2011 was a year of moving forward with new leadership and innovation for our brands while drawing upon our rich legacy. In November, we completed the spin-off of our timeshare business, resulting in two strong companies with solid core businesses and opportunities for growth. A month later, we announced that Bill Marriott was handing the chief executive officer responsibility to Arne Sorenson while continuing to serve as chairman of the board, effective March 31. Both of us have been preparing for this transition for some time, and Arne will continue to drive our company toward dramatic global growth, while remaining grounded in our heritage and core values.
Since our founding nearly 85 years ago, Marriott has never been as focused on its lodging management and franchise business as it is now. With the spin-off, Marriott Vacations Worldwide Corporation (NYSE: VAC) is now an independent, publicly traded company. Wall Street can better value both companies given their focus on distinct businesses — Marriott Vacations Worldwide on the vacation ownership business, and Marriott International on managing and franchising the best lodging products in the world. We believe this will foster growth and potentially attract new investors to both companies. We look forward to a mutually beneficial relationship for years to come.
While 2011 was a year of change, it also delivered strong performance across our company. Business travel rebounded, our meetings segment showed signs of strength, leisure demand grew during the year, and each of our 18 lodging and timeshare brands benefited from the economic recovery. Revenue Per Available Room (RevPAR) grew and we aggressively opened new hotels globally.
With our competitive advantages — strong brands, customer preference, a proven business model of managing and franchising hotels rather than owning them, and most importantly, outstanding associates worldwide — we feel confident that our business will perform well in 2012.
In 2011, reported revenue totaled more than $12 billion and diluted earnings per share totaled $0.55. Adjusted revenue was nearly $11 billion and adjusted diluted earnings per share totaled $1.31, a 28 percent increase over the prior year. Total adjusted fee revenue increased 10 percent to more than $1.3 billion, reflecting the increase in worldwide RevPAR and unit growth. The adjustments reflect the timeshare spin-off and timeshare impairments, and certain other charges and tax items.*
With the spin-off of the timeshare business, the strengths of our core lodging management and franchise business will become more focused. Our adjusted pretax margin should increase and we expect return on invested capital to improve dramatically. Looking ahead, Marriott International will continue to benefit from the expected growth in Marriott Vacations Worldwide while we focus on growing the industry’s best lodging brand portfolio globally.
RevPAR for the company’s worldwide comparable systemwide properties increased 6.4 percent in 2011 and average daily rates rose 3.4 percent. We saw rapid RevPAR growth in Asia and Latin America. In North America, a strengthening economy and modest industry supply growth pushed RevPAR higher. Approximately two-thirds of incentive management fees came from hotels outside North America. Our balance sheet remains strong. At year-end our total debt was $2,171 million and our cash balances totaled $102 million. We are proud of our investment-grade credit rating.
In 2011, we opened 210 properties with nearly 32,000 new rooms around the world — including The Ritz-Carlton,® Dubai International Financial Centre; the JW Marriott® Indianapolis; the Courtyard by Marriott® Moscow Paveletskaya in Russia; the Residence Inn by Marriott® Manama Juffair in Bahrain — the first Residence Inn to open in the Middle East; the Renaissance® Baton Rouge Hotel in Louisiana, the first full-service hotel to be built there in more than 40 years; and 80 hotels flying our new AC Hotels by MarriottSM flag in Europe. At year-end, our lodging portfolio totaled 3,718 properties across 18 brands in 73 countries and territories.
As we grow our portfolio around the world, we strive to attract local customers to our hotels, as well as international travelers. New hotel and brand development reflect robust in-country consumer research as part of our design and planning. We want to understand and represent local tastes, customs and traditions, even while meeting the quality standards defined by our global expertise in hotel design and development.
Our development pipeline of hotels under construction, awaiting conversion or approved for development grew to more than 110,000 rooms, including more than 52,000 rooms outside North America.
China, host to our 2012 Analyst Meeting in June, continues to be our largest market outside North America. We signed our 100th hotel there — the JW Marriott Hotel Shenyang. Our growing pipeline should allow us to open one new hotel a month in China for the next three years. China is an exciting market and we believe our products there beat the competition in design, style and service. In India, we expect to grow to about 100 hotels.
We are also focused on growth in Brazil, where we expect to build 50 environmentally sustainable Fairfield by MarriottSM hotels. And in Europe, we’re on track for 80,000 rooms open or in the pipeline by 2015.
In the Middle East and Africa, we expect to double our portfolio to more than 70 hotels by 2016 adding hotels in places such as Iraq, Rwanda, and Ghana. We just announced what will be the tallest dedicated hotel building in the world, the JW Marriott Marquis Dubai, which is expected to open in the fourth quarter of 2012.
We continue to pursue management contracts in North America, such as the 1,175-room Washington Marriott Marquis set to open in 2014. And our franchisees continue to develop new hotels with our brands through both ground-up development and conversions from other brands. In fact, our pipeline includes over 50,000 rooms under development by franchisees in North America. As a result of their efforts and the strength of our brands, while overall industry supply growth remains modest, Marriott is taking market share with more rooms under construction in North America than any other brand in the industry.
Our industry-leading loyalty programs, website and reservation management systems lead the way in revenue generation.
In 2011, more than 38 million members of Marriott Rewards,® our award-winning guest loyalty program, and The Ritz-Carlton Rewards® booked half our total room nights. Marriott.com, one of the top 10 consumer sites in the world and the only hotel company listed, accounted for nearly $7 billion in Marriott’s annual property-level gross revenues in 2011. Marriott.com is also the third largest mobile commerce site in the world based on sales, after Amazon.com® and Apple.®
We also completed the reorganization of our lodging group into a continental structure. While we continue to leverage reservations, marketing and other systems on a global basis, each of our four continental divisions has its own leadership and operators. This puts us closer to our customers, aligns us better with our hotel owners, driving even better operating results and growth.
Marriott is a founding partner of RoomKey.com, a new lodging and lead generation website. With RoomKey.com, consumers can objectively compare hotel brands for a given destination and still earn loyalty points and other benefits — because RoomKey.com ultimately allows them to book directly with each hotel company’s website, such as Marriott.com.
From urban centers to resorts, from lifestyle to long stays, our brands have something for everyone. We continue to invest in our brands so that they are always fresh, appealing and relevant, and continue to meet the needs of our guests and owners.
The Ritz-Carlton, Hong Kong opened in 2011 and dominates the skyline. Located at the top of the International Commerce Centre (ICC) in Hong Kong, the hotel is the pinnacle of luxury. It’s the newest addition to the brand’s growing global portfolio of 78 properties.
The lifestyle segment has become increasingly important as guests desire unique travel experiences which reflect the local culture of their destination. Since its introduction in 2010, the Autograph Collection® has grown to approximately 30 upper upscale and independent hotels worldwide, including Scrub Island Resort, Spa & Marina in the British Virgin Islands.
We’re tremendously confident in the EDITION® brand, developed with lifestyle visionary Ian Schrager. Despite a slow start due to the economic downturn, we’re excited about the future of the brand, and expect to open five hotels on three continents by 2015, including the famed Clock Tower building in New York City.
Courtyard, our largest brand with more than 900 hotels in 36 countries outside the U.S., now has its Refreshing Business Lobby in more than half of its portfolio in North America. Offering comfort, function and opportunities to socialize, these refreshed Courtyard hotels are earning rave reviews and revenue premiums.
Marriott Hotels & Resorts announced a global pipeline of nearly 90 new properties to open by 2015, representing a multi-billion dollar investment by owners and franchisees worldwide. Currently in nearly 60 countries, we are excited about our signature brand’s future.
With the number of international arrivals having doubled in the past 20 years — expected to reach 1 billion in 2012 — we are entering a new “Golden Age of Travel.” As the middle classes grow in places such as Brazil, China and India, the travel industry expects to create 100 million jobs globally in 2012 — and one American job is created for every 35 international visitors to the U.S. We’re enthusiastic about recent progress to attract more of the millions of international visitors to the U.S. by expediting the visa process.
We recognize it’s more important than ever to embrace the cultural differences of all our customers, so we can offer the warmest welcome to everyone. We strive to embed diversity and inclusion into our organization so it is integral to how we do business.
We are committed to building a more sustainable future. Marriott now has five brands with pre-certified LEED® (Leadership in Energy and Environmental Design) hotel prototypes, which saves our owners design and operational costs while conserving resources. We have multiple initiatives to reduce water and energy use, waste, and carbon emissions enterprise-wide.
A more sustainable future means creating more jobs and stronger communities. We plan to hire 60,000 people globally this year. We have also launched our latest “World of Opportunity” initiative in the U.S. and in Europe to help young people from disadvantaged backgrounds reach their full potential by providing life and vocational skills.
“Marriott on the Move” — the name of Bill’s blog — is emblematic of how the company is always moving forward. Yet this is also a time of continuity and a time to remain true to what we’ve done best for nearly 85 years: putting people first. With strong leadership and a record of innovation, we look forward to a successful 2012.
On behalf of our hotels and associates around the world, we invite you to stay with us. Safe travels.
J.W. Marriott, Jr.
Executive Chairman And Chairman of the Board
Arne M. Sorenson
President and Chief Executive Officer
* See Non-GAAP Financial Measure Reconciliation for additional information on these adjustments, including reconciliations with reported results, our reasons for providing adjusted results, and limitations on their use.