FRANCHISE DISCLOSURE DOCUMENT
MARRIOTT INTERNATIONAL, INC.
a Delaware corporation
MIF, L.L.C.
a Delaware limited liability company
10400 Fernwood Road
Bethesda, Maryland 20817
(301) 380-3000
www.marriott.com
Courtyard 741292v6 (03/31/2014)
ITEM 19
FINANCIAL PERFORMANCE REPRESENTATIONS
The FTC’s Franchise Rule permits a franchisor to provide information about the actual or
potential financial performance of its franchised and/or franchisor-owned or franchisor-managed hotels if
there is a reasonable basis for the information, and if the information is included in the disclosure
document. Financial performance information that differs from that included in this Item 19 may be
given only if: (1) a franchisor provides the actual records of an existing hotel you are considering buying;
or (2) a franchisor supplements the information provided in this Item 19, for example, by providing
information about possible performance at a particular location or under particular circumstances.
1.
Certain Metrics for Smith Travel Included Franchised Hotels
As of December 31, 2013, there were 857 North American (U.S. and Canada) open and operating
Courtyard by Marriott hotels; of these, 582 were franchised. There were 525 North American franchised
hotels for which Smith Travel Research, Inc. (“Smith Travel”) data was available and which, as of
December 31, 2013, were open and operating as franchised Courtyard hotels at least two years and, in the
case of U.S. hotels, satisfied each of the following conditions (the “Conditions”). They did not undergo at
any time during the preceding two years: (1) a rooms renovation that resulted in five percent or more of
the total number of available rooms at such hotel being taken out of service for the year in which the
renovation occurred; (2) a public space renovation that resulted in revenue displacement during the year
in which such renovation occurred of five percent or more of the annual available room nights at the
average daily rate of the most recent year prior to the renovation during which the hotel satisfied each of
the Conditions; and (3) an expansion that resulted in an increase in revenues of five percent or more of the
annual available room nights (before the expansion) at the average daily rate of the most recent year prior
to the expansion during which the hotel satisfied each of the Conditions. Such hotels are referred to as
“Smith Travel Included Franchised Hotels.”
A.
Average Occupancy Rate
For the one-year period ended December 31, 2013, the Smith Travel Included Franchised
Hotels achieved an average occupancy rate of 71.3%. The occupancy rate for the Smith Travel Included
Franchised Hotels ranged from a high of 103.4% to a low of 45.4%. Two hundred forty-five of the Smith
Travel Included Franchised Hotels (47%) achieved an average occupancy rate equal to or greater than
71.3%. The “average occupancy rate” is the total occupied rooms reported divided by total available
rooms for the entire period.
B.
Average Daily Room Rate
For the one-year period ended December 31, 2013, the Smith Travel Included Franchised
Hotels achieved an average daily room rate of $123.97. The average daily room rate for the Smith Travel
Included Franchised Hotels ranged from a high of $288.86 to a low of $77.13. One hundred seventythree of the Smith Travel Included Franchised Hotels (33%) achieved an average daily room rate equal to
or greater than $123.97. The “average daily room rate” is the gross room sales divided by total occupied
rooms.
C.
Average RevPAR
For the one-year period ended December 31, 2013, the Smith Travel Included Franchised
Hotels achieved an average revenue per available room (“RevPAR”) of $88.40. The RevPAR of the
Smith Travel Included Franchised Hotels ranged from a high of $267.14 to a low of $40.80. One hundred
eighty of the Smith Travel Included Franchised Hotels (34%) achieved or exceeded the average RevPAR
of $88.40. The “average RevPAR” is the gross room sales divided by total available rooms.
D.
RevPAR Index
For the one-year period ended December 31, 2013, the Smith Travel Included Franchised
Hotels achieved an average RevPAR Index of 113.4%. The RevPAR Index of the Smith Travel Included
Franchised Hotels ranged from a high of 196.3% to a low of 67.5%. Two hundred and eighty-one Smith
Travel Included Franchised Hotels (54%) achieved an average RevPAR Index equal to or greater than
113.4%. “RevPAR Index” measures the fair share of the amount of available revenue a hotel (or hotel
brand) receives relative to its competitive set (as defined by each hotel or brand) within a given market.
2.
Reservations
During 2013, Marriott Worldwide Reservations received 3,753,183 inquiries for Courtyard hotels
worldwide through our domestic and international reservations numbers (“Voice Reservations”), which
resulted in 3,470,838 gross room nights booked for Courtyard hotels worldwide. In addition, 26,576,004
gross room nights worldwide were generated through Marriott.com, global distribution systems (“GDS”),
and certain online travel agencies such as Orbitz, Travelocity, and Expedia (“OTAs”). The total number
of gross room nights booked for all Courtyard hotels worldwide through Voice Reservations,
Marriott.com, GDS, and OTAs (collectively, the “Marriott Channels”) was 30,046,842, and out of that
number 27,618,792 gross room nights were booked for all North American (U.S. and Canada) Courtyard
hotels.
There were 525 North American franchised Courtyard hotels that, as of December 31, 2013, were
open and operating as franchised Courtyard hotels at least two years and, in the case of U.S. hotels,
satisfied each of the Conditions (the “North American Included Franchised Hotels”). During 2013, the
average number of gross room nights booked through the Marriott Channels for North American Included
Franchised Hotels was 29,730 gross room nights per hotel. Gross room nights for hotels ranged from
10,161 for a small North American Included Franchised Hotel with fewer than 70 rooms to 159,081 for a
North American Included Franchised Hotel with more than 570 rooms. One hundred ninety of the North
American Included Franchised Hotels (36.2%) had more than 29,730 gross room nights booked through
the Marriott Channels. As a percentage of gross room nights per hotel, the percentage booked through the
Marriott Channels for North American Included Franchised Hotels in 2013 ranged from 19.5% to 87.6%,
and the average percentage was 62.8%. Two hundred sixty-five of the North American Included
Franchised Hotels (50.5%) had at least 62.8% of their gross room nights booked through the Marriott
Channels.
3.
Marriott Rewards
All references to Marriott Rewards include both The Ritz-Carlton Rewards and the Marriott
Rewards programs. Marriott Rewards has approximately 45 million members worldwide, and over 3,700
hotels and resorts in 71 countries participate in Marriott Rewards. For the one-year period ended
December 31, 2013, hotel guests at North American Included Franchised Hotels who were members of
Marriott Rewards generated Marriott Rewards eligible revenue that was approximately 60% of the total
room night revenue at such hotels, with an average daily spend of $134. The total of all Marriott Rewards
room nights for such North American Included Franchised Hotels was approximately 10,069,000,
generating approximately $1,348,955,000 in room revenue, not including taxes and tips. For such North
American Included Franchised Hotels, Marriott Rewards members paid for an average of 19,200 room
nights. These Marriott Rewards hotel room nights ranged from 6,700 to 70,400 and 208 North American
Included Franchised Hotels (40%) achieved or exceeded the average of 19,200 paid Marriott Rewards
room nights.
4.
Bases and Assumptions
Smith Travel, an independent research firm servicing the travel industry, compiles occupancy
rate, average daily room rate, RevPAR, RevPAR Index, and other relevant information concerning the
lodging industry and is used by substantially all of the major lodging companies for tracking this data.
The information in this Item 19 used in calculating average occupancy rate, average daily room rate,
average RevPAR, and RevPAR Index was compiled and reported by Smith Travel, and such information
has not been audited or otherwise confirmed by us. The data in this Item 19 regarding reservations and
Marriott Rewards was not provided by Smith Travel, but instead was drawn from Marriott’s internal
databases. Because of Smith Travel’s minimum competitive set reporting requirements, some hotels that
are North American Included Franchised Hotels and are reflected in Marriott’s internal databases may not
be included in the Smith Travel data and, as a result, would not be Smith Travel Included Franchised
Hotels.
These statements relate to historical performance of franchised North American Courtyard hotels
that satisfy certain criteria as detailed above and are not guarantees of future performance. The figures
above were based on hotels with at least two years of operating results. Hotels typically achieve lower
results in their first year of operation. We do not claim or expect that you can or will expect to achieve
the same average occupancy rate, average daily room rate, average RevPAR, RevPAR Index,
reservations, or Marriott Rewards room nights, as these figures will vary from hotel to hotel and will
depend upon many variables and factors, including size, location, seasonality, competition, general
economic conditions, the length of time your hotel has been open or affiliated with us, the condition and
attractiveness of the hotel, the perception of your hotel by customers utilizing our distribution channels,
the reputation for quality of service at the hotel, how effectively you participate in our programs and
market your affiliation with us, and the efficiency with which you operate your hotel. Operating results
are subject to numerous risks and uncertainties, including economic conditions, public reaction to terrorist
attacks and political unrest, supply and demand changes for hotel rooms, competitive conditions in the
hospitality industry, relationships with customers and property owners, and the availability of capital.
YOUR RESULTS ARE LIKELY TO DIFFER SUBSTANTIALLY FROM THE DATA
AND RESULTS INDICATED ABOVE AND THERE IS NO ASSURANCE YOU WILL DO AS
WELL. IF YOU RELY UPON THE DATA AND RESULTS ABOVE, YOU MUST ACCEPT THE
RISK OF NOT DOING AS WELL.
We will provide you with written substantiation of the data used in preparing this Item 19 upon
your reasonable request. The information described above that was provided to us by third parties has not
been audited or otherwise verified by us. We are under no obligation to disclose specific information for
a particular hotel in the system.
Other than the preceding financial performance representation, we do not make any financial
performance representations. We also do not authorize our employees or representatives to make any
such representations either orally or in writing. If you are purchasing an existing outlet, however, we may
provide you with the actual records of that outlet. If you receive any other financial performance
information or projections of your future income, you should report it to the franchisor’s management by
contacting Eric Jacobs, 10400 Fernwood Road, Bethesda, MD, 20817 (301) 380-3488, the Federal Trade
Commission, and the appropriate state regulatory agencies.