MARRIOTT INTERNATIONAL, INC. 2006 Annual Report Celebrating 80 years of service MARRIOTT...the place to be. Celebrating 80 years of service As Marriott embarks on its 80th year as a hospitality provider, its long and distinguished history of innovation and growth provides a remarkable insight into what lies ahead. As a lodging leader, Marriott has a tradition of providing exceptional quality, service and value at more than 2,800 hotels. Yet, it is innovation that perpetually drives the company forward—by providing a product that is relevant and current to meet the changing expectations, tastes and comfort trends of our guests. Marriott’s capacity for adaptability was clearly evident in the 2006 renovation and reopening of the Hurricane Wilma-ravaged JW Marriott Cancun Resort & Spa (shown below), whose new windows can now withstand Category Five hurricane winds. ON THE COVER: The JW Marriott Hotel Hong Kong was the company’s first hotel in Asia nearly 20 years ago. Today, it stands among more than 80 Marriott-branded hotels in Asia, which continues to be a source of tremendous growth for Marriott, with a forecasted addition of more than 11,000 hotel rooms by the end of 2009. CONTENTS Brand Overview.......................................................................... 2 513,832 499,165 Executive Letter.......................................................................... 9 482,186 22% 465,141 1.66 442,926 Financial Review ........................................................................ 11 $ 417,869 1.45 382,599 $ Financial Statements................................................................ 37 18% 1.24 16% Notes to Financial Statements.............................................. 41 $ .97 .96 14% 87 13% $0 $0 Shareholder Return Performance Graph.......................... 63 12% $0. Quarterly Financial Data ......................................................... 64 10% .52 Selected Historical Financial Data....................................... 65 $0 Non-GAAP Financial Measure Reconciliation ................. 66 Management’s Reports ........................................................... 68 Reports of Independent Registered 2000 2001 2002 2003 2004 2005 2006 2000 2001 2002 2003 2004 2005 2006 2000 2001 2002 2003 2004 2005 2006 Public Accounting Firm....................................................... 69 DILUTED EARNINGS PER SHARE LODGING ROOMS RETURN ON INVESTED CAPITAL (ROIC) Directors and Officers .............................................................. 70 (From continuing operations. Reflects the (excludes Ramada International franchised (from continuing operations excluding Corporate Information............................................................. 71 June 2006, two-for-one stock split. See rooms as the brand was sold in 2004, and the synthetic fuel segment) Social Responsibility................................................ Back Cover Footnote No. 1, “Summary of Significant also excludes corporate housing rental units) Accounting Policies,” for additional information.) Our Brands The Ritz-Carlton® Hotel Company has enjoyed Marriott® Hotels & Resorts, the flagship brand, more than two decades as an award-winning, inspires your best performance during travel, luxury hospitality organization. The Ritz-Carlton engineering an experience with the services and manages 60 award-winning hotels and resorts; human touches that help you achieve and revive. private condominiums; fractional ownerships; With 470 properties worldwide, Marriott provides golf communities with exclusive private homes; a current approach to the classic hospitality that elegant spas; and highly successful restaurants. has made it a leading choice for travelers for over The Ritz-Carlton name has become synonymous 70 years. with delivering the finest service and creating exceptional experiences for guests around the globe. SM Marriott Resorts is our award-winning portfolio of distinctive properties—from colorful and exotic corners of the globe to exciting family playgrounds Bulgari Hotels & Resorts®, developed in partnership —designed for travelers seeking memorable and with jeweler and luxury goods designer Bulgari rewarding experiences. Marriott Resorts locations SpA, is a collection of sophisticated, intimate offer attentive service and exceptional amenities, luxury properties located in exclusive destinations. many with world-class golf and spa facilities. Properties feature Bulgari’s striking contemporary interpretation of luxury design and cuisine. The Bulgari Resort Bali opened fall 2006 with 59 private villas, two restaurants and comprehensive spa facilities in a spectacular sea-view setting. Marriott Conference Centers provide the ultimate experience for small to mid-size meetings in distraction-free, retreat-style surroundings. Located near major U.S. cities, Marriott Conference Centers offer special meeting expertise and technical support as well as a variety of social and leisure environments, a combination that ensures creative and effective group events. The JW Marriott® Collection, the most distinctive hotels bearing the Marriott name, invites guests to enjoy a new dimension of luxury—from designer bedding and delectable dining to extraordinary spa and golf offerings—enhanced by exquisite environments, approachable elegance and attentive service at more than 35 locations worldwide. Renaissance® Hotels & Resorts keeps your life interesting during travel, offering stylish environments and opportunities to explore each unique destination along with the attentive service of an upscale hotel. At 135 worldwide Renaissance locations, every moment adds up to an interesting stay that fulfills your journey. Renaissance ClubSport®, a new “lifestyle” concept, combines boutique-style ambience of Renaissance Hotels & Resorts with sleek, upscale, full-service fitness clubs. Renaissance ClubSport offers distinctive décor in guest rooms, imaginative (PICTURED FROM TOP TO BOTTOM) dining, attentive service and world-class sports and Rome Marriott Grand Hotel Flora fitness amenities. The fitness club is complimentary The Portman Ritz-Carlton, Shanghai for guests and offers memberships to local SpringHill Suites Savannah Airport communities. The first Renaissance ClubSport Residence Inn Model Kitchen is located in Walnut Creek, Calif.; seven more Marriott’s Shadow Ridge® (Marriott Vacation Club) properties are under development. Courtyard by Marriott® offers its guests exactly Residence Inn by Marriott®, the leading extended- Marriott Vacation ClubSM (MVC) is the recognized, what they need to achieve their goals—and stay brand, helps guests feel connected while away worldwide leader in the vacation ownership perform at their peak—when on the road. In from home. Spacious suites with full kitchens and industry. The 45 MVC properties around the globe more than 730 locations around the world, separate areas for sleeping, working, relaxing and offer a lifetime of memorable vacations featuring Courtyard provides an enabling environment that eating offer homelike comfort and functionality. one- to three-bedroom villas (depending on provides its guests “peace of mind,” connection Guests experience a true sense of community as location) with living and dining areas, master and restoration. they interact with our friendly staffs, enjoy our bedroom and bath, balcony, full kitchen and enhanced complimentary hot breakfast, and mingle washer/dryer. Flexible usage options include at our evening social hours at more than 510 hotels. exchange to MVC resorts and trade for Marriott Rewards® points. SpringHill Suites by Marriott® offers spacious studio suites, expertly blending function with innovative and contemporary style. With more Moderate-tier, extended-stay guests find comfort The Ritz-Carlton Club® is a deeded, fractional than 150 hotels, SpringHill Suites provides flexible in being self-sufficient and doing things their way. ownership real estate offering combining the design, inspiring service, and enhanced amenities To sustain their life’s rhythm, TownePlace Suites by benefits of second home ownership with renowned to meet the needs of the growing upper-moderate Marriott® provides a place to unpack, settle in and Ritz-Carlton service. Designed as a private club, segment of enjoyment-seeking travelers. connect to the local area. With a casual, residential Members may access their home Club or other atmosphere and a productive home office and full Ritz-Carlton Clubs. Locations: Aspen Highlands and kitchen in every suite, at more than 120 hotels, Bachelor Gulch, Colo.; St. Thomas, U.S.V.I.; and Jupiter, TownePlace Suites is all about real living. Fla., as well as several future properties ranging from Kapalua Bay on Maui to Miami’s South Beach. Fairfield Inn by Marriott®, Marriott’s most affordable brand, offers all the award-winning quality and hospitality of Marriott at a satisfying value. Fairfield Inn & SuitesSM offers uniquely Marriott Executive Apartments® is the ideal Grand Residences by Marriott® provides second designed suites, an exercise room and enhanced solution for longer-stay trips in key international home options through fractional real estate offerings amenities. There are nearly 520 Fairfield Inn gateway cities. Offering studios to three-bedroom and select private ownership opportunities. Designed hotels, including more than 160 Fairfield Inn & apartments in more than 15 locations, Marriott for regional second home destinations, the brand is Suites locations throughout the United States. Executive Apartments