Marriott Reports Record Earnings Per Share

Marriott International, Inc. today reported record diluted earnings per
share from continuing operations of $1.94 in 2003, up 11 percent from
2002. Income from continuing operations, net of taxes, for the year was
$476 million, an eight percent increase over 2002 levels. Synthetic fuel
operations contributed approximately $96 million ($0.39 per share) in 2003
versus $74 million ($0.29 per share) a year ago.
J.W. Marriott, Jr., chairman and chief executive officer of Marriott
International, said, “We are pleased with our solid performance in 2003,
especially in light of the challenges of a war in Iraq and Severe Acute
Respiratory Syndrome (SARS). Our leading brands have proven themselves in
the challenging operating environment over the past three years. Owners
have converted more than 115 hotels with over 20,000 rooms, excluding
Ramada International, to our brands since the beginning of 2001 and the
trend continues into 2004.

“We expect 2004 to be an even better year at Marriott, in part due to an
improved demand outlook and in part due to Marriott’s recent product
initiatives. We rolled out Marriott’s industry leading Look No Further(SM)
Best Rate Guarantee, which ensures that customers receive the best
available room rate at nearly 2,500 hotels when booking through any
Marriott reservation channel. We also recently signed distribution
agreements with major third party internet hotel distributors as well as
with major travel management companies. These agreements are designed to
make Marriott products available to a growing number of travelers with
reliable pricing across all distribution channels.

“We are encouraged by the signs of improving trends and look forward to
business travel demand building throughout 2004. We expect our 2004 REVPAR
(revenue per available room) to increase three to four percent in North
America. We also expect to continue our growth in distribution, adding
approximately 25,000 to 30,000 hotel rooms and timeshare units to our
system in 2004, even as growth in industry supply in the U.S. is expected
to continue to decline. As we began 2004, our pipeline of hotel rooms
under development increased to more than 50,000 rooms and included a
growing proportion of international full service projects. With improved
lodging demand, continued strong unit growth and strength in our timeshare
business, we continue to expect EPS from continuing operations to be in
the range of $2.06 to $2.16 in 2004.

“We have a long term vision for the lodging business to be where our
guests are traveling. High-quality, worldwide distribution is important to
drive brand value. During the year, we announced a number of exceptional
hotels with tremendous market presence, both newly constructed and
converted. Properties such as a new Ritz-Carlton in Tokyo and the
Grosvenor House in Mayfair, London will extend the excellent distribution
our brands enjoy today.”

In fiscal 2003 (52 week period from January 4, 2003 to January 2, 2004),
REVPAR for comparable systemwide North American properties declined by 1.3
percent, driven largely by lower average room rates. REVPAR at comparable
systemwide North American full-service hotels (including Marriott Hotels &
Resorts, The Ritz-Carlton, and Renaissance Hotels & Resorts) decreased by
1.6 percent during the year, while North American systemwide REVPAR for
select- service and extended-stay brands (including Courtyard, Fairfield
Inn, Residence Inn, TownePlace Suites, and SpringHill Suites) posted a
REVPAR decline of 0.8 percent. The Ritz-Carlton brand in North America
experienced stronger demand, particularly at its resort properties, with
comparable REVPAR up 1.0 percent for the year. International REVPAR at
comparable systemwide properties increased 3.7 percent (or declined 1.5
percent in constant dollars). International lodging demand was impacted in
2003 by SARS, the Iraqi war and weak economies in Continental Europe.

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We added 185 hotels and timeshare resorts (31,261 rooms) to our worldwide
lodging portfolio during 2003, while 24 properties (4,126 rooms) exited
the system. For the full year 2003, hotels converted from competitor or
unbranded hotels accounted for approximately one-third of gross hotel room
additions. At year-end, the company’s lodging group encompassed 2,718
hotels and timeshare resorts (490,564 rooms).

MARRIOTT REVENUES totaled $9.0 billion in 2003, a 7 percent increase from
2002. Base fees from managed hotels increased 2 percent to $388 million,
reflecting 3 percent net growth in managed rooms, somewhat offset by lower
REVPAR. Franchise fees increased 6 percent in 2003 to $245 million,
reflecting 9 percent net growth in franchised rooms, somewhat offset by
lower REVPAR. Incentive management fees declined 33 percent to $109
million, reflecting the REVPAR decline at managed hotels as well as lower
property level house profit margins. North American company-operated hotel
house profit margins in 2003 declined 2.7 percentage points largely due to
lower average room rates, higher wages and insurance costs, lower
telephone profits, and higher utility costs, offset somewhat by continued
productivity improvements. International house profit margins were down
only 1.0 percentage point. In 2003, 29 percent of managed rooms earned
incentive management fees.

Marriott’s timeshare business reported 16 percent higher contract sales
for the full year 2003. Contract sales were particularly strong at
timeshare resorts in Aruba and Hawaii.

MARRIOTT OPERATING INCOME increased 17 percent from 2002 levels to $377
million, largely as a result of lower operating losses from the company’s
synthetic fuel business in 2003 and the $50 million writedown of goodwill
associated with ExecuStay that was included in operating income in 2002.
Marriott’s 2003 operating income included the receipt of a $36 million
insurance payment for lost revenue related to the loss of the Marriott
World Trade Center Hotel on September 11, 2001. Operating income in 2003
also reflected a $53 million reduction in incentive fees, due to the
continued weak operating environment in the lodging industry.

Gains and other income include the gains on the sale of timeshare mortgage
notes, hotel assets and other investments, including $64 million from the
company’s ongoing timeshare mortgage note sale program in 2003 and $21
million in gains on the sale of three international joint venture
interests. Prior year gains included $60 million from timeshare mortgage
note sales and $44 million from the sale of our equity stake in Interval
International.

INTEREST EXPENSE increased to $110 million in 2003 compared to $86 million
in 2002 reflecting lower levels of capitalized interest. The net provision
for loan losses was $7 million, down from the 2002 level of $12 million.

We sold a 50 percent ownership interest in our synthetic fuel operation to
a major U.S. financial institution in mid-2003. We expect to receive
substantial additional payments over time, the size of which depends on
the amount of synthetic fuel produced. Because the buyer retained a put
option, we continued to report synthetic fuel results on a consolidated
basis until November 6, 2003, when the put option was terminated. At that
point, we began to account for the synthetic fuel business under the
equity method. Our income derived from our equity in the synthetic fuel
joint venture totaled $10 million during the year. Excluding the impact of
our synthetic fuel operations, our tax rate for continuing operations was
34.6 percent in 2003.

Other equity losses increased to $17 million in 2003, primarily as a
result of continued weakness in the Courtyard joint venture.

During 2003, we sold 3 hotels, 23 senior living communities and several
land parcels totaling $611 million. We owned only six hotels at year-end
2003. Also, during 2003, we received $280 million in cash from the sale
and collection of notes receivable (excluding timeshare mortgage notes).
Total debt at year end 2003 was $1.5 billion, down from $1.8 billion at
the end of 2002. In addition to reducing our debt by more than $300
million, we repurchased 10.5 million shares of common stock during 2003 at
a total cost of $380 million. To date in 2004, we have repurchased an
additional 2.3 million shares of common stock for a total cost of $104
million. Ten million shares remain authorized for repurchase.

During 2002, we closed the distribution services business and during 2003
we sold our senior living business. Therefore, we show the financial
results for those businesses in discontinued operations for 2003 and 2002.
Fully diluted earnings per share from discontinued operations were $0.11
in 2003 compared to losses of $0.64 a year ago. In light of our transition
to a pure lodging company, we have modified our financial statements to
include the consolidation of all of our general and administrative
expenses and to provide more detail about our lodging business.

FOURTH QUARTER RESULTS Fourth quarter highlights include: * EPS from
continuing operations totaled $0.69 in the fourth quarter 2003, a 47
percent increase over a year ago. * North American comparable systemwide
REVPAR for the fourth quarter (Sept. 13, 2003 - Jan 2, 2004), increased
0.4 percent from the prior year. * On a fourth quarter 2003 calendar
basis, Marriott’s full service brands reported 1.1 percent comparable
company-operated REVPAR growth in North America and Hawaii combined.

Fourth quarter diluted earnings per share from continuing operations
totaled $0.69 in 2003, a 47 percent increase from the 2002 quarter. Income
from continuing operations, net of taxes, for the quarter was $170 million
compared to $116 million a year ago. Synthetic fuel operations contributed
approximately $30 million ($0.12 per share) in the fourth quarter of 2003
versus $36 million ($0.14 per share) a year ago.

We added 50 hotels and timeshare resorts (7,206 rooms) to our worldwide
lodging portfolio during the fourth quarter of 2003, while nine properties
(1,599 rooms) exited the system.

Outside North America, comparable systemwide REVPAR for the last four
months of 2003 increased 3.4 percent in constant dollars as a result of
stronger occupancies in almost all regions and particularly strong demand
in Middle Eastern, the United Kingdom and Caribbean destinations. Taking
into account the decline in the value of the U.S. dollar, comparable
systemwide REVPAR outside North America increased 8.7 percent during the
quarter.

MARRIOTT REVENUES totaled $2.9 billion in the 2003 fourth quarter, a six
percent increase from 2002. Base fees from managed hotels increased one
percent, while franchise fees increased six percent as a result of strong
unit growth. Incentive management fees declined 36 percent, reflecting
REVPAR declines and lower property level house profit margins. North
American comparable company-operated house profit margins during the
fourth quarter declined 2.7 percentage points.

Marriott’s timeshare business reported 11 percent higher contract sales in
the 2003 fourth quarter. Contract sales were particularly strong at
timeshare resorts in Hawaii and California.

MARRIOTT’S OPERATING INCOME for the fourth quarter of 2003 was $161
million, up from $37 million a year ago primarily as a result of lower
synthetic fuel operating losses in 2003 and the inclusion of a $50 million
writedown of goodwill related to our ExecuStay corporate living business
in the year ago quarter. Marriott’s fourth quarter lodging operating
income benefited from a $36 million insurance payment for lost revenue
related to the loss of the Marriott World Trade Center Hotel on September
11, 2001, largely offset by $19 million in lower incentive fees and
charges totaling $15 million related to three hotels.

INTEREST EXPENSE totaled $33 million during the 2003 fourth quarter
compared to $27 million in the fourth quarter of 2002. The increase was
largely due to $5 million of lower capitalized interest.

Synthetic fuel operations contributed approximately $0.12 cents per share
of after-tax earnings during the quarter. After the sale of a 50 percent
interest, we continued to report synthetic fuel results on a consolidated
basis because the buyer retained a put option. Effective November 6, 2003,
that put option was terminated and we began to account for the synthetic
fuel business under the equity method. Our income derived from our equity
in the synthetic fuel joint venture totaled $10 million during the
quarter. Excluding the impact of our synthetic fuel operations, our tax
rate for continuing operations was 34.5 percent in the fourth quarter of
2003.

We are pleased with our current booking patterns in 2004 and believe the
strengthening economy is beginning to impact favorably individual business
travel. Combined with already strong leisure business, we are optimistic
about 2004 demand growth. In addition, Lodging Econometrics expects U.S.
lodging supply to grow only 1.2 percent in 2004. Based on these dynamics,
we continue to estimate North American REVPAR growth for 2004 of 3 to 4
percent.

Assuming nearly flat house profit margins, completion of timeshare
mortgage note sale transactions in the second and fourth quarters,
approximately 25,000 to 30,000 new room openings, and roughly $0.40 of
after-tax earnings per share from our synthetic fuel business, we continue
to estimate that 2004 diluted earnings per share from continuing
operations will range from $2.06 to $2.16. Under these assumptions,
lodging operating income (excluding synthetic fuel’s operating loss in
2003) should increase roughly 15 percent for full year 2004.

Assuming North American REVPAR growth of 2 to 4 percent in the first
quarter of 2004, we currently estimate first quarter earnings per share
from continuing operations of $0.38 to $0.42, including $0.06 of earnings
from synthetic fuel.

We expect investment spending in 2004 to include approximately $50 million
for maintenance capital spending and approximately $50 million for systems
initiatives. We also expect to invest approximately $25 million in new
company-developed hotels and $75 million in the timeshare business. We
expect to invest approximately $150 million in mezzanine financing and
mortgage loans for hotels developed by our owners and franchisees and
approximately $150 million in equity investments, including investments in
timeshare joint ventures. In 2004, we estimate total investment spending
levels to be roughly $500 million, moderately lower than in 2003.

Individual investors and the news media are invited to listen to the
review on the Internet at http://www.marriott.com/investor. A replay will
be available on the Internet until March 10, 2004 at
http://www.marriott.com/investor (click on “recent investor news”). A
recording of the call will also be available by telephone from 1 p.m. ET,
Tuesday, February 10, 2004 until Tuesday, February 17, 2004 at 8 p.m. ET.
To access the recording, call 719-457-0820. The reservation number for the
recording is 277182.
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