Marriott International Inc.

The stable outlook reflects our view that the company will continue to make financial policy choices regarding share repurchases and other investments over the next few years that should enable it to maintain adjusted debt to EBITDA within its currently stated financial policy range of 3.0x-3.5x and FFO to total debt around 20%. The debt to EBITDA policy maximum of 3.5x likely provides an adequate cushion compared with our revised 3.75x downgrade threshold if the lodging industry were to face a downturn. In the event Marriott borrows to complete substantial share repurchases over the next few years in a manner that weakens FFO to debt to around or slightly below 20%, we would keep a stable rating outlook—that is, as

...We believe Marriott's scale advantages could increase over time. With 30 brands and 1.3 million rooms in its worldwide system, Marriott's core business strengths include its brand quality and diversity, the likelihood of increased member loyalty given the reach and flexibility of Marriott Bonvoy, and the company's ability to expand rooms in its worldwide system quickly, despite its industry-leading room scale. In addition, we believe Marriott has been largely successful in integrating Starwood's brands and loyalty programs, realizing cost synergies in procurement and online travel agency commissions, and completing real estate sales in a manner that has maintained the company's well-above-average EBITDA margin (forecasted at mid-60% through 2020) compared with that of its peers. As long as the loyalty program continues to promote repeat visits and guest satisfaction, and the company can continue to deliver a RevPAR premium and cost savings to most of its hotel owners, these benefits should...

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