Fitch Downgrades Marriott's IDR to 'BBB-'; Outlook Remains Negative

NEW YORK--(Business Wire)--
Fitch Ratings has downgraded Marriott International Inc.'s (Marriott) Issuer
Default Rating (IDR) and outstanding debt ratings as follows:

--IDR to 'BBB-' from 'BBB';

--$2.4 billion senior unsecured credit facility to 'BBB-' from 'BBB';

--$1.8 billion senior unsecured notes to 'BBB-' from 'BBB';

--Short-term IDR/commercial paper to 'F3' from 'F2';

The Rating Outlook remains Negative.

The downgrade reflects the deterioration in lodging demand trends that has
accelerated since Fitch revised Marriott's Rating Outlook to Negative on Dec. 5,
2008. Last week, Marriott revised its 2009 revenue per available room (RevPAR)
expectations to a level well below Fitch's outlook in early December. Marriott
now expects a 12%-17% RevPAR decline in 2009 for its comparable company-operated
properties in North America and an 8%-13% decline internationally.

Marriott's outlook also incorporates a Q1'09 comparable RevPAR decline of 20% in
North America and 15% internationally. So the company's outlook implies some
level of stabilization in the economy and/or travel demand trends later in the
year, particularly at the more optimistic end of its expected RevPAR range.
RevPAR comparisons become easier over the course of the year. However, there is
extremely limited operating visibility, and Fitch maintains a macro economic
outlook of a deepening severe global recession. That supports Fitch's view that
actual 2009 RevPAR declines may be closer to the more pessimistic end of
Marriott's expected range. As such, Fitch's Negative Outlook incorporates the
potential for additional pressure on Marriott's operating performance in 2009
and 2010.

Marriott's timeshare business was a significant cash drain in 2008 and demand is
likely to remain very weak in 2009 and likely into 2010, in Fitch's view. As a
result, the company is restructuring the business, which includes a significant
reduction in sales centers and headcount, curtailment of resort development, and
reduced loan originations. Marriott is planning for the segment to be cash flow
positive in 2009, supported by an expectation of generating a segment profit and
selling roughly $250 million-$350 million of timeshare receivables. Fitch
maintains a cautious view regarding the level of cash flow improvement in 2009,
which is incorporated into the Negative Outlook.

As of Dec. 31, 2008, Marriott's adjusted leverage (including adjustments for
operating leases, timeshare receivable securitizations, and guarantees) was 3.4
times (x), which was above Fitch's 3.0x-3.25x target range for the previous
rating. Although the company plans to reduce debt levels by $600 million-$700
million in 2009, Fitch believes the company's adjusted leverage levels will be
sustained well above that range for at least the next few quarters, and likely
into 2010. The current rating contemplates that adjusted leverage could increase
to the 4.0x range over the next 12 months, which would be a weak level for the
rating.

However, Marriott's investment grade rating is supported by a strong business
profile that incorporates:

--its diversified portfolio of leading hotel brands,

--its flexible capital allocation strategy,

--the exposure to its management/franchise fee business,

--and its strong management team and track record of managing to an investment
grade credit profile.

Although the operating outlook is poor, Marriott's credit profile maintains
notable flexibility, which could support the current rating if trends
deteriorate further. The company's liquidity is solid, which is supported by a
solid free cash flow profile, ample availability on its revolver, and no
significant debt maturities until 2012. In addition, the company can pull back
further on its investment spending plans and cut dividends in order to support
the credit.

The following considerations could result in a downgrade of Marriott's IDR out
of investment grade:

--Economic trends point to a deeper and more prolonged recession than Fitch's
current expectation;

--Adjusted leverage that is expected to be sustained solidly above 4.0x;

--Expected 2009 RevPAR declines worsen from the current negative 12%-17% range
for North America and 8%-13% range internationally;

--As visibility becomes greater with respect to 2010, an expectation that 2010
RevPAR could decline in the mid-single digit range;

--The rationalization of the timeshare business takes longer than expected and
continues to drain cash in 2009;

--The company is unable to sell timeshare receivable notes to the level expected
in 2009, reducing its ability to pay down debt.

The following considerations could result in an Outlook revision to Stable:

--The recession shows signs of stabilization around mid year to Q3'09;

--Adjusted leverage that is expected to be sustained around 4.0x or below;

--Expected 2009 RevPAR declines do not deteriorate further;

--Travel demand stabilizes and RevPAR declines cease by the end of 2009 as
comparisons will become easier, particularly in Q4'09, and an expectation of
flattish RevPAR growth in 2010;

--The company successfully rationalizes the timeshare business and generates
cash flow as expected in 2009;

--The company completes a timeshare receivable note sale as expected, which
supports debt reduction; and there is an expectation of a continued ability to
monetize receivables.

Fitch's rating definitions and the terms of use of such ratings are available on
the agency's public site, www.fitchratings.com. Published ratings, criteria and
methodologies are available from this site, at all times. Fitch's code of
conduct, confidentiality, conflicts of interest, affiliate firewall, compliance
and other relevant policies and procedures are also available from the 'Code of
Conduct' section of this site.

Fitch Ratings
Michael Paladino, CFA, +1-212-908-9113 (New York)
Bill Warlick, +1-312-368-3141 (Chicago)
Cindy Stoller, +1-212-908-0526 (Media Relations, New York)
cindy.stoller@fitchratings.com

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