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Analysis of Revenues
Revenue Recognition Accounting Policy
Marriott’s revenues include: (1) base management and incentive management fees; (2) franchise fees (including licensing fees from MVW and Vistana of $101 million for 2017, $73 million for 2016, and $59 million for 2015); (3) revenues from lodging properties Marriott owns or leases; and (4) cost reimbursements. Management fees are typically composed of a base fee, which is a percentage of the revenues of hotels, and an incentive fee, which is generally based on hotel profitability. Franchise fees are typically composed of initial application fees, continuing royalties generated from Marriott’s franchise programs, which permit the hotel owners and operators to use certain of Marriott’s brand names, and branding fees for third-party residential sales and credit card licensing. Cost reimbursements include direct and indirect costs that are reimbursed to Marriott by properties that Marriott manages, franchises, or licenses.
Base Management and Incentive Management Fees
Marriott recognizes base management fees as revenue when Marriott earns them under the contracts. In interim periods and at year-end, Marriott recognizes incentive management fees that would be due as if the contracts were to terminate at that date, exclusive of any termination fees payable or receivable by Marriott.
Franchise Fee and License Fee Revenue
Marriott recognizes application fees at hotel opening. Marriott recognizes ongoing franchise fees and license fees as revenue in each accounting period as Marriott earns those fees from the franchisee or licensee under the contracts.
Owned and Leased Units
Marriott recognizes room sales and revenues from other guest services for the owned and leased units when rooms are occupied and when Marriott has rendered the services.
Marriott generally recognizes cost reimbursements from managed, franchised, and licensed properties when Marriott incurs the related reimbursable costs. These costs primarily consist of payroll and related expenses at managed properties where Marriott is the employer and include certain operational and administrative costs as provided for in the contracts with the owners. As these costs have no added markup, the revenue and related expense have no impact on either Marriott’s operating or net income.
Includes termination fees and other property and brand revenues. Marriott generally recognizes other revenue as services are rendered and when collection is reasonably assured. Amounts received in advance are deferred as liabilities.
Source: 10-K (filing date: 2018-02-15).
Revenues as Reported
Marriott International Inc., Income Statement, Revenues
USD $ in millions
|12 months ended||Dec 31, 2017||Dec 31, 2016||Dec 31, 2015||Dec 31, 2014||Dec 31, 2013|
|North American Full-Service|
|North American Limited-Service|
|Consolidated revenues||Amount of revenue recognized from goods sold, services rendered, insurance premiums, or other activities that constitute an earning process. Includes, but is not limited to, investment and interest income before deduction of interest expense when recognized as a component of revenue, and sales and trading gain (loss).||Marriott International Inc.’s consolidated revenues increased from 2015 to 2016 and from 2016 to 2017.|