Marriott International signs in at the top of the lodging industry. The company is one of the world's leading hoteliers with some 3,700 operated or franchised properties in more than 70 countries. Its hotels include such full-service brands as Renaissance Hotels and its flagship Marriott Hotels & Resorts, as well as select-service and extended-stay brands Courtyard and Fairfield Inn. It also owns the Ritz-Carlton luxury chain and resort, and manages about 45 golf courses. The firm spun off its time-share business, Marriott Vacations Worldwide, in 2011 and is selling its ExecuStay corporate housing business in 2012. The Marriott family, including J. W. Marriott Jr., owns about 30% of Marriott International.
Marriott's business model focuses on managing and franchising hotels, rather than owning them. About 53% of its hotel rooms are operated by franchisees that pay the company fees and royalties, as well as a percentage of their food and beverage revenue. The company operates 44% of its hotel rooms under management agreements. It has long-term management agreements with properties that are owned or leased by Host Hotels & Resorts, a major customer that accounts for about 18% of Marriott's sales. While the bulk of its hotels are located in the US, about 15% of its properties are international.
Marriott in 2012 announced that it is selling its ExecuStay corporate and temporary apartment housing business to Oakwood, a provider of corporate housing and serviced apartments. It is making the deal to focus on its hotel business, but will continue to maintain a relationship with Oakwood. Terms of the deal have ExecuStay customers continuing to earn Marriott Rewards guest loyalty program points for stays at ExecuStay.
The previous year Marriott added about 170 hotel properties to its portfolio. Also in 2011 it formed a joint venture with Spanish hotel group AC Hotels. The venture operates under a new co-brand called AC Hotels by Marriott that is pursuing growth in Europe and Latin America. As a result of the deal, some 80 existing AC hotels in Spain, Italy, and Portugal were re-branded AC by Hotels Marriott, which operate in the urban, four-star hotel category.
Revenues increased by $626 million (5%) to $12,317 million in 2011 from $11,691 million in 2010, driven by a continuation of the rebound in the hospitality market that began in 2010. However, Marriott's net income dropped in 2011 due to a one time impairment charge related to the spinoff of its time share business, as well as higher income taxes.
The time-share business was a particularly weak spot for the company. While the subsidiary was a large revenue generator when the economy was booming, the business lost its luster during the recession. Time share sales -- which target vacationing consumers -- continued to fall as hotel room sales recovered. As a result, Marriott spun off the business (which accounted for about 10% of total sales) as a new publicly traded company at the end of 2011. It made the separation to allow both companies to tailor business strategies to their respective market segment.
Mergers & Acquisitions
On the hotel side of things, in 2012 the company acquired the Gaylord brand and hotel management operations from Ryman Hospitality Properties (then called Gaylord Entertainment) for $210 million. The deal included four hotels (in Texas, Tennessee, Florida, and Washington, DC). Under the agreement, Ryman will continue to own the hotels and Marriott will assume management of the properties through long-term contracts. Marriott made the deal to expand its group and meetings portfolio -- the deal will roughly 2 million square feet of meeting and event space and approximately 7,800 rooms to its holdings. – less