 23 16 121 Rooms 19,261 2,523 4,299 8,832 9,219 4,296 48,430 The Ritz-Carlton ® Properties 42 12 15 23 18 9 119 Rooms 12,787 2,703 3,979 4,544 5,159 2,007 31,179 The Luxury Collection ® Properties 17 40 13 28 5 10 113 Rooms 5,408 5,756 2,493 6,822 1,488 1,461 23,428 W ® Hotels Properties 25 10 7 11 11 7 71 Rooms 7,295 2,122 2,316 2,754 3,905 1,752 20,144 St.
With the opening of our new global headquarters in Bethesda, Maryland, we adopted a hybrid work model to allow for increased flexibility and choice, to meet the evolving needs of our corporate workforce. For hotel-based associates, we are innovating the way hotel jobs are structured with the goal of increasing associate satisfaction and providing better service for our guests.
To attract talent, we are targeting new labor pools, optimizing our recruiting practices, and sharing our story of long-term career potential. At our headquarters in Bethesda, Maryland, we utilize a hybrid work model to allow for flexibility and choice to meet the needs of our corporate workforce.
Removed
Third-party owners typically construct and sell residences with limited amounts, if any, of our capital at risk. We have used or licensed the JW Marriott, The Ritz-Carlton, Ritz-Carlton Reserve, W, The Luxury Collection, St.
Added
In January 2024, we modified our segment structure as a result of a change in the way management intends to evaluate results and allocate resources within the Company.
Removed
Regis, EDITION, Bvlgari, Renaissance, Le Méridien, Marriott, Sheraton, Westin, Four Points, Delta Hotels by Marriott, Autograph Collection, and Tribute Portfolio brand names and trademarks for residential real estate sales. At year-end 2022, we had 113 branded residential communities (11,481 residential units), for which we typically manage the related homeowners’ associations.
Added
Beginning with the 2024 first quarter, we will report the following four operating segments: (1) U.S. & Canada, (2) Europe, Middle East, and Africa, (3) Asia Pacific excluding China, and (4) Greater China.
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Regis ® Properties 10 5 11 23 4 53 Rooms 1,977 668 3,049 5,530 569 11,793 EDITION ® Properties 5 4 3 3 — 15 Rooms 1,379 726 638 852 — 3,595 Bvlgari ® Properties — 3 1 3 — 7 Rooms — 222 121 260 — 603 Premium Marriott ® Hotels Properties 339 75 28 102 31 575 Rooms 132,960 21,454 8,726 33,992 8,311 205,443 Sheraton ® Properties 172 50 33 146 29 430 Rooms 66,621 14,096 9,516 52,487 8,226 150,946 Westin ® Properties 132 18 8 63 14 235 Rooms 53,756 5,968 2,030 19,450 3,955 85,159 Renaissance ® Hotels Properties 89 27 5 44 9 174 Rooms 28,998 6,307 1,476 14,791 2,745 54,317 Le Méridien ® Properties 25 16 23 49 2 115 Rooms 5,705 5,154 6,848 12,486 271 30,464 Autograph Collection ® Hotels (1) Properties 146 68 13 19 36 282 Rooms 29,678 8,482 2,344 4,455 12,158 57,117 Delta Hotels by Marriott ® (Delta Hotels ® ) Properties 87 30 5 2 1 125 Rooms 20,893 5,134 1,284 978 117 28,406 Gaylord ® Hotels Properties 6 — — — — 6 Rooms 10,220 — — — — 10,220 Marriott Executive Apartments ® Properties — 4 12 18 2 36 Rooms — 361 1,665 2,742 240 5,008 Tribute Portfolio ® (1) Properties 51 17 2 12 7 89 Rooms 7,952 1,741 344 1,859 640 12,536 Design Hotels ® Properties 10 26 6 2 6 50 Rooms 1,385 2,123 619 581 146 4,854 6 Table of Contents U.S. & Canada Europe Middle East & Africa Asia Pacific Caribbean & Latin America Total Select Courtyard by Marriott ® (Courtyard ® ) Properties 1,050 74 10 99 47 1,280 Rooms 145,025 14,003 2,139 22,398 7,612 191,177 Residence Inn by Marriott ® (Residence Inn ® ) Properties 849 21 7 — 8 885 Rooms 104,463 2,408 1,117 — 1,213 109,201 Fairfield by Marriott ® (Fairfield ® ) Properties 1,141 — — 96 16 1,253 Rooms 108,338 — — 14,283 2,222 124,843 SpringHill Suites by Marriott ® (SpringHill Suites ® ) Properties 532 — — — — 532 Rooms 63,014 — — — — 63,014 Four Points by Sheraton ® (Four Points ® ) Properties 159 19 21 89 18 306 Rooms 24,058 3,291 5,113 23,133 2,332 57,927 TownePlace Suites by Marriott ® (TownePlace Suites ® ) Properties 486 — — — — 486 Rooms 49,719 — — — — 49,719 Aloft ® Hotels Properties 156 10 11 31 14 222 Rooms 22,582 1,676 2,555 6,790 2,313 35,916 AC Hotels by Marriott ® Properties 107 89 2 7 17 222 Rooms 17,766 11,959 286 1,910 2,696 34,617 Protea Hotels ® by Marriott (Protea Hotels ® ) Properties — 1 64 — — 65 Rooms — 72 6,627 — — 6,699 Element ® Hotels Properties 82 1 6 8 — 97 Rooms 11,396 160 1,009 1,651 — 14,216 Moxy ® Hotels Properties 28 81 — 13 — 122 Rooms 5,316 15,321 — 2,471 — 23,108 Residences Residences Properties 67 9 11 14 12 113 Rooms 7,128 326 1,580 1,864 583 11,481 Subtotal Properties 5,846 721 327 980 320 8,194 Subtotal Rooms 964,412 135,078 72,131 264,946 65,946 1,502,513 Timeshare (2) Properties 93 Rooms 22,745 Yacht (2) Properties 1 Rooms 149 Total Properties 8,288 Total Rooms 1,525,407 (1) Includes properties acquired when we purchased Elegant Hotels Group plc in December 2019, which we currently intend to re-brand under the following brands after the completion of planned renovations: The Luxury Collection (one property), Autograph Collection Hotels (four properties), and Tribute Portfolio (two properties).
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Our Caribbean and Latin America operating segment will not meet the applicable criteria for separate disclosure as a reportable business segment, and as such, we will include its results in “Unallocated corporate and other.” See Note 14 for more information.
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Sales and Marketing and Reservation Systems Marriott.com, our international websites, and our mobile application allow for a seamless booking experience and easy enrollment in Marriott Bonvoy to book our exclusive Member Rates and participate in program benefits.
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In certain circumstances, some of our management agreements allow owners to convert company-operated properties to franchised properties under our brands.
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Our Best Rate Guarantee ensures best rate integrity, strengthening consumer confidence in our brand and giving guests access to the best rates when they book hotel rooms through our direct channels.
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Regis ® Properties 11 6 13 10 13 5 58 Rooms 2,169 768 3,222 2,068 3,462 693 12,382 EDITION ® Properties 5 5 3 3 2 1 19 Rooms 1,379 819 638 496 646 180 4,158 Bvlgari ® Properties — 4 1 2 2 — 9 Rooms — 332 121 157 201 — 811 Premium Marriott ® Hotels Properties 337 77 29 47 65 32 587 Rooms 132,856 21,990 9,083 14,893 22,781 8,461 210,064 Sheraton ® Properties 168 51 32 56 99 30 436 Rooms 64,923 14,279 9,234 16,525 38,791 8,442 152,194 Westin ® Properties 134 17 8 38 31 15 243 Rooms 54,820 5,787 2,030 10,813 10,360 4,347 88,157 Autograph Collection ® Properties 153 77 15 19 3 37 304 Rooms 31,321 10,010 2,402 4,277 426 12,448 60,884 Renaissance ® Hotels Properties 88 28 5 15 30 9 175 Rooms 28,041 6,491 1,476 3,801 10,704 2,745 53,258 Le Méridien ® Properties 25 16 23 33 19 3 119 Rooms 5,489 5,156 6,841 7,756 5,225 562 31,029 Delta Hotels by Marriott ® (Delta Hotels ® ) Properties 92 31 6 — 4 2 135 Rooms 21,730 5,446 1,443 — 1,529 366 30,514 Tribute Portfolio ® Properties 66 25 5 11 4 7 118 Rooms 10,725 3,096 584 1,096 986 640 17,127 Gaylord ® Hotels Properties 6 — — — — — 6 Rooms 10,220 — — — — — 10,220 Design Hotels ® Properties 11 65 8 6 4 17 111 Rooms 1,605 4,782 750 389 783 393 8,702 Marriott Executive Apartments ® Properties — 3 13 9 11 2 38 Rooms — 212 1,841 1,297 1,735 240 5,325 Apartments by Marriott Bonvoy TM Properties — — — — — 1 1 Rooms — — — — — 107 107 6 Table of Contents U.S. & Canada Europe Middle East & Africa Asia Pacific Excluding China Greater China Caribbean & Latin America Total Select Courtyard by Marriott ® (Courtyard ® ) Properties 1,066 75 11 60 53 47 1,312 Rooms 147,091 13,984 2,304 12,107 13,865 7,609 196,960 Fairfield by Marriott ® (Fairfield ® ) Properties 1,153 — — 71 48 18 1,290 Rooms 109,445 — — 9,527 7,834 2,576 129,382 Residence Inn by Marriott ® (Residence Inn ® ) Properties 861 27 7 — — 8 903 Rooms 105,911 3,205 1,117 — — 1,213 111,446 SpringHill Suites by Marriott ® (SpringHill Suites ® ) Properties 547 — — — — — 547 Rooms 64,774 — — — — — 64,774 Four Points by Sheraton ® (Four Points ® ) Properties 154 20 21 46 50 18 309 Rooms 22,965 3,284 5,136 10,796 14,459 2,332 58,972 TownePlace Suites by Marriott ® (TownePlace Suites ® ) Properties 503 — — — — — 503 Rooms 51,063 — — — — — 51,063 Aloft ® Hotels Properties 162 10 12 17 14 17 232 Rooms 23,457 1,669 2,744 4,301 3,230 2,769 38,170 AC Hotels by Marriott ® Properties 117 92 2 6 1 18 236 Rooms 19,386 12,529 286 1,775 135 2,867 36,978 Moxy ® Hotels Properties 35 87 — 8 8 — 138 Rooms 6,572 16,416 — 1,561 1,495 — 26,044 Element ® Hotels Properties 83 1 7 3 5 — 99 Rooms 11,522 160 1,189 572 1,151 — 14,594 Protea Hotels ® by Marriott Properties — 1 62 — — — 63 Rooms — 72 6,539 — — — 6,611 Midscale City Express by Marriott TM Properties — — — — — 150 150 Rooms — — — — — 17,431 17,431 Residences Residences Properties 69 11 14 17 2 13 126 Rooms 7,416 540 1,969 2,999 302 722 13,948 Subtotal Properties 5,965 799 343 567 525 492 8,691 Subtotal Rooms 979,631 144,131 74,036 130,158 159,871 86,659 1,574,486 Timeshare (1) Properties 93 Rooms 22,745 Yacht (1) Properties 1 Rooms 149 Total Properties 8,785 Total Rooms 1,597,380 (1) We exclude geographical data for Timeshare and Yacht as these offerings are captured within “Unallocated corporate and other.” In the above table, The Luxury Collection, Autograph Collection, and Tribute Portfolio include seven total properties that we acquired when we purchased Elegant Hotels Group plc in December 2019, which we currently intend to re-brand under such brands after the completion of planned renovations.
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We remain focused on creating digital experiences that better connect our customers to travel, namely through our mobile application, which offers contactless check-in and check-out, chat, service requests, mobile key, and more.
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Payments received under our co-branded credit card agreements represent a significant funding source for the Loyalty Program. See the “Loyalty Program” caption in Note 2 for more information about our Loyalty Program and co-branded credit cards.
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Our digital strategy remains focused on growing customer engagement via these elevated digital experiences to drive bookings to our direct channels, which generally deliver more profitable business to hotels in our system compared to bookings made through intermediary channels.
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Sales and Marketing and Reservation Systems Marriott.com, the Marriott Bonvoy mobile app, and our other digital direct channels offer seamless digital experiences that complement the experience our customers enjoy at Marriott’s extensive portfolio of properties.
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We aim to create frictionless digital experiences for our guests, from inspiration to stay, to generate superior guest satisfaction and grow our loyal customer base. In addition, we are focused on driving digital engagement and direct bookings through improved search engine optimization, merchandising placements, increased destination-based content for leisure travelers, and additional language availability across our digital channels.
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We deliver customer-minded enhancements, including powerful in-stay capabilities through our mobile app, such as contactless check-in and check-out, Mobile Key, chat, service requests, mobile dining, and more. In addition, we are focused on strengthening the Loyalty Program by attracting more members and localizing our experiences to reach new customers around the world.
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At year-end 2022, we operated 20 customer care and reservation centers, seven in the U.S. and 13 in other countries and territories. We own two of the U.S. facilities and either lease the others or share space with a company-operated property.
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Our focus on creating frictionless experiences throughout our digital direct channels is foundational to our long-term digital and technology transformation, which aims to grow our loyal customer base and drive more direct bookings and more business to our hotels. At year-end 2023, we operated 19 customer engagement centers, seven in the U.S. and 12 in other countries and territories.
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Affiliation with a brand is common in the U.S. lodging industry, and we believe that our strong brand recognition assists us in attracting and retaining guests, owners, and franchisees. In 2022, approximately 72 percent of U.S. hotel rooms were brand-affiliated.
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Our above-property sales deployment strategy is designed around the way the customer wants to buy and the strategic priorities of our hotels globally. Our strategy is focused on driving efficiencies, profitable revenue, and customer loyalty by leveraging customer relationships and reducing duplication of efforts at the hotel level.
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Most of the branded properties in the U.S. are franchises, under which the owner pays the franchisor a fee for use of its brand name and reservation system.
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For hotel-based associates, we are innovating the way hotel jobs are structured, introducing more flexibility and choice through our integrated jobs program, which allows associates to have more cross-training and engaging roles. We encourage continual feedback from our associates at all levels.
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Based on lodging industry data, we have an approximately 16 percent share of the U.S. hotel market and a four percent share of the hotel market outside the U.S. (based on number of rooms).
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We also continue to focus on our efforts to advance human rights, and we have trained 1.2 million associates in human trafficking awareness between 2016 and year-end 2023. We have also donated our training program to the broader lodging industry, and the training has been completed 1.6 million times by non-Marriott individuals between 2020 and year-end 2023.
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Over the past several years, we faced a number of staffing challenges, including the continuing impact of the COVID-19 pandemic, evolving work environment, and competitive talent landscape. To address these challenges, we are focused on our talent attraction and retention strategies and reinforcing our culture to position us for future growth.
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Additionally, in 2023, Marriott became a member of the Internet Watch Foundation and deployed technology to block websites with illegal child sexual abuse material from guest network access in most of its U.S. & Canada hotels.
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It includes a variety of skills training, professional development, and other learning opportunities. Our Leadership Performance Acceleration program encourages managers and associates to have regular career and development conversations in order to provide actionable feedback and to help associates set and achieve career goals.
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As part of our efforts to continue to diversify our senior leadership, we have established a goal to achieve global gender parity at the Vice President level and above by the end of 2023.
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We also have established an objective to increase the representation of people of color at the Vice President level and above in the U.S. to twenty-five percent by year-end 2025. To better meet the needs of our diverse and changing workforce, we are continuing to evolve our hospitality jobs through workforce innovation.
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As part of this effort, we are blending certain hotel jobs to enhance the employment experience for our associates as well as providing scheduling flexibility.
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Although the COVID-19 pandemic and certain other factors have impacted our progress in some areas, we remain focused on advancing our sustainability and social impact goals and initiatives.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Our ability to remain competitive and attract and retain business, group and leisure travelers depends on our success in distinguishing and driving preference for our lodging products and services, including our Loyalty Program, direct booking channels, consumer-facing technology platforms and services, and other offerings (including our co-branded credit cards).
Our ability to remain competitive and attract and retain business, group and leisure travelers depends on our success in distinguishing and driving preference for our lodging products and services, including our Loyalty Program, direct booking channels, consumer-facing technology platforms and services, our co-branded credit cards, and other offerings.
In the operation of our business, we collect, store, use, and transmit large volumes of personal data regarding associates, guests, customers, owners, licensees, franchisees, and our own business operations, including credit card numbers, reservation and loyalty data, and other personal data, in various information systems that we maintain and in systems maintained by third parties, including those of our owners, franchisees, licensees, and service providers.
In the operation of our business, we collect, store, use, and transmit large volumes of personal data regarding associates, guests, customers, owners, licensees, franchisees, and our own business operations, including credit card numbers, reservation and loyalty data, and other personal data, in various information systems that we maintain and in systems maintained by third parties, including those of our owners, franchisees, licensees, service providers, and other third parties.
We also cannot assure you that in every instance a court would ultimately enforce our contractual termination rights or that we could collect any awarded damages from the defaulting party. Collective bargaining activity and strikes could disrupt our operations, increase our labor costs, and interfere with the ability of our management to focus on executing our business strategies .
We also cannot assure you that in every instance a court would ultimately enforce our contractual termination rights or that we could collect any awarded damages from the defaulting party. Collective bargaining activity and strikes could materially disrupt our operations, increase our labor costs, and interfere with the ability of our management to focus on executing our business strategies .
Insurance coverage designed to limit our exposure to losses such as those related to the Data Security Incident may not be sufficient or available to cover all of our expenses or other losses (including the final payment imposed by the ICO and any other payments, fines or penalties) related to the Data Security Incident, and certain expenses by their nature (such as, for example, expenses related to enhancing our cybersecurity program) are not covered by our insurance program.
Insurance coverage designed to limit our exposure to losses such as those related to the Data Security Incident may be costly and may not be sufficient or available to cover all of our expenses or other losses (including the final payment imposed by the ICO and any other payments, fines or penalties) related to the Data Security Incident, and certain expenses by their nature (such as, for example, expenses related to enhancing our cybersecurity program) are not covered by our insurance program.
As a result, exchange rate changes between foreign currencies and the U.S. dollar affect the amounts we record for our foreign assets, liabilities, revenues and expenses, and could have a negative effect on our financial results. To the extent that our international operations continue to grow, our exposure to foreign currency exchange rate fluctuations will grow.
As a result, exchange rate changes between foreign currencies and the U.S. dollar affect the amounts we record for our foreign assets, liabilities, revenues and expenses, and could have a material negative effect on our financial results. To the extent that our international operations continue to grow, our exposure to foreign currency exchange rate fluctuations will grow.
If these third parties fail to maintain or act in accordance with applicable brand standards; experience operational problems, including any data or privacy incident, or a circumstance involving guest or associate health or safety; or project a brand image inconsistent with ours, then our image and reputation could suffer.
If these third parties fail to maintain or act in accordance with applicable brand standards; experience operational problems, including a data or privacy incident, or a circumstance involving guest or associate health or safety; or project a brand image inconsistent with ours, then our image and reputation could suffer.
Because we conduct our business on a global scale, we are affected by changes in global, national, or regional economies, governmental policies (including in areas such as trade, travel, immigration, healthcare, and related issues), and geopolitical, public health, social and other conditions and events.
Because we conduct our business on a global scale, we are affected by changes in global, national, or regional economies, governmental policies (including in areas such as trade, travel, immigration, labor, healthcare, and related issues), and geopolitical, public health, social and other conditions and events.
Numerous collective bargaining agreements are typically subject to negotiation each year, and our ability in the past to resolve such negotiations does not mean that we will be able to resolve future negotiations without strikes, disruptions, or on terms that we consider reasonable.
Numerous collective bargaining agreements are typically subject to negotiation each year, and our ability in the past to resolve such negotiations does not mean that we will be able to resolve future negotiations without significant strikes or disruptions, or on terms that we consider reasonable.
A significant number of associates at our managed, leased, and owned hotels are covered by collective bargaining agreements. If relationships with our organized associates or the unions that represent them become adverse, then the properties we operate could experience labor disruptions such as strikes, lockouts, boycotts, and public demonstrations.
A significant number of associates at our managed, leased, and owned hotels are covered by collective bargaining agreements. If relationships with our organized associates or the unions that represent them become adverse, then the properties we operate could experience labor disruptions such as strikes, lockouts, boycotts, and public demonstrations that cause a significant impact.
We have experienced challenges hiring for certain positions due to various factors, such as increasing wage expectations and competition for labor from other industries, and these circumstances could continue or worsen in the future to an extent and for durations that we are not able to predict.
We have in the past experienced, and could in the future experience, challenges hiring for certain positions due to various factors, such as increasing wage expectations or competition for labor from other industries, and these circumstances could continue or worsen in the future to an extent and for durations that we are not able to predict.
These conditions and events have in the past materially negatively impacted, and could in the future materially negatively impact, our business, operations, and financial results in many ways, including, but not limited to, as follows: • reducing revenues at our managed and franchised hotels, owned and leased hotels, and properties in which we have an investment, potentially impacting their ability to meet expenses, including payment of amounts owed to us; • adversely affecting the value of our owned and leased properties or investments; • affecting the ability or willingness of hotel owners and franchisees to service, repay or refinance existing indebtedness or similar obligations, including loans or guaranty advances we have made to or for them; • making it more difficult for hotel owners and franchisees to obtain financing on commercially acceptable terms, or at all; • causing hotel construction and opening delays; • decreasing the rate at which new projects enter our pipeline; • causing hotels to exit our system; 11 Table of Contents • requiring us to borrow or otherwise raise a significant amount of cash in order to preserve financial flexibility, repay maturing debt and manage debt maturities; • causing the terms of our borrowing to be more expensive or more restrictive; and • adversely affecting associate hiring and retention.
These conditions and events have in the past materially negatively impacted, and could in the future materially negatively impact, our business, operations, and financial results in many ways, including, but not limited to, as follows: • reducing revenues at our managed and franchised hotels, owned and leased hotels, and properties in which we have an investment, potentially impacting their ability to meet expenses, including payment of amounts owed to us; • adversely affecting the value of our owned and leased properties or investments; • affecting the ability or willingness of hotel owners and franchisees to service, repay or refinance existing indebtedness or similar obligations, including loans or guaranty advances we have made to or for them; • making it more difficult for hotel owners and franchisees to obtain financing on commercially acceptable terms, or at all; • causing hotel construction and opening delays; • decreasing the rate at which new projects enter our pipeline; • causing hotels to exit our system; • increasing operating costs; • requiring us to borrow or otherwise raise a significant amount of cash in order to preserve financial flexibility, repay maturing debt and manage debt maturities; • causing the terms of our borrowing to be more expensive or more restrictive; and • adversely affecting associate hiring and retention.
If we cannot recruit, train, develop, and retain sufficient numbers of associates, we could experience significant negative impacts on our operations, associate morale and turnover, guest satisfaction, or our internal control environment. Insufficient numbers of associates could also limit our ability to grow and expand our businesses.
If we cannot recruit, train, develop, and retain sufficient numbers of associates, we could experience significant negative impacts on our operations, associate morale and turnover, guest satisfaction, or our internal control environment. Insufficient numbers of associates could also limit our ability to grow and expand our business.
Natural disasters, extreme weather, and other physical impacts of climate change (including rising sea levels, extreme hot or cold weather, water shortages, fire, and droughts) have in the past and could in the future result in increases in related insurance, energy or other operating costs, and physical damage to our hotels that might not be covered by insurance and might prevent or limit the operations of the property.
Natural disasters, extreme weather, and other physical impacts of climate change (including rising sea levels, extreme hot or cold weather, flooding, water shortages, fires, and droughts) have in the past and could in the future result in increases in related insurance, energy or other operating costs, and physical damage to our hotels that might not be covered by insurance and might prevent or limit the operations of the property.
These risk factors do not identify all risks that we face; our operations could also be affected by factors, events, or uncertainties that are not presently known to us or that we currently do not consider to present significant risks to our operations.
These risk factors do not identify all risks that we face, and our business could also be affected by factors, events, or uncertainties that are not presently known to us or that we currently do not consider to present significant risks to our operations.
Although we carry cyber insurance that is designed to protect us against certain losses related to cyber risks, that insurance coverage may not be sufficient or available to cover all expenses or other losses (including payments to regulatory authorities) or all types of claims that may arise in connection with cyberattacks, security compromises, and other related incidents.
Although we carry cyber insurance that is designed to protect us against certain losses related to cyber risks, that 17 Table of Contents insurance coverage may not be sufficient or available to cover all expenses or other losses (including payments to regulatory authorities) or all types of claims that may arise in connection with cyberattacks, security compromises, and other related incidents.
Our governing corporate documents 18 Table of Contents also, among other things, require supermajority votes for mergers and similar transactions. In addition, our Board of Directors could, without stockholder approval, implement other anti-takeover defenses, such as a stockholder rights plan. Item 1B. Unresolved Staff Comments. None.
Our governing corporate documents also, among other things, require supermajority votes for mergers and similar transactions. In addition, our Board of Directors could, without stockholder approval, implement other anti-takeover defenses, such as a stockholder rights plan. Item 1B. Unresolved Staff Comments. None.
The integrity and protection of this personal data is critical to our business. Our guests and associates also have a high expectation that we, as well as our owners, franchisees, licensees, and service providers, will adequately protect and appropriately use their personal data.
The integrity and protection of this personal data is critical to our business. Our guests and associates also have a high expectation that we, as well as our owners, franchisees, licensees, service providers, and other third parties will adequately protect and appropriately use their personal data.
Although our agreements with these parties provide us with recourse and remedies in the event of a breach, including termination of the agreements under certain circumstances, it could be expensive or time-consuming for us to pursue such remedies and even if we are successful in pursuing such remedies, that may not be sufficient to mitigate reputational harm 13 Table of Contents to us.
Although our agreements with these parties generally provide us with recourse and remedies in the event of a breach, including termination of the agreements under certain circumstances, it could be expensive or time-consuming for us to pursue such remedies and even if we are successful in pursuing such remedies, that may not be sufficient to mitigate reputational harm to us.
Because of the significance of our goodwill and other intangible assets, any future impairment of these assets could require material non-cash charges to our results of operations, which could have a material adverse effect on our reported financial condition and results of operations.
Because of the significance of our goodwill and other intangible assets, any future impairment of these 14 Table of Contents assets could require material non-cash charges to our results of operations, which could have a material adverse effect on our reported financial condition and results of operations.
The lodging industry continues to demand the use of sophisticated technology and systems, including those used for our reservation, revenue management, property management, human resources and payroll systems, our Loyalty Program, and technologies we make available to our guests and for our associates.
The lodging industry continues to demand the use of sophisticated technology and systems, including those used for our reservation, customer relationship management, analytics, revenue management, property management, human resources and payroll systems, our Loyalty Program, and technologies we make available to our guests and for our associates.
Our business, financial results and growth are impacted by weak or volatile economic conditions, pandemics and other outbreaks of disease, natural and man-made disasters, changes in energy prices and currency values, political instability, geopolitical conflict, actual or threatened war, terrorist activity and other acts of violence, heightened travel security measures, travel advisories, disruptions in air travel, and concerns over the foregoing.
Our business, financial results and growth are impacted by weak or volatile economic conditions; pandemics and other outbreaks of disease; natural and man-made disasters; changes in energy prices, interest rates and currency values; political instability, geopolitical conflict, actual or threatened war, terrorist activity, civil unrest and other acts of violence; heightened travel security measures, travel advisories, and disruptions in air and ground travel; and concerns over the foregoing.
In addition, labor disputes and disruptions or increased demands from labor unions could harm our relationship with our associates, result in increased regulatory requirements or inquiries and enforcement by governmental authorities, harm our relationships with our guests and customers, divert management attention, and reduce customer demand for our services, all of which could have an adverse effect on our reputation, business, financial condition, or results of operations.
In addition, labor disputes and disruptions or increased demands from labor unions can sometimes harm our relationship with our associates, result in increased regulatory requirements or inquiries and enforcement by governmental authorities, harm our relationships with our guests and customers, divert management attention, and reduce customer demand for our services, all of which could have a significant adverse effect on our reputation, business, financial condition, or results of operations.
Our growth strategy depends upon attracting third-party owners and franchisees to our platform, and future arrangements with these third parties may be less favorable to us, depending on the terms offered by our competitors . 12 Table of Contents Adding properties to our system entails entering into and maintaining various arrangements with property owners.
Our growth strategy depends upon attracting third-party owners and franchisees to our platform, and future arrangements with these third parties may be less favorable to us, depending on the terms offered by our competitors . Adding properties to our system entails entering into and maintaining various arrangements with property owners.
Efforts to hack or circumvent security measures, efforts to gain unauthorized access to, exploit or disrupt the operation or integrity of our data or systems, failures of systems or software to operate as designed or intended, viruses, “ransomware” or other malware, 17 Table of Contents “supply chain” attacks, “phishing” or other types of business communications compromises, operator error, or inadvertent releases of data have impacted, and may in the future impact, our information systems and records or those of our owners, franchisees, licensees, other business partners, or service providers.
Efforts to hack or circumvent security measures, efforts to gain unauthorized access to, exploit or disrupt the operation or integrity of our data or systems, failures of systems or software to operate as designed or intended, viruses, “ransomware” or other malware, “supply chain” attacks, “phishing” or other types of business communications compromises, operator error, or inadvertent releases of data have impacted, and may in the future impact, our information systems and records or those of our owners, franchisees, licensees, service providers, or other third parties.
If those owners cannot repay or refinance maturing indebtedness on favorable terms or at all, the lenders could declare a default, accelerate the related debt, and foreclose on the property, or the owners could declare bankruptcy, as we have seen in the past and could see in the future.
If those owners cannot meet required debt service payments or repay or refinance maturing indebtedness on favorable terms or at all, the lenders could declare a default, accelerate the related debt, and foreclose on the property, or the owners could declare bankruptcy, as we have seen in the past and could see in the future.
Negative incidents could lead to tangible adverse effects on our business, including lost sales, boycotts, reduced enrollment and/or participation in our Loyalty Program, loss of development opportunities, adverse government attention, or associate retention and recruiting difficulties.
Negative incidents could lead to tangible adverse effects on our business, including lost sales, boycotts, reduced enrollment and/or participation in our Loyalty Program, loss of development opportunities, adverse government attention, adverse reaction from owners and franchisees, or associate retention and recruiting difficulties.
Depending on the nature and scope of the event, future compromises in the security of our information systems or those of our owners, franchisees, licensees, other business partners, or service providers or other future disruptions or compromises of data or systems could lead to future interruptions in, or other adverse effects on, the operation of our systems or those of our owners, franchisees, licensees, other business partners, or service providers.
Depending on the nature and scope of the event, future compromises in the security of our information systems or those of our owners, franchisees, licensees, service providers, or other third parties, or other future disruptions or compromises of data or systems, could lead to future interruptions in, or other adverse effects on, the operation of our systems or those of our owners, franchisees, licensees, service providers, or other third parties.
Some of our hotel rooms are booked through Internet travel intermediaries such as Expedia.com, Priceline.com, Booking.com, Travelocity.com, and Orbitz.com, as well as lesser-known online travel service providers. These intermediaries initially focused on leisure travel, but now also provide offerings for corporate travel and group meetings.
Some of our hotel rooms are booked through Internet travel intermediaries such as Expedia.com, Priceline.com, Booking.com, Travelocity.com, Orbitz.com, and Ctrip.com, and other online travel service providers. These intermediaries initially focused on leisure travel, but now also provide offerings for corporate travel and group meetings.
We may seek to sell some of these properties over time; however, equity real estate investments can be difficult to sell quickly. We may not be able to complete asset sales at prices we find acceptable, or at all.
We may seek to sell some of these properties over time; however, equity real estate investments can be difficult to sell and we may not be able to complete assets sales at prices we find acceptable or at all.
Disruptions in or changes to these systems could result in a disruption to our business and the loss of important data. A failure to keep pace with developments in technology could impair our operations or competitive position .
Disruptions in or changes to these systems, including during upgrades or replacements, could result in a disruption to our business and the loss of important data. A failure to keep pace with developments in technology could impair our operations or competitive position .
We are currently undertaking a multi-year initiative to upgrade certain of our core technologies and systems, as these and other technologies and systems described in this risk factor must be refined, updated, and/or replaced with more advanced systems on a regular basis.
We have underway a multi-year initiative to upgrade certain of our core technologies and systems, as these and other technologies and systems described in this risk factor must be refined, updated, and/or replaced with more advanced systems on a regular basis.
Property owners may assert the right to terminate management agreements even where the agreements provide otherwise, and some courts have upheld such assertions about our management agreements and may do so in the future.
Property owners may assert the right to 11 Table of Contents terminate management agreements even where the agreements provide otherwise, and some courts have upheld such assertions about our management agreements and may do so in the future.
If our brands, goodwill, or other intangible assets become impaired, we may be required to record significant non-cash charges to earnings. As of December 31, 2022, we had $17.6 billion of goodwill and other intangible assets. We review goodwill and indefinite-lived intangible assets for impairment annually or whenever events or circumstances indicate impairment may have occurred.
If our brands, goodwill, or other intangible assets become impaired, we may be required to record significant non-cash charges to earnings. As of December 31, 2023, we had $18.1 billion of goodwill and other intangible assets. We review goodwill and indefinite-lived intangible assets for impairment annually or whenever events or circumstances indicate impairment may have occurred.
We and the hotels that we franchise or manage are subject to a variety of laws, regulations and government policies around the globe, including, among others, those related to employment practices; marketing and advertising efforts; trade and economic sanctions; anti-bribery and anti-corruption; intellectual property; cybersecurity, data privacy, data localization, and the handling of personally identifiable information; competition; climate and the environment; health and safety; liquor sales; and the offer and sale of franchises.
We, the hotels that we franchise or manage, and the programs that we offer, are subject to or affected by a variety of laws, regulations and government policies around the globe, including, among others, those related to employment practices; marketing and advertising efforts; trade and economic sanctions; anti-bribery, anti-corruption, and anti-money laundering; intellectual property; cybersecurity, data privacy, data localization, data transfers, and the handling of personally identifiable information; competition; climate and the environment; health and safety; liquor sales; the offer and sale of franchises; and credit card products.
Such projects pose further risks beyond those generally associated with our lodging business, which may reduce our profits or compromise our brand equity, including risks that: (1) changes in residential real estate demand generally may reduce our profits and could make it more difficult to convince future project developers of the value added by our brands; (2) increases in interest rates, reductions in mortgage availability or the tax benefits of mortgage financing or residential ownership generally, or increases in the costs of residential ownership could prevent potential customers from buying residential products or reduce the prices they are willing to pay; and (3) residential construction may be subject to warranty and liability claims or claims related to purchaser deposits, and the costs of resolving such claims may be significant.
Such projects pose further risks beyond those generally associated with our lodging business, which may reduce our profits or compromise our brand equity, including risks that: (1) changes in residential real estate demand generally may reduce our profits and could make it more difficult to convince future project developers of the value added by our brands; and (2) increases in interest rates, reductions in mortgage availability or the tax benefits of mortgage financing or residential ownership generally, or increases in the costs of residential ownership could prevent potential customers from buying residential products or reduce the prices they are willing to pay.
Market forces beyond our control may nonetheless limit the scope of the insurance coverage we, our hotel owners, or our franchisees can obtain, or our or their ability to obtain coverage at reasonable rates.
We also require our franchisees to maintain similar levels of insurance. Market forces beyond our control may nonetheless limit the scope of the insurance coverage we, our hotel owners, or our franchisees can obtain, or our or their ability to obtain coverage at reasonable rates.
As a result of the foregoing, we may experience reduced demand, significant increased operating and compliance costs, operating disruptions or limitations, constraints on our room growth, and even physical damage to our hotels, all of which could adversely affect our profits and growth.
As a result of the foregoing, we may experience reduced demand, significant increased operating and compliance costs, operating disruptions or limitations, constraints on our room growth, and physical damage to our hotels, all of which could adversely affect our profits and growth, as we have seen in the past to some extent.
Labor shortages have resulted and could continue to result in higher wages and initial hiring costs, increasing our labor costs and labor costs at our hotels, which could reduce our revenues and profits.
Labor shortages have in the past resulted, and could in the future result, in higher wages and initial hiring costs, increasing our labor costs and labor costs at our hotels, which could reduce our revenues and profits.
Many factors can affect the reputation and value of our Company or one or more of our properties or brands, including our ability to protect and use our brands and trademarks; our properties’ adherence to service and other brand standards; our approach to, or incidents involving, matters related to food quality and safety, guest and associate safety, health and cleanliness, managing and reducing our carbon footprint and our use of scarce natural resources, supply chain management, and diversity, human rights, and support for local communities; and our compliance with applicable laws.
Many factors can affect the reputation and value of our Company or one or more of our properties or brands, including our ability to protect and use our brands and trademarks; our properties’ adherence to service and other brand standards; our approach to, or incidents involving, matters related to food quality and safety, guest and associate safety, health and cleanliness, sustainability and climate impact, supply chain management, inclusion and belonging, human rights, and support for local communities; and our compliance with applicable laws.
Risks associated with development and sale of residential properties associated with our lodging properties or brands may reduce our profits . We participate, through licensing agreements, in the development and sale of residential properties associated with our brands, including residences and condominiums under many of our luxury and premium brand names and trademarks.
Risks associated with development and sale of residential properties associated with our lodging properties or brands may reduce our profits . We participate, through licensing agreements, in the development and sale of residential properties associated with many of our luxury and premium brands.
Measures taken by our service providers or our owners, franchisees, licensees, other business partners or their service providers also may not be sufficient, as we have seen in the past.
Security measures implemented by our service providers or our owners, franchisees, licensees, other third parties or their service providers also may not be sufficient, as we have seen in the past.
The requirements of applicable laws, regulations, and government policies, our failure to meet such requirements (including investigations and publicity resulting from actual or alleged failures), or actions we take in order to comply with such requirements or investigations could have significant adverse effects on our results of operations, reputation, or ability to grow our business.
The requirements of applicable laws, regulations, and government policies, our failure to meet such requirements (including investigations and publicity resulting from actual or alleged failures), or actions we take to comply with such requirements or investigations could have significant adverse effects on our results of operations, reputation, or ability to grow our business. 12 Table of Contents Exchange rate fluctuations could result in significant foreign currency gains and losses and affect our business results .
Accordingly, fluctuations in currency exchange rates may significantly increase the amount of U.S. dollars required for foreign currency expenses or significantly decrease the U.S. dollars we receive from foreign currency revenues.
We earn revenues and incur expenses in foreign currencies in connection with our operations outside of the U.S. Accordingly, fluctuations in currency exchange rates may significantly increase the amount of U.S. dollars required for foreign currency expenses or significantly decrease the U.S. dollars we receive from foreign currency revenues.
Natural disasters and extreme weather in locations where we manage, franchise, own or lease properties or in areas of the world from which we draw a large number of guests may cause a significant decline in travel and reduced demand for lodging. The prevalence of these events may continue to increase as the result of climate change.
We have seen a decline in travel and reduced demand for lodging as a result of natural disasters and extreme weather in some locations where we manage, franchise, own or lease properties or in areas of the world from which we draw guests, and the prevalence and impact of these events may increase or worsen in the future.
Our systems and the systems maintained or used by our owners, franchisees, licensees, and service providers may not be able to satisfy these changing legal and regulatory requirements and associate and guest expectations, or may require significant additional investments or time to do so.
Our systems and the systems maintained or used by our owners, franchisees, licensees, service providers, and other third parties may not be able to satisfy these changing legal and regulatory requirements and associate and guest expectations; we and/or these third parties may require significant additional investments or time to do so; and security controls that we and/or these third parties may implement sometimes do not operate effectively or as intended.
The cost, speed, accuracy, and efficiency of our reservation, Loyalty Program, and other core operational systems are critical aspects of our business and are important considerations for hotel owners when choosing our brands. Our business may suffer if we fail to maintain, 16 Table of Contents upgrade, or prevent disruption to these systems.
The cost, speed, accuracy, and efficiency of these technologies and systems are critical aspects of our business and are important considerations for hotel owners when choosing our brands. Our business may suffer if we or our third-party service providers fail to maintain, upgrade, or prevent disruption to these systems.
We have incurred and may in the future incur significant additional costs to meet these requirements, obligations, and expectations, and in the event of alleged or actual noncompliance, we may experience increased operating costs, increased exposure to payment obligations and litigation, and increased risk of damage to our reputation and brand.
We have incurred and may in the future incur significant additional costs to meet these requirements, obligations, and expectations, and in the event of alleged or actual noncompliance, we may experience increased operating costs, increased exposure to payment obligations and litigation, and increased risk of damage to our reputation and brand. 16 Table of Contents The Data Security Incident, and other information security incidents, could have numerous adverse effects on our business .
Labor disputes and disruptions could result in adverse publicity or regulatory investigations and adversely affect operations and revenues at affected hotels, as we have seen at times in the past.
Labor disputes and disruptions sometimes result in adverse publicity or regulatory investigations and adversely affect operations and revenues at affected hotels.
Extreme weather, climate change, and sustainability-related concerns could have a material adverse effect on our business and results of operations . We are subject to the risks associated with extreme weather and climate change, including the impacts of the physical effects of climate change, changes in laws and regulations related to climate change and sustainability, and changing consumer preferences.
We are subject to the risks associated with extreme weather, natural disasters, and climate change, including the impacts of the physical effects of climate change, changes in laws and regulations related to climate change and sustainability, and changing consumer preferences.
Economic downturns and other global, national, and regional conditions and events could further impact our business, financial results and growth .
Economic and other global, national, and regional conditions and events have in the past impacted, and could in the future impact, our business, financial results and growth .
If we cannot compete successfully in these areas, our operating margins could contract, our market share could decrease, and our earnings could decline. Further, new lodging supply in individual markets could have a negative impact on the hotel industry and hamper our ability to maintain or increase room rates or occupancy in those markets.
If we cannot compete successfully in these areas, our business, liquidity, financial condition, and results of operations could be materially adversely affected. Further, new lodging supply in individual markets could have a negative impact on the hotel industry and hamper our ability to maintain or increase room rates or occupancy in those markets.
Significant costs could be involved in improving the efficiency and climate resiliency of our hotels and otherwise preparing for, responding to, and mitigating the physical effects of climate change or sustainability-related concerns.
Significant costs could be involved in improving the efficiency and climate resiliency of our hotels and otherwise preparing for, responding to, and mitigating the physical effects of climate change or sustainability-related concerns. Compliance with climate-related legislation and regulation, and our efforts to achieve science-based emissions reduction targets or other sustainability initiatives, could also be complex and costly.
We could face similar risks to the extent we undertake development activities again in the future. 15 Table of Contents Our owned properties and other real estate investments subject us to numerous risks . We have a number of owned and leased properties, which are subject to the risks that generally relate to investments in real property.
Our owned properties and other real estate investments subject us to numerous risks . We have a number of owned and leased properties and investments in joint ventures that own properties, which are each subject to the risks that generally relate to investments in real property.
Insurance may not cover damage to, or losses involving, properties that we own, manage, or franchise, or other aspects of our business, and the cost of such insurance could increase .
Insurance may not cover damage to, or losses involving, properties that we own, manage, or franchise, or other aspects of our business, and the cost of such insurance could increase . We require comprehensive property and liability insurance policies for our managed, leased, and owned properties with coverage features and insured limits that we believe are customary.
At times, we make loans for hotel development, acquisition, or renovation expenditures when we enter into or amend management or franchise agreements.
Losses on loans or loan guarantees that we have made to third parties impact our profits . At times, we make loans for hotel development, acquisition, or renovation expenditures when we enter into or amend management or franchise agreements.
We franchise and license many of our brand names and trademarks to third parties for lodging, timeshare, and residential properties, and with respect to our credit card programs and other offerings. Under the terms of their agreements with us, these third parties interact directly with guests and others under our brand and trade names.
We franchise and license many of our brand names and trademarks to third parties for lodging, timeshare, and residential properties, and with respect to our credit card programs and other offerings, and enter into marketing and other strategic collaborations with other companies.
Our ability to grow our management and franchise systems is subject to the range of risks associated with real estate investments .
Obtaining financing on attractive terms has been, and may in the future be further, constrained by the capital markets for hotel and real estate investments. Our ability to grow our management and franchise systems is subject to the range of risks associated with real estate investments .
We do not have the ability to control the negotiations of collective bargaining agreements covering unionized labor employed by the operators of our franchised properties. Increased unionization of our workforce, new labor legislation, or changes in regulations could disrupt our operations, reduce our profitability, or interfere with the ability of our management to focus on executing our business strategies.
Increased unionization of our workforce, new labor legislation, or changes in regulations could disrupt our operations, reduce our profitability, or interfere with the ability of our management to focus on executing our business strategies. Our business could suffer if we cannot attract and retain associates or as the result of the loss of the services of our senior executives .
We have seen construction timelines for pipeline hotels lengthen due to various factors, including competition for skilled construction labor, challenges related to financing, and disruption in permitting and the supply chain for materials, and these circumstances could continue or worsen in the future.
We have seen construction timelines for pipeline hotels lengthen due to various factors, including challenges related to financing, and these circumstances could continue or worsen in the future. 15 Table of Contents Accordingly, we cannot assure you that all of our development pipeline will result in new hotels entering our system, or that those hotels will open when we anticipate.
Compliance with future climate-related legislation and regulation, and our current or future voluntary efforts to achieve science-based emissions reduction targets or other sustainability initiatives, could also be difficult and costly. Growing public recognition of the dangers of climate change and other sustainability-related concerns may affect customers’ travel choices, including their frequency of travel.
Growing public recognition of the dangers of climate change and other sustainability-related concerns may affect customers’ travel choices, including their frequency of travel.
Our business could suffer if we cannot attract and retain associates or as the result of the loss of the services of our senior executives . We compete with other companies both within and outside of our industry for personnel.
We compete with other companies both within and outside of our industry for personnel.
The Data Security Incident, and other information security incidents, could have numerous adverse effects on our business . As a result of the Data Security Incident, numerous lawsuits were filed against us, as described further in Note 7.
As a result of the data security incident involving unauthorized access to the Starwood reservations database that we disclosed in November 2018 (the “Data Security Incident”), numerous lawsuits were filed against us, as described further in Note 7.
The terms of our management agreements and franchise agreements for each of our properties are influenced by contract terms offered by our competitors, among other things.
Our ability to attract and retain owners and franchisees and the terms of our management and franchise agreements are influenced by the needs and preferences of owners and franchisees and the offerings otherwise available to owners and franchisees in the market, among other things.
Removed
Although COVID-19’s negative impact on our business, operations, and financial results has significantly decreased since 2020, we are continuing to see some of the foregoing effects and could see additional effects in the future.
Added
Under the terms of their agreements with us, these third parties interact directly with guests and others under or in connection with our brand and trade names.
Removed
Some courts have also applied agency law principles and related fiduciary standards to managers of third-party hotel properties, including us (or have interpreted hotel management agreements to be “personal services contracts”).
Added
We do not have the ability to control the negotiations of collective bargaining agreements covering unionized labor employed by the 13 Table of Contents operators of our franchised properties.
Removed
Exchange rate fluctuations could result in significant foreign currency gains and losses and affect our business results . We earn revenues and incur expenses in foreign currencies as part of our operations outside of the U.S.
Added
Extreme weather, natural disasters, climate change, and sustainability-related concerns have impacted our business in the past and could in the future have a material adverse effect on our business and results of operations .
Removed
The impact of COVID-19 on the hospitality industry, and actions that we and others in the hospitality industry have taken and may take in the future with respect to our associates and executives in response to COVID-19, have adversely affected and may in the future continue to adversely affect our ability to attract and retain associates and executives.
Added
Our Loyalty Program plays a significant role in our business and unfavorable developments affecting the program could adversely affect our business and results of operations. Our Loyalty Program is an important aspect of our business.
Removed
We require comprehensive property and liability insurance 14 Table of Contents policies for our managed, leased, and owned properties with coverage features and insured limits that we believe are customary. We also require our franchisees to maintain similar levels of insurance.
Added
Our Loyalty Program faces significant competition from the loyalty programs offered by other hospitality companies, as well as from loyalty programs offered by online travel platforms, bank travel programs, and others. There is significant competition among loyalty programs in terms of the value and utility of program currency, rewards ranges and values, and other terms and conditions.
Removed
Also, due to the data security incident involving unauthorized access to the Starwood reservations database, which we initially reported in November 2018 (the “Data Security Incident”), and the state of the cyber insurance market generally, the costs for our cyber insurance increased with each of our renewals over the last several years, and the cost of such insurance could continue to increase for future policy periods.
Added
If we are not able to maintain a competitive and attractive loyalty program, whether because of changes we make to the program or changes that result from external factors (including changes in law or regulation), our ability to acquire, engage and retain members in our Loyalty Program and our ability to operate other programs (including our co-branded credit card program) may be adversely impacted, which could adversely affect our operating results and financial condition.
Removed
Obtaining financing on attractive terms has been, and may in the future be further, constrained by the capital markets for hotel and real estate investments. In addition, owners of existing hotels that we franchise or manage may have difficulty meeting required debt service payments or refinancing loans at maturity.
Added
In the operation of our business, we manage or use sophisticated technology and systems, including those used for our reservation, customer relationship management, analytics, revenue management, property management, human resources and payroll systems, our Loyalty Program, and technologies we make available to our guests and for our associates.
Removed
Our renovation activities expose us to project cost, completion, and resale risks . We occasionally acquire and renovate hotel properties, both directly and through partnerships and other business structures with third parties.
Added
Security measures, no matter how well designed or implemented, may only mitigate and not fully eliminate risks, and security events, when detected by security tools or third parties, may not always be immediately understood or acted upon.
Removed
This presents a number of risks, including that: (1) market conditions may limit the availability of capital for project completion or take-out financing or make properties that we renovate less attractive to potential purchasers, with the result that we may not be able to complete or sell such properties at the prices or times we anticipate or we may be required to record additional impairment charges; and (2) construction delays or cost overruns, including those due to general market conditions, shortages or increased costs of skilled labor and/or materials, lender financial defaults, or so-called “Acts of God” such as earthquakes, hurricanes, floods, or fires may increase project costs.

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Item 2. Properties

Properties — owned and leased real estate

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See Part I, Item 1, “Business,” earlier in this report, and the “Properties and Rooms” caption in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for more information about our company-operated properties.
See Part I, Item 1, “Business,” earlier in this report, and the “Properties and Rooms” caption in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for more information about our company-operated properties. 19 Table of Contents
Additionally, most of our regional offices, customer care and reservation centers, and sales offices, as well as our corporate headquarters, are in leased facilities.
Additionally, most of our regional offices, customer engagement centers, and sales offices, as well as our corporate headquarters, are in leased facilities.
Item 2. Properties. Under our asset-light business model, we typically manage or franchise hotels and other lodging offerings, rather than own them. As of December 31, 2022, we owned or leased 26 hotels in U.S. & Canada and 38 hotels in International.
Item 2. Properties. Under our asset-light business model, we typically manage or franchise hotels and other lodging offerings, rather than own them. As of December 31, 2023, we owned or leased 13 hotels (4,339 rooms) in U.S. & Canada and 37 hotels (8,776 rooms) in International.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities. Market Information At February 7, 2023, 308,121,159 shares of our Class A Common Stock (our “common stock”) were outstanding and were held by 32,128 stockholders of record. Our common stock trades on the Nasdaq Global Select Market (“Nasdaq”) under the trading symbol MAR.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities. Market Information At February 6, 2024, 289,485,338 shares of our Class A Common Stock (our “common stock”) were outstanding and were held by 30,822 stockholders of record. Our common stock trades on the Nasdaq Global Select Market under the trading symbol MAR.
Fourth Quarter 2022 Issuer Purchases of Equity Securities (in millions, except per share amounts) Period Total Number of Shares Purchased Average Price per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs (1) October 1, 2022 - October 31, 2022 3.0 $ 149.16 3.0 6.3 November 1, 2022 - November 30, 2022 2.8 $ 159.06 2.8 28.5 December 1, 2022 - December 31, 2022 2.9 $ 155.66 2.9 25.6 (1) On February 28, 2019, we announced that our Board of Directors increased our common stock repurchase authorization by 25 million shares.
Fourth Quarter 2023 Issuer Purchases of Equity Securities (in millions, except per share amounts) Period Total Number of Shares Purchased Average Price per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs (1) October 1, 2023 - October 31, 2023 1.5 $ 193.70 1.5 7.3 November 1, 2023 - November 30, 2023 1.6 $ 202.74 1.6 30.7 December 1, 2023 - December 31, 2023 1.6 $ 215.26 1.6 29.1 (1) On November 10, 2022, we announced that our Board of Directors increased our common stock repurchase authorization by 25 million shares.
In addition, on November 10, 2022, we announced that our Board of Directors further increased our common stock repurchase authorization by 25 million shares. At year-end 2022, 25.6 million shares remained available for repurchase under Board approved authorizations.
In addition, on November 9, 2023, we announced that our Board of Directors further increased our common stock repurchase authorization by 25 million shares. At year-end 2023, 29.1 million shares remained available for repurchase under Board approved authorizations. We may repurchase shares in the open market or in privately negotiated transactions, and we account for these shares as treasury stock.
Removed
We repurchase shares in the open market and in privately negotiated transactions and account for these shares as treasury stock. 19 Table of Contents Item 6. Reserved.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Over time, we have sold lodging properties, both completed and under development, subject to long-term management agreements. The ability of third-party purchasers to raise the debt and equity capital necessary to acquire such properties depends in part on the perceived risks in the lodging industry and other constraints inherent in the capital markets.
Over time, we have sold lodging properties, both completed and under development, generally subject to long-term management agreements. The ability of third-party purchasers to raise the debt and equity capital necessary to acquire such properties depends in part on the perceived risks in the lodging industry and other constraints inherent in the capital markets.
The breakage impact may vary significantly depending on the specific Loyalty Program points for which the anticipated breakage changes. Goodwill , including how we evaluate the fair value of reporting units and when we record an impairment loss on goodwill. During the 2022 fourth quarter, we conducted our annual goodwill impairment test and no impairment charges were recorded.
The breakage impact may vary significantly depending on the specific Loyalty Program points for which the anticipated breakage changes. Goodwill , including how we evaluate the fair value of reporting units and when we record an impairment loss on goodwill. During the 2023 fourth quarter, we conducted our annual goodwill impairment test, and no impairment charges were recorded.
Based on the conditions existing at December 31, 2022 and holding other factors constant, a one percent decrease in our estimate of the breakage of points could result in an increase in the liability for guest loyalty program of approximately $50 million.
Based on the conditions existing at December 31, 2023 and holding other factors constant, a one percent decrease in our estimate of the breakage of points could result in an increase in the liability for guest loyalty program of approximately $50 million.
See Note 9 for further information about our long-term debt. • We enter into operating and finance leases primarily for hotels, offices, and equipment, which are discussed in Note 8. • At December 31, 2022, projected Deemed Repatriation Transition Tax payments under the U.S. tax legislation enacted on December 22, 2017, commonly referred to as the 2017 Tax Cuts and Jobs Act, totaled $336 million, of which $89 million is payable within the next 12 months from year-end 2022. • The Company also had guarantees, a contingent purchase obligation, commitments, and letters of credit as of year-end 2022, which are discussed in Note 7.
See Note 9 for further information about our long-term debt. • We enter into operating and finance leases primarily for hotels, offices, and equipment, which are discussed in Note 8. • At December 31, 2023, projected Deemed Repatriation Transition Tax payments under the U.S. tax legislation enacted on December 22, 2017, commonly referred to as the 2017 Tax Cuts and Jobs Act, totaled $243 million, of which $108 million is payable within the next 12 months from year-end 2023. • The Company also had guarantees, a contingent purchase obligation, commitments, and letters of credit as of year-end 2023, which are discussed in Note 7.
BUSINESS AND OVERVIEW Overview We are a worldwide operator, franchisor, and licensor of hotel, residential, timeshare, and other lodging properties in 138 countries and territories under 30 brand names. Under our asset-light business model, we typically manage or franchise hotels, rather than own them.
BUSINESS AND OVERVIEW Overview We are a worldwide operator, franchisor, and licensor of hotel, residential, timeshare, and other lodging properties in 139 countries and territories under more than 30 brand names. Under our asset-light business model, we typically manage or franchise hotels, rather than own them.
Although our insurance program includes coverage designed to limit our exposure to losses such as those related to the Data Security Incident, that insurance may not be sufficient or available to cover all of our expenses or other losses (including monetary payments to regulators and/or litigants) related to the Data Security Incident.
Although our insurance program includes coverage designed to limit our exposure to losses such as those related to the Data Security Incident, that insurance may not be sufficient or available to cover all of our expenses or other 21 Table of Contents losses (including monetary payments to regulators and/or litigants) related to the Data Security Incident.
During 2022, we evaluated our intangibles and long-lived asset groups for impairment and did not record any material impairment charges. The estimated fair values of all our indefinite-lived intangible assets significantly exceeded their carrying amounts at the date of their most recent estimated fair value determination.
During 2023, we evaluated our intangibles and long-lived asset groups for impairment and did not record any material impairment charges. The estimated fair values 28 Table of Contents of all our indefinite-lived intangible assets significantly exceeded their carrying amounts at the date of their most recent estimated fair value determination.
A discussion regarding our financial condition and results of operations for year-end 2021 compared to year-end 2020 can be found in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as filed with the SEC on February 15, 2022 (“2021 Form 10-K”).
A discussion regarding our financial condition and results of operations for year-end 2022 compared to year-end 2021 can be found in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as filed with the SEC on February 14, 2023 (“2022 Form 10-K”).
Including the effect of interest rate swaps, the ratio of our fixed-rate long-term debt to our total long-term debt was 0.9 to 1.0 at year-end 2022. See the “Our Credit Facility,” caption in this “Liquidity and Capital Resources” section for more information on our Credit Facility. Share Repurchases and Dividends.
Including the effect of interest rate swaps, the ratio of our fixed-rate long-term debt to our total long-term debt was 0.8 to 1.0 at year-end 2023. See the “Our Credit Facility” caption in this “Liquidity and Capital Resources” section for more information on our Credit Facility. Share Repurchases and Dividends.
Incentive management fees are typically calculated as a percentage of a hotel profitability measure, and, in many cases (particularly in our U.S. & Canada, Europe, and Caribbean & Latin America regions), are subject to a specified owner return. Under our franchise agreements, franchise fees are typically calculated as a percentage of property-level revenue or a portion thereof.
Base management fees are typically calculated as a percentage of property-level revenue. Incentive management fees are typically calculated as a percentage of a hotel profitability measure, and, in many cases (particularly in our U.S. & Canada, Europe, and Caribbean & Latin America regions), are subject to a specified owner return.
In 2022, we earned incentive management fees from 61 percent of our managed properties worldwide, compared to 47 percent in 2021.
In 2023, we earned incentive management fees from 68 percent of our managed properties worldwide, compared to 61 percent in 2022.
Material Cash Requirements Our material cash requirements include the following contractual obligations and off-balance sheet arrangements. • At year-end 2022, we had $11,989 million of debt, including principal and future interest payments, of which $1,032 million is payable within the next 12 months from year-end 2022.
Material Cash Requirements Our material cash requirements include the following contractual obligations and off-balance sheet arrangements. • At year-end 2023, we had $13,937 million of debt, including principal and future interest payments, of which $972 million is payable within the next 12 months from year-end 2023.
See Note 9 for additional information on the Senior Notes issuance and redemption. Our long-term financial objectives include diversifying our financing sources, optimizing the mix and maturity of our long-term debt, and reducing our working capital. At year-end 2022, our long-term debt had a weighted average interest rate of 4.1 percent and a weighted average maturity of approximately 5.8 years.
See Note 9 for additional information on Senior Notes issuances. Our long-term financial objectives include maintaining diversified financing sources, optimizing the mix and maturity of our long-term debt, and reducing our working capital. At year-end 2023, our long-term debt had a weighted average interest rate of 4.5 percent and a weighted average maturity of approximately 5.0 years.
We expect capital expenditures and other investments will total approximately $850 million to $1 billion for 2023, including capital and technology expenditures, loan advances, contract acquisition costs, and other investing activities (including approximately $300 million for maintenance capital spending).
We expect capital expenditures and other investments will total approximately $1.0 billion to $1.2 billion for 2024, including capital and technology expenditures, loan advances, contract acquisition costs, and other investing activities (including approximately $250 million for maintenance capital spending).
We expect such reductions to end by year-end 2023. Our ratio of current assets to current liabilities was 0.5 to 1.0 at year-end 2022 and 0.6 to 1.0 at year-end 2021. We have significant borrowing capacity under our Credit Facility should we need additional working capital. Investing Activities Cash Flows Capital Expenditures and Other Investments.
Our ratio of current assets to current liabilities was 0.4 to 1.0 at year-end 2023 and 0.5 to 1.0 at year-end 2022. We have significant borrowing capacity under our Credit Facility should we need additional working capital. 26 Table of Contents Investing Activities Cash Flows Capital Expenditures and Other Investments.
We earned incentive management fees from 29 percent of our U.S. & Canada managed properties and 76 percent of our International managed properties in 2022, compared to 13 percent in U.S. & Canada and 63 percent in International in 2021.
We earned incentive management fees from 31 percent of our U.S. & Canada managed properties and 85 percent of our International managed properties in 2023, compared to 29 percent in U.S. & Canada and 76 percent in International in 2022.
We define our comparable properties as our properties that were open and operating under one of our brands since the beginning of the last full calendar year (since January 1, 2021 for the current period) and have not, in either the current or previous year: (1) undergone significant room or public space renovations or expansions, (2) been converted between company-operated and franchised, or (3) sustained substantial property damage or business interruption, with the exception of properties closed or otherwise experiencing interruptions related to COVID-19, which we continue to classify as comparable.
We define our comparable properties as our properties that were open and operating under one of our brands since the beginning of the last full calendar year (since January 1, 2022 for the current period) and have not, in either the current or previous year: (1) undergone significant room or public space renovations or expansions, (2) been converted between company-operated and franchised, or (3) sustained substantial property damage or business interruption.
The Starwood reservations database is no longer used for busi ness operations. We are currently unable to reasonably estimate the range of total possible financial impact to the Company from the Data Security Incident in excess of the expenses already recorded. However, we do not believe this incident will impact our long-term financial health.
We are currently unable to reasonably estimate the range of total possible financial impact to the Company from the Data Security Incident in excess of the expenses already recorded. However, we do not believe this incident will impact our long-term financial health.
RevPAR, occupancy, and ADR statistics are on a systemwide basis for comparable properties, unless otherwise stated. Comparisons to prior periods are on a constant U.S. dollar basis. We calculate constant dollar statistics by applying exchange rates for the current period to the prior comparable period.
Comparisons to prior periods are on a constant U.S. dollar basis. We calculate constant dollar statistics by applying exchange rates for the current period to the prior comparable period.
We repurchased 16.8 million shares of our common stock for $2.6 billion in 2022. Year-to-date through February 10, 2023, we repurchased 2.5 million shares for $400 million. For additional information, see “Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities” in Part II, Item 5.
We repurchased 21.5 million shares of our common stock for $3.9 billion in 2023. Year-to-date through February 9, 2024, we repurchased 1.3 million shares for $300 million. For additional information, see “Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities” in Part II, Item 5.
We currently satisfy the covenants in our Credit Facility and public debt instruments, including the leverage covenant under the Credit Facility, and do not expect the covenants will restrict our ability to meet our anticipated borrowing and liquidity needs.
Our outstanding public debt does not contain a corresponding financial covenant or a requirement that we maintain certain financial ratios. We currently satisfy the covenants in our Credit Facility and public debt instruments, including the leverage covenant under the Credit Facility, and do not expect the covenants will restrict our ability to meet our anticipated borrowing and liquidity needs.
The Credit Facility contains certain covenants, including a single financial covenant that limits our maximum leverage (consisting of the ratio of Adjusted Total Debt to EBITDA, each as defined in the Credit Facility) to not more than 4.5 to 1.0. Our outstanding public debt does not contain a corresponding financial covenant or a requirement that we maintain certain financial ratios.
The Credit Facility expires on December 14, 2027. The Credit Facility contains certain covenants, including a single financial covenant that limits our maximum leverage (consisting of the ratio of Adjusted Total Debt to EBITDA, each as defined in the Credit Facility) to not more than 4.5 to 1.0.
Cash inflow from our Loyalty Program in 2020 included $920 million of cash received from the prepayment of certain future revenues under the 2020 amendments to our existing U.S.-issued co-branded credit card agreements, which reduced in both 2021 and 2022, and will in the future reduce, the amount of cash we receive from these card issuers.
Cash inflow from our Loyalty Program in 2020 included $920 million of cash received from the prepayment of certain future revenues under the 2020 amendments to our existing U.S.-issued co-branded credit card agreements, which reduced the amount of cash we received from these card issuers in subsequent years, until such reductions ended as of year-end 2023.
December 31, 2021 December 31, 2022 December 31, 2021 vs.
December 31, 2022 December 31, 2023 December 31, 2022 vs.
Cash from Operations Net cash provided by operating activities increased by $1,186 million in 2022 compared to 2021, primarily due to higher net income (adjusted for non-cash items and the prior year loss on extinguishment of debt), partially offset by higher cash paid for income taxes and working capital changes driven by accounts receivable timing.
Cash from Operations Net cash provided by operating activities increased by $807 million in 2023 compared to 2022, primarily due to higher net income (adjusted for non-cash items), working capital changes driven by accounts receivable timing, and higher cash generated by our Loyalty Program, partially offset by higher cash paid for income taxes.
We expect to incur significant expenses associated with the Data Security Incident in future periods in excess of the amounts already recorded, primarily related to legal proceedings and regulatory investigations (including possible additional monetary payments to regulators and/or litigants as well as costs associated with compliance with any settlements or resolutions of matters).
We expect to incur ongoing legal and other expenses associated with the Data Security Incident in future periods, and we believe it is reasonably possible that we may incur additional monetary payments to regulators and/or litigants in excess of the amounts already recorded and costs in connection with compliance with any settlements or resolutions of matters.
Our Board of Directors declared the following quarterly cash dividends in 2022: (1) $0.30 per share declared on May 2, 2022 and paid on June 30, 2022 to stockholders of record on May 16, 2022; (2) $0.30 per share declared on August 4, 2022 and paid on September 30, 2022 to stockholders of record on August 18, 2022; and (3) $0.40 per share declared on November 10, 2022 and paid on December 30, 2022 to stockholders of record on November 23, 2022.
Our Board declared the following quarterly cash dividends in 2023: (1) $0.40 per share declared on February 10, 2023 and paid on March 31, 2023 to stockholders of record on February 24, 2023; (2) $0.52 per share declared on May 12, 2023 and paid on June 30, 2023 to stockholders of record on May 26, 2023; (3) $0.52 per share declared on August 3, 2023 and paid on September 29, 2023 to stockholders of record on August 17, 2023; and (4) $0.52 per share declared on November 9, 2023 and paid on December 29, 2023 to stockholders of record on November 22, 2023.
Our Board of Directors declared a cash dividend of $0.40 per share on February 10, 2023, payable on March 31, 2023 to stockholders of record on February 24, 2023. We expect to continue to return cash to stockholders through a combination of share repurchases and cash dividends.
Our Board declared a cash dividend of $0.52 per share on February 8, 2024, payable on March 29, 2024 to stockholders of record on February 22, 2024. 27 Table of Contents We expect to continue to return cash to stockholders through a combination of share repurchases and cash dividends.
Available borrowings under the Credit Facility support our commercial paper program and general corporate needs. Borrowings under the Credit Facility generally bear interest at SOFR (the Secured Overnight Financing Rate) plus a spread based on our public debt rating. We also pay quarterly fees on the Credit Facility at a rate based on our public debt rating.
LIQUIDITY AND CAPITAL RESOURCES Our Credit Facility We are party to a $4.5 billion multicurrency revolving credit agreement (the “Credit Facility”). Available borrowings under the Credit Facility support our commercial paper program and general corporate needs. Borrowings under the Credit Facility generally bear interest at SOFR (the Secured Overnight Financing Rate) plus a spread based on our public debt rating.
The majority of our guarantee commitments are not expected to be funded within the next 12 months from year-end 2022. In addition to the purchase obligations discussed in Note 7, in the normal course of business, we enter into purchase commitments and incur other obligations to manage the daily operating needs of the hotels that we manage.
In addition to the purchase obligations discussed in Note 7, in the normal course of business, we enter into purchase commitments and incur other obligations to manage the daily operating needs of the hotels that we manage.
Cost Reimbursements ($ in millions) 2022 2021 Change 2022 vs. 2021 Cost reimbursement revenue $ 15,417 $ 10,442 $ 4,975 48 % Reimbursed expenses 15,141 10,322 4,819 47 % Cost reimbursements, net $ 276 $ 120 $ 156 130 % Cost reimbursements, net (cost reimbursement revenue, net of reimbursed expenses) varies due to timing differences between the costs we incur for centralized programs and services and the related reimbursements we receive from hotel owners and franchisees.
Cost Reimbursements ($ in millions) 2023 2022 Change 2023 vs. 2022 Cost reimbursement revenue $ 17,413 $ 15,417 $ 1,996 13 % Reimbursed expenses 17,424 15,141 2,283 15 % Cost reimbursements, net $ (11) $ 276 $ (287) (104) % Cost reimbursements, net (cost reimbursement revenue, net of reimbursed expenses) varies due to timing differences between the costs we incur for centralized programs and services and the related reimbursements we receive from property owners and franchisees.
Occupancy, which we calculate by dividing occupied rooms by total rooms available (including rooms in hotels temporarily closed due to issues related to COVID-19), measures the utilization of a property’s available capacity. ADR, which we calculate by dividing property room revenue by total rooms sold, measures average room price and is useful in assessing pricing levels.
Occupancy, which we calculate by dividing occupied rooms by total rooms available, measures the utilization of a property’s available capacity. ADR, which we calculate by dividing property room revenue by total rooms sold, measures average room price and is useful in assessing pricing levels. RevPAR, occupancy, and ADR statistics are on a systemwide basis for comparable properties, unless otherwise stated.
We made capital and technology expenditures of $332 million in 2022 and $183 million in 2021. Capital and technology expenditures in 2022 increased by $149 million compared to 2021, primarily reflecting higher spending on improvements to our worldwide technology systems.
We made capital and technology expenditures of $452 million in 2023 and $332 million in 2022. Capital and technology expenditures in 2023 increased by $120 million compared to 2022, primarily due to higher spending on our worldwide technology systems transformation, the overwhelming portion of which is expected to be reimbursed over time.
Performance Measures We believe Revenue per Available Room (“RevPAR”), which we calculate by dividing room sales for comparable properties by room nights available for the period, is a meaningful indicator of our performance because it measures the period-over-period change in room revenues for comparable properties.
Additionally, we earn franchise fees for the use of our intellectual property, including primarily co-branded credit card fees, as well as timeshare and yacht fees, residential branding fees, franchise application and relicensing fees, and certain other licensing fees, which we refer to as “non-RevPAR related franchise fees.” Performance Measures We believe Revenue per Available Room (“RevPAR”), which we calculate by dividing room sales for comparable properties by room nights available for the period, is a meaningful indicator of our performance because it measures the period-over-period change in room revenues for comparable properties.
We classify outstanding borrowings under the Credit Facility and outstanding commercial paper borrowings as long-term based on our ability and intent to refinance the outstanding borrowings on a long-term basis. The Credit Facility expires on December 14, 2027.
We also pay quarterly fees on the Credit Facility at a rate based on our public debt rating. We classify outstanding borrowings under the Credit Facility and outstanding commercial paper borrowings (which generally have short-term maturities of 45 days or less) as long-term based on our ability and intent to refinance the outstanding borrowings on a long-term basis.
Since our contracts with owners require reimbursement for these amounts, these obligations are expected to have minimal impact on our net income and cash flow.
Since our contracts with owners require reimbursement for these amounts, these obligations are expected to have minimal impact on our net income and cash flow. NEW ACCOUNTING STANDARDS We do not expect that accounting standard updates issued to date and that are effective after December 31, 2023 will have a material effect on our Financial Statements.
NEW ACCOUNTING STANDARDS We do not expect that accounting standard updates issued to date and that are effective after December 31, 2022 will have a material effect on our Financial Statements. 27 Table of Contents CRITICAL ACCOUNTING POLICIES AND ESTIMATES Our preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect reported amounts and related disclosures.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES Our preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect reported amounts and related disclosures.
(“Starwood”), through a series of transactions, after which Starwood became an indirect wholly-owned subsidiary of the Company.
Starwood Data Security Incident On September 23, 2016, we completed the acquisition of Starwood Hotels & Resorts Worldwide, LLC, formerly known as Starwood Hotels & Resorts Worldwide, Inc. (“Starwood”), through a series of transactions, after which Starwood became an indirect wholly-owned subsidiary of the Company.
(2) Includes U.S. & Canada and International - All. 22 Table of Contents CONSOLIDATED RESULTS Our consolidated results in 2022 improved significantly compared to 2021 due to the continued recovery in lodging demand from the impacts of COVID-19. The discussion below presents an additional analysis of our consolidated results of operations for 2022 compared to 2021.
(2) Includes U.S. & Canada and International - All. CONSOLIDATED RESULTS The discussion below presents an analysis of our consolidated results of operations for 2023 compared to 2022. Also see the “Business Trends” section above for further discussion.
The increase in franchise fees primarily reflected higher RevPAR, higher co-branded credit card fees ($119 million) and unit growth ($109 million), partially offset by net unfavorable foreign exchange rates ($17 million). The increase in incentive management fees primarily reflected higher profits at certain managed hotels and unit growth, partially offset by net unfavorable foreign exchange rates ($16 million).
The increase in franchise fees primarily reflected higher RevPAR, unit growth ($99 million), and higher non-RevPAR related franchise fees ($50 million). Non-RevPAR related franchise fees of $832 million in 2023 increased primarily due to higher co-branded credit card fees ($55 million). The increase in incentive management fees primarily reflected higher profits at many managed hotels.
We have made, and expect to continue making, selective and opportunistic investments to add units to our lodging business, which may include property acquisitions and renovations, new construction, loans, guarantees, and equity 26 Table of Contents investments. Over time, we seek to minimize capital invested in our business through asset sales subject to long-term management or franchise agreements. Loan Activity.
We monitor the status of the capital markets and regularly evaluate the potential impact of changes in capital market conditions on our business operations. We have made, and expect to continue making, selective and opportunistic investments to add units to our lodging business, which may include property acquisitions and renovations, new construction, loans, guarantees, and equity investments.
Owned, Leased, and Other ($ in millions) 2022 2021 Change 2022 vs. 2021 Owned, leased, and other revenue $ 1,367 $ 796 $ 571 72 % Owned, leased, and other - direct expenses 1,074 734 340 46 % Owned, leased, and other, net $ 293 $ 62 $ 231 373 % Owned, leased, and other revenue, net of direct expenses, increased primarily due to net stronger results at our owned and leased properties, partially offset by an estimated monetary payment related to a portfolio of 12 leased hotels in the U.S. & Canada ($31 million) and lower termination fees ($18 million).
In addition, 65 percent of our total incentive management fees in 2023 came from our International managed properties versus 58 percent in 2022. 23 Table of Contents Owned, Leased, and Other ($ in millions) 2023 2022 Change 2023 vs. 2022 Owned, leased, and other revenue $ 1,564 $ 1,367 $ 197 14 % Owned, leased, and other - direct expenses 1,165 1,074 91 8 % Owned, leased, and other, net $ 399 $ 293 $ 106 36 % Owned, leased, and other revenue, net of direct expenses, increased primarily due to stronger results at our owned and leased properties, $46 million of higher termination fees, primarily related to one development project in U.S. & Canada, and an estimated monetary payment of $31 million recorded in 2022 related to a portfolio of 12 leased hotels in the U.S. & Canada, partially offset by $29 million of subsidies received in 2022 for certain of our leased hotels under German government COVID-19 assistance programs.
Debt decreased by $74 million in 2022, to $10,064 million at year-end 2022 from $10,138 million at year-end 2021, primarily due to lower outstanding Credit Facility borrowings ($1,050 million), the maturity of our Series Q Notes ($399 million), the maturity of our Series DD Notes ($224 million), and the redemption of our Series L Notes ($173 million), partially offset by the issuance of our Series JJ Notes ($983 million) and higher outstanding commercial paper borrowings ($868 million).
Debt increased by $1,809 million in 2023, to $11,873 million at year-end 2023 from $10,064 million at year-end 2022, primarily due to the issuance of our Series LL Notes and Series MM Notes ($1,135 million) and Series KK Notes ($783 million), and higher outstanding commercial paper borrowings ($546 million), partially offset by the maturity of our Series Z Notes and Series U Notes ($350 million and $291 million, respectively).
Fee Revenues ($ in millions) 2022 2021 Change 2022 vs. 2021 Base management fees $ 1,044 $ 669 $ 375 56 % Franchise fees 2,505 1,790 715 40 % Incentive management fees 529 235 294 125 % Gross fee revenues 4,078 2,694 1,384 51 % Contract investment amortization (89) (75) (14) (19) % Net fee revenues $ 3,989 $ 2,619 $ 1,370 52 % The increase in base management fees primarily reflected higher RevPAR and unit growth, partially offset by net unfavorable foreign exchange rates ($25 million).
Fee Revenues ($ in millions) 2023 2022 Change 2023 vs. 2022 Base management fees $ 1,238 $ 1,044 $ 194 19 % Franchise fees 2,831 2,505 326 13 % Incentive management fees 755 529 226 43 % Gross fee revenues 4,824 4,078 746 18 % Contract investment amortization (88) (89) 1 1 % Net fee revenues $ 4,736 $ 3,989 $ 747 19 % The increase in base management fees primarily reflected higher RevPAR and unit growth.
See Note 7 for additional information related to legal proceedings and governmental investigations related to the Data Security Incident.
See Note 7 for additional information related to legal proceedings and governmental investigations related to the Data Security Incident. System Growth and Pipeline Our system grew from 8,288 properties (1,525,407 rooms) at year-end 2022 to 8,785 properties (1,597,380 rooms) at year-end 2023.
($ in millions) 2022 2021 Change 2022 vs. 2021 U.S. & Canada Segment revenues $ 15,753 $ 10,356 $ 5,397 52 % Segment profit 2,446 1,394 1,052 75 % International Segment revenues 3,486 2,254 1,232 55 % Segment profit 794 258 536 208 % Properties Rooms December 31, 2022 December 31, 2021 vs.
($ in millions) 2023 2022 Change 2023 vs. 2022 U.S. & Canada Segment revenues $ 17,696 $ 15,753 $ 1,943 12 % Segment profit 2,724 2,446 278 11 % International Segment revenues 4,455 3,486 969 28 % Segment profit 1,121 794 327 41 % Properties Rooms December 31, 2023 December 31, 2022 vs.
December 31, 2021 U.S. & Canada 5,846 5,712 134 2 % 964,412 945,987 18,425 2 % International 2,348 2,185 163 7 % 538,101 510,491 27,610 5 % U.S. & Canada U.S. & Canada segment profit increased primarily due to the following: • $906 million of higher gross fee revenues, primarily reflecting higher comparable systemwide RevPAR driven by increases in both ADR and occupancy, higher profits at certain managed hotels, and unit growth; • $83 million of higher cost reimbursement revenue, net of reimbursed expenses; and • $62 million of higher owned, leased, and other revenue, net of direct expenses, primarily reflecting stronger results at owned and leased properties, partially offset by an estimated monetary payment related to a portfolio of 12 leased hotels in U.S. & Canada ($31 million); partially offset by: • $23 million of higher general, administrative, and other expenses, primarily reflecting a favorable litigation settlement in 2021 ($18 million).
December 31, 2022 U.S. & Canada 5,965 5,846 119 2 % 979,631 964,412 15,219 2 % International 2,726 2,348 378 16 % 594,855 538,101 56,754 11 % U.S. & Canada U.S. & Canada segment profit increased primarily due to the following: • $313 million of higher gross fee revenues, primarily reflecting higher RevPAR driven by increases in both ADR and occupancy, unit growth, and higher profits at certain managed hotels; and • $73 million of higher owned, leased, and other revenue, net of direct expenses, primarily reflecting $57 million of higher termination fees, primarily related to one development project, and a $31 million estimated monetary payment recorded in 2022 related to a portfolio of 12 leased hotels; partially offset by: • $77 million of lower cost reimbursement revenue, net of reimbursed expenses. 25 Table of Contents International International segment profit increased primarily due to the following: • $373 million of higher gross fee revenues, primarily reflecting higher profits at certain managed hotels, higher RevPAR driven by increases in both occupancy and ADR in all regions, and unit growth, partially offset by net unfavorable foreign exchange rates; • $24 million of higher gains and other income, net, primarily reflecting a gain on the sale of a hotel in the Caribbean & Latin America region ($24 million); and • $3 million of higher owned, leased, and other revenue, net of direct expenses, primarily reflecting stronger results at our owned and leased properties ($43 million), partially offset by subsidies received in 2022 for certain of our leased hotels under German government COVID-19 assistance programs ($29 million); partially offset by: • $32 million of lower cost reimbursement revenue, net of reimbursed expenses; and • $55 million of higher general, administrative, and other expenses, primarily reflecting higher litigation accruals and higher compensation costs.
In the 2022 fourth quarter, U.S. & Canada RevPAR improved 5.2 percent compared to the same period in 2019, due to ADR growth of 11.1 percent, partially offset by a decline in occupancy of 3.7 percentage points.
The increase in RevPAR was driven by improvement in all customer segments. In the U.S. & Canada, RevPAR improved 8.9 percent in 2023 compared to 2022, driven by ADR growth of 4.7 percent and occupancy improvement of 2.7 percentage points.
RevPAR Occupancy Average Daily Rate 2022 vs. 2021 2022 vs. 2021 2022 vs. 2021 Comparable Company-Operated Properties U.S. & Canada $ 159.06 67.0 % 65.3 % 17.9 % pts. $ 243.73 21.3 % Greater China $ 53.22 (18.5) % 47.5 % (8.0) % pts. $ 112.14 (4.8) % Asia Pacific excluding China $ 84.41 122.5 % 59.2 % 23.1 % pts. $ 142.60 35.8 % Caribbean & Latin America $ 126.55 67.0 % 60.8 % 17.7 % pts. $ 208.17 18.4 % Europe $ 153.51 148.3 % 63.5 % 30.3 % pts. $ 241.65 29.9 % Middle East & Africa $ 124.63 52.8 % 64.7 % 13.1 % pts. $ 192.54 22.0 % International - All (1) $ 94.64 55.5 % 57.0 % 11.7 % pts. $ 166.06 23.4 % Worldwide (2) $ 123.30 61.9 % 60.7 % 14.5 % pts. $ 203.23 23.3 % Comparable Systemwide Properties U.S. & Canada $ 118.97 46.5 % 67.0 % 11.6 % pts. $ 177.47 21.1 % Greater China $ 51.38 (16.6) % 46.8 % (7.2) % pts. $ 109.71 (3.9) % Asia Pacific excluding China $ 83.87 111.8 % 59.3 % 22.2 % pts. $ 141.47 32.5 % Caribbean & Latin America $ 105.26 72.3 % 58.0 % 17.1 % pts. $ 181.42 21.6 % Europe $ 121.38 146.2 % 61.1 % 29.8 % pts. $ 198.67 25.9 % Middle East & Africa $ 116.91 55.8 % 64.2 % 13.3 % pts. $ 182.07 23.5 % International - All (1) $ 91.30 66.2 % 57.0 % 14.6 % pts. $ 160.21 23.7 % Worldwide (2) $ 110.64 51.0 % 64.0 % 12.5 % pts. $ 172.85 21.5 % (1) Includes Greater China, Asia Pacific excluding China, Caribbean & Latin America, Europe, and Middle East & Africa.
RevPAR Occupancy Average Daily Rate 2023 vs. 2022 2023 vs. 2022 2023 vs. 2022 Comparable Company-Operated Properties U.S. & Canada $ 171.81 10.2 % 68.9 % 3.7 % pts. $ 249.25 4.3 % Greater China $ 88.18 80.3 % 68.9 % 22.4 % pts. $ 128.03 21.7 % Asia Pacific excluding China $ 117.33 41.9 % 69.5 % 11.5 % pts. $ 168.86 18.4 % Caribbean & Latin America $ 168.44 13.8 % 64.0 % 4.4 % pts. $ 263.19 6.0 % Europe $ 183.67 21.2 % 70.7 % 7.7 % pts. $ 259.65 8.0 % Middle East & Africa $ 128.99 12.5 % 67.6 % 3.2 % pts. $ 190.71 7.2 % International - All (1) $ 120.78 35.6 % 68.8 % 13.1 % pts. $ 175.62 9.7 % Worldwide (2) $ 142.69 21.2 % 68.8 % 9.1 % pts. $ 207.27 5.1 % Comparable Systemwide Properties U.S. & Canada $ 128.25 8.9 % 69.8 % 2.7 % pts. $ 183.83 4.7 % Greater China $ 82.77 78.6 % 67.9 % 22.2 % pts. $ 121.91 20.2 % Asia Pacific excluding China $ 117.89 43.2 % 69.4 % 10.9 % pts. $ 169.93 20.7 % Caribbean & Latin America $ 142.85 13.9 % 64.7 % 4.2 % pts. $ 220.73 6.5 % Europe $ 142.88 21.8 % 68.7 % 8.3 % pts. $ 207.86 7.2 % Middle East & Africa $ 120.67 14.7 % 66.6 % 2.9 % pts. $ 181.18 9.7 % International - All (1) $ 116.81 32.6 % 67.9 % 11.7 % pts. $ 172.05 9.7 % Worldwide (2) $ 124.70 14.9 % 69.2 % 5.5 % pts. $ 180.24 5.8 % (1) Includes Greater China, Asia Pacific excluding China, Caribbean & Latin America, Europe, and Middle East & Africa.
From time to time, we make loans to owners of hotels that we operate or franchise. Loan collections, net of loan advances, amounted to $3 million in 2022, compared to net collections of $27 million in 2021. At year-end 2022, we had $162 million of senior, mezzanine, and other loans outstanding, compared to $153 million outstanding at year-end 2021.
Over time, we seek to minimize capital invested in our business through asset sales subject to long-term management or franchise agreements. Loan Activity. From time to time, we make loans to owners of hotels that we operate or franchise. Loan advances, net of loan collections, amounted to $16 million in 2023, compared to net collections of $3 million in 2022.
The following discussion presents an additional analysis of the operating results of our reportable business segments.
The decrease was partially offset by the increase in operating income ($61 million). BUSINESS SEGMENTS The following discussion presents an analysis of the operating results of our reportable business segments. Also see the “Business Trends” section above for further discussion.
Approximately 61 percent of our 2022 gross room additions were located outside U.S. & Canada, and 27 percent were conversions from competitor brands. 21 Table of Contents At year-end 2022, we had more than 496,000 hotel rooms in our development pipeline, which includes approximately 199,000 hotel rooms under construction and roughly 22,300 hotel rooms approved for development but not yet under signed contracts.
At year-end 2023, we had nearly 3,400 hotels and roughly 573,000 rooms in our development pipeline, which includes over 21,000 rooms approved for development but not yet under signed contracts.
We continue to monitor global economic conditions, and although we are not currently seeing signs of a slowdown in lodging demand, the lodging booking window is short and trends can change quickly. Starwood Data Security Incident On November 30, 2018, we announced a data security incident involving unauthorized access to the Starwood reservations database (the “Data Security Incident”).
On November 30, 2018, we announced a data security incident involving unauthorized access to the Starwood reservations database (the “Data Security Incident”). We discontinued use of t he Starwood reservations database for business operations at the end of 2018 .
We discuss our operations in the following reportable business segments: (1) U.S. & Canada and (2) International. Terms of our management agreements vary, but our management fees generally consist of base management fees and incentive management fees. Base management fees are typically calculated as a percentage of property-level revenue.
We discuss our operations in the following reportable business segments: (1) U.S. & Canada and (2) International. In January 2024, we modified our segment structure as a result of a change in the way 20 Table of Contents management intends to evaluate results and allocate resources within the Company.
Removed
Additionally, we earn franchise fees for the use of our intellectual property, such as fees from our co-branded credit card, timeshare, and residential programs. On September 23, 2016, we completed the acquisition of Starwood Hotels & Resorts Worldwide, LLC, formerly known as Starwood Hotels & Resorts Worldwide, Inc.
Added
Beginning with the 2024 first quarter, we will report the following four operating segments: (1) U.S. & Canada, (2) Europe, Middle East, and Africa, (3) Asia Pacific excluding China, and (4) Greater China.
Removed
For 2022 compared to 2021, we had 5,123 comparable U.S. & Canada properties and 1,548 comparable International properties.
Added
Our Caribbean and Latin America operating segment will not meet the applicable criteria for separate disclosure as a reportable business segment, and as such, we will include its results in “Unallocated corporate and other.” Terms of our management agreements vary, but our management fees generally consist of base management fees and incentive management fees.
Removed
RevPAR, occupancy, and ADR comparisons between 2022 and 2019, which we discuss under the “Business Trends” caption below, reflect properties that are defined as comparable as of December 31, 2022, September 30, 2022, June 30, 2022, or March 31, 2022 (as applicable), even if in 2019 they were not open and operating for the full year or did not meet all the other criteria listed above.
Added
Under our franchise agreements, franchise fees are typically calculated as a percentage of property-level revenue or a portion thereof.
Removed
Unless otherwise stated, all comparisons to pre-pandemic or 2019 are comparing to the same time period each year. Business Trends We continued to see strong global RevPAR improvement throughout 2022 despite Greater China continuing to be significantly negatively impacted by COVID-19 through the end of the 2022 fourth quarter.
Added
For 2023 compared to 2022, we had 5,375 comparable U.S. & Canada properties and 1,704 comparable International properties. Business Trends We saw strong global RevPAR improvement throughout 2023 compared to 2022. In 2023, worldwide RevPAR increased 14.9 percent compared to 2022, reflecting ADR growth of 5.8 percent and occupancy improvement of 5.5 percentage points.
Removed
While RevPAR recovery at the beginning of 2022 was dampened due to the emergence of COVID-19 variants, RevPAR quickly improved, resulting in 2022 third quarter worldwide RevPAR exceeding 2019 levels for the first time since the pandemic began.
Added
As we returned to more normalized year over year RevPAR comparisons during the year, RevPAR growth began to stabilize in the 2023 last three quarters. In our International segment, RevPAR improved 32.6 percent in 2023 compared to 2022, driven by ADR growth of 9.7 percent and occupancy improvement of 11.7 percentage points.
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By the 2022 fourth quarter, 20 Table of Contents worldwide RevPAR exceeded 2019 levels by 4.6 percent, reflecting ADR growth of 12.8 percent, partially offset by a decline in occupancy of 5.1 percentage points compared to 2019 levels.
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The improvement in RevPAR compared to 2022 was driven by strengthening demand, particularly in Greater China and Asia Pacific excluding China, which were impacted by COVID-19 and government-imposed travel restrictions for much or all of 2022.
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The global recovery continued across all customer segments, led by robust leisure demand as well as strengthening group demand, which was higher than 2019 levels in certain regions during the 2022 fourth quarter. Business transient demand also continued to improve during 2022, although it continued to lag behind 2019 levels.
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The increase compared to year-end 2022 reflected gross additions of 558 properties (81,281 rooms), including 149 properties (17,300 rooms) from the City Express brand acquisition, and deletions of 63 properties (9,430 rooms). Our 2023 gross room additions included approximately 60,500 rooms located outside U.S. & Canada and roughly 16,300 rooms converted from competitor brands.
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RevPAR in 2022 compared to 2021 improved 46.5 percent in our U.S. & Canada segment, 66.2 percent in our International segment, and 51.0 percent worldwide. RevPAR in 2022 compared to pre-pandemic 2019 levels declined 4.0 percent worldwide, with improvement in the decline each succeeding quarter during 2022 for each of our segments and worldwide.
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More than 232,000 rooms in the pipeline, or 41 percent, were under construction at year-end 2023, including approximately 37,000 rooms from the exclusive, long-term strategic licensing agreement with MGM Resorts International that we announced in July 2023. Over half of the rooms in our development pipeline are outside U.S. & Canada.
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In the U.S. & Canada, RevPAR declined only 0.8 percent in 2022 compared to 2019, due to a decline in occupancy of 6.0 percentage points, partially offset by ADR growth of 8.1 percent.
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In 2023, we signed a record number of management, franchise and license agreements for approximately 164,000 organic rooms, of which nearly 65,000 rooms are conversions and approximately 91,000 rooms are located in the U.S. and Canada, in each case, including 37,000 rooms under our agreement with MGM Resorts International discussed above.
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The decline in occupancy as compared to 2019 improved sequentially in each quarter of 2022, reflecting strong demand recovery in many markets within the U.S. & Canada. Internationally, RevPAR declined 11.9 percent in 2022 compared to 2019, due to a decline in occupancy of 12.2 percentage points, partially offset by ADR growth of 7.0 percent.
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Contracts signed in 2023 reflected the Company’s strength in the luxury tier, with 58 luxury hotel agreements signed. In 2023, we also entered the Midscale segment through the City Express brand acquisition discussed above, and announced our plans for further Midscale expansion with the launch of two new brands, Four Points Express by Sheraton and StudioRes.
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In the 2022 fourth quarter, International RevPAR improved 3.4 percent compared to the same period in 2019, due to ADR growth of 17.3 percent, partially offset by a decline in occupancy of 8.3 percentage points.
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In 2024, we expect net rooms growth of 5.5 to 6.0 percent, including an anticipated 2.3 percent increase as a result of the expected addition of rooms to our system under our agreement with MGM Resorts International discussed above.
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In the 2022 fourth quarter, RevPAR remained significantly below 2019 levels in Greater China, but exceeded pre-pandemic 2019 levels in the Caribbean & Latin America, Europe, Middle East & Africa, and Asia Pacific excluding China regions, driven by strengthening demand, especially from cross-border guests and meaningful growth in ADR.
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The first of such MGM properties joined our system in January 2024, and the remaining properties are expected to join by the end of the 2024 first quarter.
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Although COVID-19’s negative impact on our business has significantly decreased and we saw strong global RevPAR improvement in 2022, our business is subject to the effects of changes in global and regional conditions and these conditions can change rapidly.
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Properties and Rooms At year-end 2023, we operated, franchised, and licensed the following properties and rooms: Managed Franchised/Licensed Owned/Leased Residential Total Properties Rooms Properties Rooms Properties Rooms Properties Rooms Properties Rooms U.S. & Canada 624 215,246 5,259 752,630 13 4,339 69 7,416 5,965 979,631 International 1,422 360,717 1,210 218,830 37 8,776 57 6,532 2,726 594,855 Timeshare — — 93 22,745 — — — — 93 22,745 Yacht — — 1 149 — — — — 1 149 Total 2,046 575,963 6,563 994,354 50 13,115 126 13,948 8,785 1,597,380 22 Table of Contents Lodging Statistics The following table presents RevPAR, occupancy, and ADR statistics for comparable properties for 2023, and 2023 compared to 2022.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk. We are exposed to market risk from changes in interest rates and currency exchange rates. We manage our exposure to these risks by monitoring available financing alternatives, through the development and application of credit granting policies, and by entering into derivative arrangements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. We are exposed to market risk primarily from changes in interest rates and currency exchange rates. We manage our exposure to these risks by monitoring available financing alternatives, through the development and application of credit granting policies, and by entering into derivative arrangements.
We use derivative instruments, including cash flow hedges, fair value hedges, net investment in non-U.S. operations hedges, and other derivative instruments, as part of our overall strategy to manage our exposure to market risks associated with fluctuations in interest rates and currency exchange rates.
We use derivative instruments, including cash flow hedges, fair value hedges, net investment in non-U.S. operations hedges, and other derivative instruments, as part of our overall strategy to manage our exposure to market risks associated with fluctuations in interest rates and currency exchange rates. We continue to have exposure to such risks to the extent they are not hedged.
See Note 2 for more information on derivative instruments. 28 Table of Contents The following table sets forth the scheduled maturities and the total fair value as of year-end 2022 for our financial instruments that are impacted by market risks: Maturities by Period ($ in millions) 2023 2024 2025 2026 2027 There- after Total Carrying Amount Total Fair Value Assets - Maturities represent expected principal receipts.
The following table sets forth the scheduled maturities and the total fair value as of year-end 2023 for our financial instruments that are impacted by interest rate risk: Maturities by Period (in millions) 2024 2025 2026 2027 2028 There- after Total Carrying Amount Total Fair Value Assets - Maturities represent expected principal receipts. Fair values represent assets.
We do not foresee any significant changes in either our exposure to fluctuations in interest rates or currency rates or how we manage such exposure in the future. We are exposed to interest rate risk on our floating-rate notes receivable and floating-rate debt.
We do not foresee any significant changes in either our exposure to fluctuations in interest rates or currency rates or how we manage such exposure in the future.
Changes in interest rates also impact the fair value of our fixed-rate notes receivable and the fair value of our fixed-rate long-term debt.
We are exposed to interest rate risk on our floating-rate notes receivable and floating-rate debt, including the effect of interest rate swaps. Changes in interest rates also impact the fair value of our fixed-rate notes receivable and the fair value of our fixed-rate long-term debt.
Fair values represent assets. Fixed-rate notes receivable $ 3 $ 17 $ 3 $ 1 $ 1 $ 25 $ 50 $ 45 Average interest rate 1.13 % Floating-rate notes receivable $ 7 $ 81 $ 15 $ 4 $ 4 $ 1 $ 112 $ 107 Average interest rate 5.73 % Liabilities - Maturities represent expected principal payments.
Fixed-rate notes receivable $ 23 $ 7 $ 6 $ 4 $ 2 $ 15 $ 57 $ 53 Average interest rate 1.09 % Floating-rate notes receivable $ 8 $ 73 $ 4 $ — $ 20 $ 7 $ 112 $ 109 Average interest rate 6.60 % Liabilities - Maturities represent expected principal payments. Fair values represent liabilities.
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As a matter of policy, we only enter into transactions that we believe will be highly effective at offsetting the underlying risk, and we do not use derivatives for trading or speculative purposes.
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See Note 2 for more information on derivative instruments. We use forward contracts not designated as hedging instruments to manage currency exchange rate risk associated with certain cash and intercompany loan balances.
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Fair values represent liabilities. Fixed-rate debt $ (676) $ — $ (1,301) $ (747) $ (984) $ (4,815) $ (8,523) $ (7,810) Average interest rate 3.92 % Floating-rate debt $ — $ (1,402) $ — $ — $ — $ — $ (1,402) $ (1,411) Average interest rate 5.05 % 29 Table of Contents
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We intend to offset the gains and losses related to these forward contracts with the gains and losses related to the remeasurement of our cash and intercompany loan balances, such that there is a negligible effect on earnings. We do not consider the fair value or earnings impact of these forward contracts to be material to our consolidated financial statements.
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Fixed-rate debt $ — $ (1,301) $ (1,192) $ (987) $ (1,435) $ (4,861) $ (9,776) $ (9,445) Average interest rate 4.20 % Floating-rate debt $ (545) $ — $ — $ (1,421) $ — $ — $ (1,966) $ (1,966) Average interest rate 6.06 % 29 Table of Contents

Other MAR 10-K year-over-year comparisons