Research Update: Marriott International Inc. Leverage Threshold Increased Following Starwood Integration Completion; Rating Affirmed

We believe global hotel manager and franchiser Marriott International Inc. has substantially and successfully completed its integration of Starwood Hotels&Resorts Worldwide Inc. Marriott closed its acquisition of Starwood in September 2016. We are raising our adjusted debt to EBITDA threshold to 3.75x from 3.5x because of improved business risk. In addition, Marriott raised its leverage policy maximum to the 3.0x to 3.5x range. We are affirming our 'BBB' issuer credit rating on Marriott. 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 will enable it to sustain adjusted debt to EBITDA within its currently stated financial policy range between

...+ We believe global hotel manager and franchiser Marriott International Inc. has substantially and successfully completed its integration of Starwood Hotels & Resorts Worldwide Inc. Marriott closed its acquisition of Starwood in September 2016. + We are raising our adjusted debt to EBITDA threshold to 3.75x from 3.5x because of improved business risk. + In addition, Marriott raised its leverage policy maximum to the 3.0x to 3.5x range. + We are affirming our '###' issuer credit rating on Marriott. + 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 will enable it to sustain adjusted debt to EBITDA within its currently stated financial policy range between 3.0x and 3.5x and FFO to total debt around 20%. The 3.5x debt to EBITDA policy maximum likely provides a good enough cushion compared with our revised 3.75x downgrade threshold if the lodging industry faces...

Research Update