Marriott this morning released their fourth-quarter results that show a net loss of $164M, but with some magic, this number is turned to a positive adjusted EBITDA of $317M (close to half of the billion difference).
The hotel giant has a pipeline of close to 2,900 hotels, of which just under half were under construction at the end of 2020 and will likely materialize.
You can access Marriott here.
Here’s some information our reader may find interesting:
US & Canada versus International Managed and Franchised
Marriott’s 7,642 properties, 5,606, are in the United States and Canada (73%).
Properties by Brand & Segment:
- Luxury: 538 hotels = 7% of portfolio
- Full-service: 1,939 hotels = 25% of portfolio
- Limited-service: 5,074 hotels = 66% of portfolio
Two-thirds of Marriott’s portfolio are limited/select-service hotels, while luxury only represents 7%. The limited-service segment had performed better than full-service and luxury during the pandemic.
Systemwide Numbers for 2020 & 4th Quarter
Here’s the announcement from Marriott:
Marriott International Reports Fourth Quarter 2020 Results
- Fourth quarter 2020 comparable systemwide constant dollar RevPAR declined 64.1 percent worldwide, 64.6 percent in the U.S. & Canada, and 62.7 percent in international markets, compared to the 2019 fourth quarter;
- Fourth quarter reported diluted loss per share totaled $0.50, compared to reported diluted EPS of $0.85 in the year-ago quarter. Fourth quarter adjusted diluted EPS totaled $0.12, compared to fourth quarter 2019 adjusted diluted EPS of $1.51;
- Fourth quarter reported net loss totaled $164 million, compared to reported net income of $279 million in the year-ago quarter. Fourth quarter adjusted net income totaled $39 million, compared to fourth quarter 2019 adjusted net income of $498 million;
- Adjusted EBITDA totaled $317 million in the 2020 fourth quarter, compared to fourth quarter 2019 adjusted EBITDA of $901 million;
- The company added nearly 63,000 rooms globally during 2020, including more than 28,000 rooms in international markets and a total of roughly 8,100 conversion rooms. Net rooms grew 3.1 percent from year-end 2019;
- At year end, Marriott’s worldwide development pipeline totaled nearly 2,900 properties and more than 498,000 rooms, including roughly 20,000 rooms approved, but not yet subject to signed contracts. Over 229,000 rooms in the pipeline were under construction as of the end of 2020;
- As of year-end 2020, the company’s net liquidity totaled approximately $4.4 billion, representing roughly $0.8 billion in available cash balances and $3.6 billion of unused borrowing capacity under its revolving credit facility.
Marriott International, Inc. (NASDAQ: MAR) today reported fourth quarter 2020 results, which were materially impacted by the COVID-19 global pandemic and efforts to contain it (COVID-19).
Leeny Oberg, Executive Vice President and Chief Financial Officer, said, “We are all deeply saddened by Arne Sorenson’s unexpected passing. We are grateful to have been able to work with such an inspiring and talented leader and will always treasure our memories of working with him. Our leadership team is committed to honoring him by building on his incredible legacy as we move the company forward.”
Stephanie Linnartz, Group President, Consumer Operations, Technology and Emerging Businesses, and Tony Capuano, Group President, Global Development, Design and Operations Services, who together are sharing responsibility for overseeing the company’s day-to-day operations until Marriott’s Board of Directors appoints a new President and Chief Executive Officer, commented on the company’s quarterly results.
Ms. Linnartz said, “With the global pandemic, 2020 was the most challenging year in our 93-year history. In April, we experienced the sharpest worldwide RevPAR decline on record, down 90 percent year over year with just 12 percent occupancy. Demand around the world improved from this trough at varying rates, with China leading the way. RevPAR in mainland China saw a meaningful rebound through the year and was down less than 10 percent year over year in December.
“While China has shown that demand can be quite resilient when the virus is perceived to be contained, we have also seen that progress can be slowed by significant spikes in virus cases, such as we saw in the U.S and Europe towards the end of 2020. Global occupancy remained at 35 percent in the fourth quarter, in line with the third quarter, and still substantially above the trough in April. While no one can know how long this pandemic will last, we are seeing some small, early signs that the acceleration of vaccine rollouts around the world will help drive a significant rebound in travel and lodging demand.”
Mr. Capuano said, “We are gratified that we continue to see strong demand for our industry leading brands from owners and franchisees despite the unprecedented challenges resulting from the pandemic. Our pipeline grew during the quarter to more than 498,000 rooms as of the end of 2020, with 46 percent of those rooms under construction. We are seeing strong interest in conversions, as demonstrated by our recent announcement of the planned conversion of 19 all-inclusive hotels with nearly 7,000 rooms to our system in the Caribbean and Latin America region during 2021. Looking ahead, we expect gross rooms growth could accelerate to approximately 6 percent in 2021.
“In the face of the unprecedented environment resulting from the pandemic, our associates and leadership team rose to the challenge. We worked closely with our owners and franchisees to help them weather the crisis by implementing cost savings, both temporary and permanent. And operationally we implemented heightened cleanliness standards across our portfolio to enhance the safety and wellbeing of our associates and guests, while also introducing additional protocols to help enable meeting and group business to safely take place.”
Ms. Oberg added, “In 2020, we moved swiftly to right-size our business in response to the precipitous decline in revenue by reducing costs, strengthening our balance sheet, and lowering capital spending. While the current environment remains challenging, we believe our financial condition is strong and we look ahead to the rest of 2021 with optimism.”
Fourth Quarter 2020 Results
Marriott’s reported operating loss totaled $128 million in the 2020 fourth quarter, compared to 2019 fourth quarter reported operating income of $274 million. Reported net loss totaled $164 million in the 2020 fourth quarter, compared to 2019 fourth quarter reported net income of $279 million. Reported diluted loss per share totaled $0.50 in the quarter, compared to reported diluted earnings per share (EPS) of $0.85 in the year-ago quarter.
Adjusted operating income in the 2020 fourth quarter totaled $148 million, compared to 2019 fourth quarter adjusted operating income of $717 million. Adjusted operating income in the 2020 fourth quarter and the 2019 fourth quarter excluded impairment charges of $44 million and $114 million, respectively.
Fourth quarter 2020 adjusted net income totaled $39 million, compared to 2019 fourth quarter adjusted net income of $498 million. Adjusted diluted EPS in the 2020 fourth quarter totaled $0.12, compared to adjusted diluted EPS of $1.51 in the year-ago quarter. These 2020 fourth quarter adjusted results excluded $74 million ($0.23 per share) of income tax benefits due to the closure of prior years’ audits. The adjusted 2020 results also excluded impairment charges of $88 million after-tax ($0.27 per share) and loss on asset sales of $4 million after-tax ($0.01 per share).
Adjusted results also excluded restructuring and merger-related charges, cost reimbursement revenue, and reimbursed expenses. See pages A-3, A-4 and A-13 for the calculation of adjusted results and the manner in which the adjusted measures are determined in this press release.
Restructuring and merger-related charges totaled $262 million in the fourth quarter. Charges in the fourth quarter of 2020 largely reflect a $243 million increase to the liability for the Sheraton Grand Chicago put option.
Base management and franchise fees totaled $379 million in the 2020 fourth quarter, compared to base management and franchise fees of $799 million in the year-ago quarter. The year-over-year decline in these fees is primarily attributable to RevPAR declines related to COVID-19. Other non-RevPAR related franchise fees in the 2020 fourth quarter of $133 million declined $24 million, or 15 percent, from the year-ago quarter, largely due to lower credit card branding fees.
Incentive management fees totaled $44 million in the 2020 fourth quarter, compared to incentive management fees of $175 million in the year-ago quarter. The year-over-year decline in these fees is primarily attributable to lower net house profits at many hotels related to COVID-19. More than 60 percent of the incentive management fees recognized in the quarter were earned at hotels in the Asia Pacific region, of which three-quarters were earned in Greater China.
Contract investment amortization for the 2020 fourth quarter totaled $38 million, compared to $17 million in the year-ago quarter. The year-over-year change largely reflects impairments of investments in management and franchise contracts.
Owned, leased, and other revenue, net of direct expenses, totaled a $27 million loss in the 2020 fourth quarter, compared to $92 million of profit in the year-ago quarter as a result of RevPAR declines related to COVID-19.
Depreciation, amortization, and other expenses for the 2020 fourth quarter totaled $71 million, compared to $179 million in the year-ago quarter. The year-over-year change largely reflects $114 million of impairment charges recorded in the 2019 fourth quarter, partially offset by an $11 million impairment charge associated with a leased hotel in the U.S. recorded in the 2020 fourth quarter.
General, administrative, and other expenses for the 2020 fourth quarter totaled $183 million, compared to $267 million in the year-ago quarter. The lower expenses in the 2020 fourth quarter largely reflect the company’s COVID-19-related cost reduction efforts.
Gains and other income, net, totaled $6 million, compared to $138 million in the year-ago quarter. Gains and other income, net, in the 2019 fourth quarter primarily reflected $134 million of gains associated with the sales of two hotels in the U.S. and Canada.
Interest expense, net, totaled $105 million in the fourth quarter compared to $89 million in the year-ago quarter. The increase is largely due to higher interest expense associated with new debt issuances.
Equity in losses for the fourth quarter totaled $87 million, largely reflecting impairment charges and the decline in results at joint venture properties due to COVID-19.
In the 2020 fourth quarter, the benefit for income taxes totaled $150 million, compared to the provision for income taxes of $47 million in the 2019 fourth quarter. The 2020 fourth quarter benefit included $100 million related to the closure of pre-acquisition Starwood audits.
Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) totaled $317 million in the 2020 fourth quarter, compared to fourth quarter 2019 adjusted EBITDA of $901 million. See page A-12 for the adjusted EBITDA calculation.
Selected Performance Information
The company added 109 new properties (17,780 rooms) to its worldwide lodging portfolio during the 2020 fourth quarter, including roughly 2,600 rooms converted from competitor brands and approximately 9,000 rooms in international markets. Forty-six properties (8,011 rooms) exited the system during the quarter. At year end, Marriott’s global lodging system totaled more than 7,600 properties and timeshare resorts, with over 1,423,000 rooms.
At year end, the company’s worldwide development pipeline totaled 2,881 properties with more than 498,000 rooms, including 1,187 properties with over 229,000 rooms under construction and 119 properties with roughly 20,000 rooms approved for development, but not yet subject to signed contracts.
In the 2020 fourth quarter, worldwide RevPAR declined 64.1 percent (a 63.9 percent decline using actual dollars). RevPAR in the U.S. & Canada declined 64.6 percent (a 64.6 percent decline using actual dollars), and RevPAR in international markets declined 62.7 percent (a 62.2 percent decline using actual dollars).
Balance Sheet and Liquidity
At year-end 2020, Marriott’s net debt was $9.5 billion, representing total debt of $10.4 billion less cash and cash equivalents of $0.9 billion. At year-end 2019, the company’s net debt was $10.7 billion, representing total debt of $10.9 billion less cash and cash equivalents of $0.2 billion.
The company’s net liquidity was approximately $4.4 billion at year end, representing roughly $0.8 billion in available cash balances and $3.6 billion of unused borrowing capacity under its revolving credit facility. During the fourth quarter, the company reduced its debt by more than $600 million.
The company halted share repurchases in February of 2020 and suspended its quarterly dividend beginning in the second quarter of 2020.
Due to the numerous uncertainties associated with COVID-19, Marriott cannot presently estimate the impact of this unprecedented situation on its future results, which is highly dependent on the severity and duration of the pandemic and its impacts, but expects that COVID-19 will continue to be material to the company’s results.
The company expects to provide additional information about the current impact of COVID-19 on its business on its call later this morning.
Here are the released numbers:
It makes you wonder what kind of trickery you need to engage in to have a half of a billion difference in the reported loss for the quarter and EBITDA (earnings before anything).
Marriott is on its way to 10,000 hotels by the middle of 2020s if everything goes to plan by looking at the current pipeline and what they will sign in the next couple of years unless this Covid-19 creates havoc way past 2021.
We should soon know who is the next President and CEO of Marriott after Mr. Arne Sorenson’s passing earlier this week (read more here).