Marriott International · 10-Q · Item 2 MD&A

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Statement

All statements in this report are made as of the date this Form 10-Q is filed with the U.S. Securities and Exchange Commission (the “SEC”). We undertake no obligation to publicly update or revise these statements, whether as a result of new information, future events or otherwise. We make forward-looking statements in Management’s Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this

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report based on the beliefs and assumptions of our management and on information available to us through the date this Form 10-Q is filed with the SEC. Forward-looking statements include information related to our development pipeline; our expectations regarding rooms growth; our expectations regarding our ability to meet our liquidity requirements; our capital expenditures and other investment spending and reimbursement expectations; our expectations regarding future dividends and share repurchases; our expectations regarding certain claims, legal proceedings, settlements or resolutions; our expectations about the conflict in the Middle East; our expectations about our co-branded credit card program; and other statements that are preceded by, followed by, or include the words “believes,” “expects,” “anticipates,” “intends,” “plans,” “estimates,” “foresees,” or similar expressions; and similar statements concerning anticipated future events and expectations that are not historical facts.

We caution you that these statements are not guarantees of future performance and are subject to numerous evolving risks and uncertainties that we may not be able to accurately predict or assess, including the risks and uncertainties we describe in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (“2025 Form 10-K”); Part II, Item 1A of this report; and other factors we describe from time to time in our periodic filings with the SEC.

BUSINESS AND OVERVIEW

Overview

We are a worldwide franchisor, operator, and licensor of hotel, residential, timeshare, and other lodging properties under a broad portfolio of compelling brands at different price and service points. We discuss our operations in the following reportable business segments: (1) U.S. & Canada, (2) Europe, Middle East & Africa (“EMEA”), (3) Greater China, and (4) Asia Pacific excluding China (“APEC”). Our Caribbean & Latin America (“CALA”) operating segment does not meet the applicable accounting criteria for separate disclosure as a reportable business segment, and as such, we include its results in “Unallocated corporate and other.”

Under our asset-light business model and consistent with our focus on franchising, management, and licensing, we own or lease very few of our lodging properties. Under our hotel franchising arrangements, we generally receive an initial application fee and continuing royalty fees, which are typically based on a percentage of room revenues, plus for certain brands, a percentage of food and beverage revenues. Terms of our management agreements vary, but we earn a management fee that is typically composed of a base management fee, which is a percentage of the revenues of the hotel, and an incentive management fee, which is based on the profits of the hotel. In many cases (particularly in our U.S. & Canada, Europe, and CALA regions), incentive management fees are subject to a specified owner return.

We also have license and other agreements with third parties for certain offerings, such as for our timeshare properties, MGM Collection with Marriott Bonvoy, Design Hotels, and The Ritz-Carlton Yacht Collection, under which we receive royalty and certain other fees. Additionally, we earn fees for other uses of our intellectual property, including primarily co-branded credit card fees, as well as residential branding fees and certain other licensing fees.

Performance Measures

We believe Revenue per Available Room (“RevPAR”), which we calculate by dividing property level room revenue by total rooms available for the period, is a meaningful indicator of our performance because it measures the period-over-period change in room revenues. RevPAR may not be comparable to similarly titled measures, such as revenues, and should not be viewed as necessarily correlating with our fee revenue. We also believe occupancy and average daily rate (“ADR”), which are components of calculating RevPAR, are meaningful indicators of our performance. Occupancy, which we calculate by dividing total rooms sold by total rooms available for the period, measures the utilization of a property’s available capacity. ADR, which we calculate by dividing property level room revenue by total rooms sold, measures average room price and is useful in assessing pricing levels.

Unless otherwise stated, RevPAR, occupancy, and ADR statistics are on a systemwide basis for comparable properties, and all changes refer to year-over-year changes for the comparable period. Comparisons to prior periods are on a constant U.S. dollar basis, which we calculate by applying exchange rates for the current period to the prior comparable period. We believe constant dollar analysis provides valuable information regarding the performance of hotels in our system as it removes currency fluctuations from the presentation of such results.

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We define our comparable properties as hotels in our system that were open and operating under one of our brands since the beginning of the last full calendar year (since January 1, 2025 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. Our comparable properties also exclude MGM Collection with Marriott Bonvoy, Design Hotels, The Ritz-Carlton Yacht Collection, residences, timeshare, and all-inclusive properties.

Business Trends

T1In the 2026 second quarter, worldwide RevPAR increased 3.4 percent, primarily driven by ADR growth of 3.5 percent. In the 2026 first half, worldwide RevPAR increased 3.8 percent, primarily driven by ADR growth of 3.3 percent. RevPAR growth was strong across all of our regions, except for Middle East & Africa.

In the U.S. & Canada, RevPAR increased 5.0 percent in the 2026 second quarter and 4.6 percent in the 2026 first half, reflecting strong demand across all brand tiers and customer segments, as well as demand from the World Cup in June 2026.

In our International regions, RevPAR decreased 0.5 percent in the 2026 second quarter and grew 2.0 percent in the 2026 first half. T2Performance was negatively impacted by the conflict in the Middle East, which resulted in a sharp decline in RevPAR in our Middle East & Africa region beginning in March 2026, with the impact from the conflict continuing into the third quarter. The continued operational and financial impact on our business depends on the duration and extent of travel disruption resulting from the conflict.

T3During 2026, we executed new multi-year agreements in the U.S. with JPMorgan Chase and American Express in connection with our co-branded credit card program. We expect the agreements to have a favorable impact on our total revenues in future periods, primarily in the “Cost reimbursement revenue” caption, followed by the “Franchise fees” caption, of our Income Statements.

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”). 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. See Note 5 for additional information related to legal proceedings and investigations related to the Data Security Incident.

System Growth and Pipeline

At the end of the 2026 second quarter, our system had 10,082 properties (1,813,698 rooms), compared to 9,805 properties (1,779,936 rooms) at year-end 2025 and 9,601 properties (1,735,819 rooms) at the end of the 2025 second quarter. In the 2026 first half, we added roughly 33,800 net rooms.

T4At the end of the 2026 second quarter, we had nearly 4,200 properties and approximately 629,000 rooms in our development pipeline, which included over 34,000 rooms approved for development but not yet under signed contracts. At the end of the 2026 second quarter, our development pipeline included over 279,000 rooms, or 44 percent, that were under construction, including hotels that are in the process of converting to our system. Over half of the rooms in our quarter-end development pipeline were located outside U.S. & Canada.

We currently expect full year 2026 net rooms growth to be toward the low end of our 4.5 to 5.0 percent range.

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Properties and Rooms

The following table shows our properties and rooms by ownership type.

Properties

Rooms

Franchised/Licensed/Other (1)

7

%

7

%

Managed

(1)

%

(1)

%

Owned/Leased

—

—

%

(6)

%

Residential

6

4

%

4

%

Total

5

%

4

%

(1)Licensed and other properties include our timeshare properties, MGM Collection with Marriott Bonvoy, Design Hotels, and The Ritz-Carlton Yacht Collection.

Lodging Statistics

The following tables present RevPAR, occupancy, and ADR statistics for comparable properties. Systemwide statistics include data from our franchised properties, in addition to our company-operated properties.

Three Months Ended June 30, 2026 and Change vs. Three Months Ended June 30, 2025

RevPAR

Occupancy

Average Daily Rate

Comparable Company-Operated Properties

U.S. & Canada

$

%

%

%

pts.

$

%

Europe

$

%

%

%

pts.

$

%

Middle East & Africa

$

%

%

%

pts.

$

%

Greater China

$

%

%

%

pts.

$

%

Asia Pacific excluding China

$

%

%

%

pts.

$

%

Caribbean & Latin America

$

%

%

%

pts.

$

%

International - All (1)

$

%

%

%

pts.

$

%

Worldwide (2)

$

%

%

%

pts.

$

%

Comparable Systemwide Properties

U.S. & Canada

$

%

%

%

pts.

$

%

Europe

$

%

%

%

pts.

$

%

Middle East & Africa

$

%

%

%

pts.

$

%

Greater China

$

%

%

%

pts.

$

%

Asia Pacific excluding China

$

%

%

%

pts.

$

%

Caribbean & Latin America

$

%

%

%

pts.

$

%

International - All (1)

$

%

%

%

pts.

$

%

Worldwide (2)

$

%

%

%

pts.

$

%

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RevPAR

Occupancy

Average Daily Rate

Comparable Company-Operated Properties

U.S. & Canada

$

%

%

%

pts.

$

%

Europe

$

%

%

%

pts.

$

%

Middle East & Africa

$

%

%

%

pts.

$

%

Greater China

$

%

%

%

pts.

$

%

Asia Pacific excluding China

$

%

%

%

pts.

$

%

Caribbean & Latin America

$

—

%

%

%

pts.

$

%

International - All (1)

$

%

%

%

pts.

$

%

Worldwide (2)

$

%

%

%

pts.

$

%

Comparable Systemwide Properties

U.S. & Canada

$

%

%

%

pts.

$

%

Europe

$

%

%

%

pts.

$

%

Middle East & Africa

$

%

%

%

pts.

$

%

Greater China

$

%

%

%

pts.

$

%

Asia Pacific excluding China

$

%

%

%

pts.

$

%

Caribbean & Latin America

$

%

%

%

pts.

$

%

International - All (1)

$

%

%

—

%

pts.

$

%

Worldwide (2)

$

%

%

%

pts.

$

%

(1)Includes Europe, Middle East & Africa, Greater China, Asia Pacific excluding China, and Caribbean & Latin America.

(2)Includes U.S. & Canada and International - All.

CONSOLIDATED RESULTS

The discussion below presents an analysis of our consolidated results of operations for the 2026 second quarter compared to the 2025 second quarter and for the 2026 first half compared to the 2025 first half. Also see the “Business Trends” section above for further discussion.

Fee Revenues

Three Months Ended

Six Months Ended

($ in millions)

Franchise fees

$

$

$

%

$

$

$

%

Base management fees

3

1

%

3

%

Incentive management fees

6

%

7

%

Gross fee revenues

%

%

Contract investment amortization

(2)

(7)

%

(9)

%

Net fee revenues

$

$

$

%

$

$

$

%

The increase in franchise fees in the 2026 second quarter and 2026 first half primarily reflected higher co-branded credit card fees ($73 million and $132 million, respectively) as well as higher revenue related to our franchised properties due to rooms growth ($30 million and $53 million, respectively), higher RevPAR, and other items. The increase in franchise fees in the 2026 first half also reflected higher residential branding fees ($32 million).

The increase in incentive management fees in the 2026 second quarter and 2026 first half primarily reflected higher profits at managed hotels in the U.S. & Canada.

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Owned, Leased, and Other

Three Months Ended

Six Months Ended

($ in millions)

Owned, leased, and other revenue

$

$

$

6

%

$

$

$

9

%

Owned, leased, and other expense

%

%

Owned, leased, and other revenue, net of owned, leased, and other expense

$

$

$

%

$

$

$

%

T5Owned, leased, and other revenue, net of owned, leased, and other expense, decreased in the 2026 second quarter and 2026 first half primarily due to a property-related litigation accrual ($27 million for both the 2026 second quarter and 2026 first half). At our owned and leased hotels, higher revenues were largely offset by higher expenses in both periods, reflecting strong performance at many hotels partially offset by the impact of hotels under renovations.

Cost Reimbursements

Three Months Ended

Six Months Ended

($ in millions)

Cost reimbursement revenue

$

$

$

3

%

$

$

$

3

%

Reimbursed expenses

5

%

5

%

Cost reimbursements, net

$

$

$

%

$

$

(9)

$

%

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 certain other counterparties. Over the long term, our centralized programs and services are not designed to impact our economics, either positively or negatively.

The decrease in cost reimbursements, net in the 2026 second quarter and 2026 first half primarily reflected higher expenses, net of revenues for many of our centralized programs and services. Loyalty Program activity further reduced cost reimbursements, net, in the 2026 second quarter due to lower revenue, while partially offsetting the decline in the 2026 first half due to lower expenses.

Other Operating Expenses

Three Months Ended

Six Months Ended

($ in millions)

Depreciation, amortization, and other

$

$

$

%

$

$

$

%

General and administrative

5

%

5

%

Restructuring and merger-related (recoveries) charges, and other

8

%

(6)

9

%

Depreciation, amortization, and other expenses increased in the 2026 second quarter and 2026 first half primarily due to the $68 million impairment charge discussed in Note 7.

General and administrative expenses increased in the 2026 first half primarily due to higher compensation costs ($26 million).

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Non-Operating Income (Expense)

Three Months Ended

Six Months Ended

($ in millions)

Gains and other income, net

$

$

5

$

6

%

$

$

3

$

%

Interest expense

(9)

%

%

Interest income

8

%

9

%

Equity in earnings

5

4

1

%

—

5

(5)

%

Interest expense increased in the 2026 second quarter and 2026 first half primarily due to higher debt balances driven by Senior Notes issuances, net of maturities ($28 million and $55 million, respectively).

Income Taxes

Three Months Ended

Six Months Ended

($ in millions)

Provision for income taxes

$

$

$

4

%

$

$

$

%

Provision for income taxes increased in the 2026 first half primarily due to the prior year release of tax reserves ($91 million) and higher pre-tax income ($42 million). The increase was partially offset by lower tax on non-U.S. income ($18 million) and the tax benefit from the impairment charge on a U.S. & Canada hotel ($17 million).

BUSINESS SEGMENTS

The following discussion presents an analysis of the operating results of our reportable business segments for the 2026 second quarter compared to the 2025 second quarter and for the 2026 first half compared to the 2025 first half. Also see the “Business Trends” section above for further discussion.

Three Months Ended

Six Months Ended

($ in millions)

U.S. & Canada

Segment net fee revenues

$

$

$

%

$

$

$

%

Segment profit

(2)

%

(1)

%

EMEA

Segment net fee revenues

(6)

%

3

1

%

Segment profit

(8)

%

(6)

%

Greater China

Segment net fee revenues

4

6

%

%

Segment profit

2

4

%

2

2

%

APEC

Segment net fee revenues

4

5

%

9

5

%

Segment profit

(7)

(9)

%

%

Properties

Rooms

U.S. & Canada

2

%

2

%

EMEA

6

%

7

%

Greater China

%

%

APEC

%

%

In the 2026 second quarter and 2026 first half, compared to the same periods in 2025, segment net fee revenues grew in the U.S. & Canada, compared to the same periods in 2025, primarily driven by higher RevPAR and rooms growth (see the Lodging Statistics and Properties and Rooms tables above for more information), as well as higher incentive management fees ($26 million and $35 million, respectively) and residential branding fees ($22 million and $36 million, respectively).

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U.S. & Canada segment profit decreased in the 2026 second quarter and 2026 first half, compared to the same periods in 2025, despite the higher net fee revenues, primarily due to the $68 million impairment charge discussed in Note 7, lower cost reimbursement revenue, net of reimbursed expenses ($37 million and $109 million, respectively), and a property-related litigation accrual ($27 million for both the 2026 second quarter and 2026 first half).

LIQUIDITY AND CAPITAL RESOURCES

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 the end of the 2026 second quarter, including the effect of interest rate swaps, our total long-term debt (current and noncurrent) had a weighted average interest rate of 4.6 percent, a weighted average maturity of approximately 5.5 years, and a ratio of fixed-rate to total long-term debt of 0.8 to 1.0.

Sources of Liquidity

Our Credit Facility

We are party to a $4.5 billion multicurrency revolving credit agreement (as amended, the “Credit Facility”). Available borrowings under the Credit Facility support our commercial paper program and general corporate needs. U.S. dollar borrowings under the Credit Facility 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. 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. 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. 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.

We monitor the status of the capital markets and regularly evaluate the effect that changes in capital market conditions may have on our ability to fund our liquidity needs. We believe the Credit Facility and our access to capital markets, together with cash we expect to generate from operations, remain adequate to meet our liquidity requirements over the next 12 months and thereafter for the foreseeable future.

Commercial Paper

We issue commercial paper in the U.S. Because we do not have purchase commitments from buyers for our commercial paper, our ability to issue commercial paper is subject to market demand. We do not expect that fluctuations in the demand for commercial paper will affect our liquidity, given our borrowing capacity under the Credit Facility and access to capital markets.

Sources and Uses of Cash

Cash, cash equivalents, and restricted cash totaled $472 million as of June 30, 2026, an increase of $101 million from December 31, 2025, primarily due to net cash provided by operating activities ($1,806 million), long-term debt issuances, net of repayments ($670 million), loan collections ($102 million), and dispositions ($93 million, primarily due to the sale of a U.S. & Canada hotel), partially offset by share repurchases ($1,819 million), dividends paid ($370 million), capital and technology expenditures ($282 million), and financing outflows for employee stock-based compensation withholding taxes ($126 million).

Our ratio of current assets to current liabilities was 0.5 to 1.0 at the end of the 2026 second quarter. We have significant borrowing capacity under our Credit Facility should we need additional working capital.

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Capital Expenditures and Other Investments

We made capital and technology expenditures of $282 million in the 2026 first half and $290 million in the 2025 first half. T6We expect capital expenditures and other investments will total approximately $1,250 million to $1,350 million for the 2026 full year, including contract acquisition costs, capital and technology expenditures, renovations at owned and leased hotels, loan advances, and other investing activities, but excluding any potential property or brand acquisitions, which we cannot forecast with sufficient accuracy and which may be significant. Our anticipated capital and technology expenditures include higher than typical spending on our worldwide technology systems transformation, the overwhelming portion of which we expect to be reimbursed over time.

Share Repurchases and Dividends

T7We repurchased 3.0 million shares of our common stock for $1.1 billion in the 2026 second quarter. Year-to-date through July 29, 2026, we repurchased 6.2 million shares for $2.2 billion. For additional information, see “Issuer Purchases of Equity Securities” in Part II, Item 2.

Our Board of Directors declared the following quarterly cash dividends in 2026 to date: (1) $0.67 per share declared on February 12, 2026 and paid on March 31, 2026 to stockholders of record on February 26, 2026; and (2) $0.73 per share declared on May 8, 2026 and paid on June 30, 2026 to stockholders of record on May 22, 2026.

We expect to continue to return cash to stockholders through a combination of share repurchases and cash dividends.

Material Cash Requirements

As of the end of the 2026 second quarter, there have been no material changes to our cash requirements as disclosed in our 2025 Form 10-K. See Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of our 2025 Form 10-K for more information about our cash requirements. Also, see Note 6 for information on our long-term debt.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our preparation of financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect reported amounts and related disclosures. We have discussed those policies and estimates that we believe are critical and require the use of complex judgment in their application in our 2025 Form 10-K. We have made no material changes to our critical accounting policies or the methodologies or assumptions that we apply under them.