Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Marriott International Inc., profitability ratios
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
The profitability analysis from 2015 to 2019 reveals a period of moderate growth in profit margins that peaked in 2018, followed by a general contraction in 2019. While efficiency margins remained relatively stable, return metrics showed significant divergence, characterized by a dramatic increase in return on equity contrasted with volatile return on assets.
- Profit Margin Trends
- Gross profit margin demonstrated a steady increase from 14.66% in 2015 to a peak of 17.70% in 2018, before declining to 15.34% in 2019. Operating and net profit margins mirrored this trajectory; the operating margin reached a high of 11.40% in 2018 after a dip to 8.01% in 2016, while the net profit margin peaked at 9.19% in 2018. Both metrics experienced a downward shift in 2019, with the operating margin falling to 8.58% and the net margin to 6.07%.
- Return on Equity (ROE)
- An exponential growth pattern is observed in the return on equity. From a base of 14.56% in 2016, the ratio increased substantially to 36.77% in 2017 and 85.71% in 2018, eventually reaching 181.08% by the end of 2019. This trajectory suggests a significant reduction in shareholders' equity or a substantial increase in financial leverage over the period.
- Return on Assets (ROA)
- Return on assets exhibited high volatility. A sharp decline occurred between 2015 and 2016, where the ratio fell from 14.12% to 3.23%. A gradual recovery followed, peaking at 8.05% in 2018, before retreating to 5.08% in 2019. This indicates that asset utilization efficiency did not track with the growth seen in equity returns.
The stark contrast between the accelerating return on equity and the fluctuating return on assets suggests that the company's equity returns were primarily driven by changes in capital structure rather than improvements in operational asset productivity. The synchronized decline across all margin metrics in 2019 indicates a broad compression of profitability at the end of the analyzed period.
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Return on Sales
Return on Investment
Gross Profit Margin
Marriott International Inc., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Gross profit | 3,217) | 3,674) | 3,702) | 2,626) | 2,123) | |
| Revenues | 20,972) | 20,758) | 22,894) | 17,072) | 14,486) | |
| Profitability Ratio | ||||||
| Gross profit margin1 | 15.34% | 17.70% | 16.17% | 15.38% | 14.66% | |
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Airbnb Inc. | — | — | — | — | — | |
| Chipotle Mexican Grill Inc. | — | — | — | — | — | |
| DoorDash, Inc. | — | — | — | — | — | |
| McDonald’s Corp. | — | — | — | — | — | |
| Starbucks Corp. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Gross profit margin = 100 × Gross profit ÷ Revenues
= 100 × 3,217 ÷ 20,972 = 15.34%
2 Click competitor name to see calculations.
The financial trajectory between 2015 and 2019 is characterized by an initial phase of growth in both scale and efficiency, followed by a contraction in profitability margins. While revenues and gross profit peaked in 2017, the efficiency of cost management, as reflected in the gross profit margin, continued to improve until 2018 before experiencing a significant decline in 2019.
- Revenue and Gross Profit Trends
- A period of significant expansion is observed from 2015 to 2017, with revenues increasing from 14,486 million USD to a peak of 22,894 million USD. Gross profit mirrored this growth, rising from 2,123 million USD to 3,702 million USD. Following 2017, a downward trend emerged; revenues contracted to 20,758 million USD in 2018 and remained relatively flat at 20,972 million USD in 2019, while gross profit declined to 3,217 million USD by the end of the period.
- Gross Profit Margin Analysis
- The gross profit margin demonstrated a consistent upward trend from 2015 to 2018, climbing from 14.66% to a peak of 17.70%. This progression indicates an improvement in the cost-to-revenue ratio and enhanced operational efficiency over those four years. However, this trend was reversed in 2019, with the margin dropping to 15.34%, effectively returning to levels observed in 2016.
- Correlation and Profitability Insights
- A notable divergence is evident in 2018, where the gross profit margin reached its highest point despite a decline in total revenues. This suggests that the increase in margin was driven by cost reductions or a shift in the revenue mix rather than volume growth. The subsequent drop in both gross profit and margin in 2019 indicates a period of increased cost pressure or diminished pricing power relative to the costs of goods sold.
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Operating Profit Margin
Marriott International Inc., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating income | 1,800) | 2,366) | 2,359) | 1,368) | 1,350) | |
| Revenues | 20,972) | 20,758) | 22,894) | 17,072) | 14,486) | |
| Profitability Ratio | ||||||
| Operating profit margin1 | 8.58% | 11.40% | 10.30% | 8.01% | 9.32% | |
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Airbnb Inc. | — | — | — | — | — | |
| Booking Holdings Inc. | — | — | — | — | — | |
| Chipotle Mexican Grill Inc. | — | — | — | — | — | |
| DoorDash, Inc. | — | — | — | — | — | |
| McDonald’s Corp. | — | — | — | — | — | |
| Starbucks Corp. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Operating profit margin = 100 × Operating income ÷ Revenues
= 100 × 1,800 ÷ 20,972 = 8.58%
2 Click competitor name to see calculations.
The operating profit margin exhibited a volatile trend between 2015 and 2019, characterized by an initial dip, a two-year period of expansion, and a subsequent contraction. While revenues generally trended upward from 2015 to 2017, operating profitability did not always scale proportionally with top-line growth.
- Margin Compression and Initial Volatility
- Between 2015 and 2016, a decline in the operating profit margin from 9.32% to 8.01% was observed. This contraction occurred despite an increase in revenues from 14,486 million to 17,072 million, indicating that operating expenses grew at a faster rate than revenue during this period.
- Period of Profitability Expansion
- A significant recovery in profitability occurred between 2017 and 2018. The margin rose to 10.30% in 2017, supported by a substantial increase in both revenues and operating income. The peak operating profit margin of 11.40% was reached in 2018; notably, this peak occurred despite a decrease in total revenues to 20,758 million, suggesting an improvement in cost management or a shift toward higher-margin revenue streams.
- Recent Profitability Decline
- In 2019, a sharp contraction in the operating profit margin to 8.58% was recorded. This decline was driven by a reduction in operating income to 1,800 million, which occurred even as revenues remained relatively stable at 20,972 million, signaling an increase in the cost of operations relative to sales.
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Net Profit Margin
Marriott International Inc., net profit margin calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income | 1,273) | 1,907) | 1,372) | 780) | 859) | |
| Revenues | 20,972) | 20,758) | 22,894) | 17,072) | 14,486) | |
| Profitability Ratio | ||||||
| Net profit margin1 | 6.07% | 9.19% | 5.99% | 4.57% | 5.93% | |
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Airbnb Inc. | — | — | — | — | — | |
| Booking Holdings Inc. | — | — | — | — | — | |
| Chipotle Mexican Grill Inc. | — | — | — | — | — | |
| DoorDash, Inc. | — | — | — | — | — | |
| McDonald’s Corp. | — | — | — | — | — | |
| Starbucks Corp. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Net profit margin = 100 × Net income ÷ Revenues
= 100 × 1,273 ÷ 20,972 = 6.07%
2 Click competitor name to see calculations.
The analysis of profitability ratios from 2015 to 2019 reveals a period of significant volatility in net profit margins, characterized by an initial dip, a substantial peak in 2018, and a subsequent correction.
- Revenue and Net Income Trends
- Revenues demonstrated a strong upward trajectory between 2015 and 2017, rising from US$ 14,486 million to a peak of US$ 22,894 million. However, net income did not move in direct correlation with revenue during the early part of this period, declining from US$ 859 million in 2015 to US$ 780 million in 2016 despite increasing sales.
- Net Profit Margin Fluctuations
- The net profit margin reached its lowest point in 2016 at 4.57%, reflecting a decrease in profitability relative to the 5.93% observed in 2015. A recovery began in 2017, with the margin returning to 5.99%, coinciding with a sharp increase in net income to US$ 1,372 million.
- Peak Profitability and Correction
- The highest efficiency in converting revenue to profit was achieved in 2018, with the net profit margin peaking at 9.19%. Notably, this peak occurred while revenues had slightly declined to US$ 20,758 million, suggesting improved cost management or higher-margin revenue streams. This trend reversed in 2019, as the net profit margin contracted to 6.07% following a decrease in net income to US$ 1,273 million.
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Return on Equity (ROE)
Marriott International Inc., ROE calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income | 1,273) | 1,907) | 1,372) | 780) | 859) | |
| Shareholders’ equity (deficit) | 703) | 2,225) | 3,731) | 5,357) | (3,590) | |
| Profitability Ratio | ||||||
| ROE1 | 181.08% | 85.71% | 36.77% | 14.56% | — | |
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Airbnb Inc. | — | — | — | — | — | |
| Booking Holdings Inc. | — | — | — | — | — | |
| Chipotle Mexican Grill Inc. | — | — | — | — | — | |
| DoorDash, Inc. | — | — | — | — | — | |
| McDonald’s Corp. | — | — | — | — | — | |
| Starbucks Corp. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
ROE = 100 × Net income ÷ Shareholders’ equity (deficit)
= 100 × 1,273 ÷ 703 = 181.08%
2 Click competitor name to see calculations.
The profitability metrics from 2015 to 2019 exhibit a significant divergence between earnings performance and the equity base, resulting in an exponential increase in the Return on Equity (ROE).
- Net Income Performance
- Net income showed a general upward trend between 2016 and 2018, peaking at 1,907 million USD. A subsequent contraction occurred in 2019, with net income decreasing to 1,273 million USD. Despite this late-period decline, earnings remained substantially higher in 2019 than in the 2015-2016 period.
- Shareholders' Equity Volatility
- A critical transition is observed between 2015 and 2016, moving from a shareholders' deficit of 3,590 million USD to a positive equity position of 5,357 million USD. From 2016 onward, the equity base entered a period of consistent and rapid decline, falling each consecutive year to reach 703 million USD by December 31, 2019.
- Return on Equity (ROE) Interpretation
- ROE experienced an aggressive acceleration, climbing from 14.56% in 2016 to 181.08% in 2019. This trajectory is not driven by a proportional increase in net income, which actually fell in the final year of the period. Instead, the surge in ROE is primarily attributable to the precipitous reduction in shareholders' equity. The shrinking denominator has mathematically magnified the return ratio, suggesting a highly leveraged capital structure.
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Return on Assets (ROA)
Marriott International Inc., ROA calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income | 1,273) | 1,907) | 1,372) | 780) | 859) | |
| Total assets | 25,051) | 23,696) | 23,948) | 24,140) | 6,082) | |
| Profitability Ratio | ||||||
| ROA1 | 5.08% | 8.05% | 5.73% | 3.23% | 14.12% | |
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Airbnb Inc. | — | — | — | — | — | |
| Booking Holdings Inc. | — | — | — | — | — | |
| Chipotle Mexican Grill Inc. | — | — | — | — | — | |
| DoorDash, Inc. | — | — | — | — | — | |
| McDonald’s Corp. | — | — | — | — | — | |
| Starbucks Corp. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
ROA = 100 × Net income ÷ Total assets
= 100 × 1,273 ÷ 25,051 = 5.08%
2 Click competitor name to see calculations.
The return on assets (ROA) exhibited significant volatility between 2015 and 2019, characterized by an initial sharp decline followed by a period of recovery and a final contraction. The most notable shift occurred between 2015 and 2016, when a massive expansion of the asset base significantly reduced the efficiency of asset utilization relative to net income.
- Asset Base Expansion
- Total assets experienced a substantial increase from 6,082 million US$ in 2015 to 24,140 million US$ in 2016. This asset base remained relatively stable through 2018 before reaching a five-year peak of 25,051 million US$ in 2019.
- Net Income Trends
- Net income showed a general upward trajectory from 2016 to 2018, rising from 780 million US$ to a peak of 1,907 million US$. However, a downturn occurred in 2019, with net income falling to 1,273 million US$.
- ROA Fluctuations
- The ROA plummeted from 14.12% in 2015 to 3.23% in 2016, driven by the surge in total assets. A recovery phase followed, with the ratio improving to 5.73% in 2017 and 8.05% in 2018. By 2019, the ROA declined again to 5.08%, reflecting the combined impact of lower net income and a higher total asset valuation.
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