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October 16, 2015 Owner & Franchise Communications

Overview of 2016 Budget Instructions and Notable Items

As you know, Budget Instructions are distributed to General Managers and Finance Leaders each year. Over the past several weeks, the 2016 guidance has been shared with Marriott-managed and franchised hotels. As hotels are working to finalizing their 2016 planning, we wanted to share with you some of the changes taking place for the coming year.

Each of the items highlighted below, while requiring an investment from or process change for our owners, franchisees, and hotels, aligns with our goal of driving a strong return for you while ensuring we meet the needs of our guests today and in the future.

NOTABLE ITEMS

Ongoing Innovations to Support Marriott’s Strategic Priorities
In support of Marriott’s strategic priorities (The 4Ms: Marriott Hotels, Marriott Rewards, Mobile-Digital, Millennial Mindset), we are focused on tools and technologies that meet the needs of our guests today and into the future. To enable this, we continue to make investments in mobile-digital, as well as in meetings, and new enhancements are being introduced to capitalize on these innovations that will require future investment (e.g., keyless entry, meeting services app 2.0).

Guestroom Entertainment
Marriott is launching our next generation entertainment platform in order to enhance the guestroom television experience. The platform is flexible and scalable, and will allow for rapid implementation of enhanced features as they become available. Current features on the platform include 40 HD channels, a branded welcome screen, an interactive channel guide, a channel banner, a digital guest directory, and an Internet TV offering, which is currently equipped with Netflix, YouTube, Hulu, Crackle and Pandora. The existing brand standard was updated for U.S. hotels to include an installation deadline of November 30, 2016 (unless the property is a new build or PIP that is still under a legacy contract signed prior to November 1, 2014, or other property still under a legacy contract signed prior to May 8, 2015). A revised brand standard for Canadian properties will be communicated via the October 19 Weekly Update.

Global Property Management System (GPMS)
As communicated earlier this month, due to instability issues in the GPMS data centers, we are halting further GPMS deployments until we can fully identify the issues and implement a stable GPMS platform. As a result of the GPMS rollout halt, the 2016 rollout schedule will be revised and will be published once the remediation plan is complete; impacted hotels will need to update their 2016 budgets accordingly. Details and guidance will be shared with hotels in the coming weeks.

Global Point of Sale (GPOS)
In an effort to meet security requirements and reduce risk, we intend to migrate all POS systems to the Marriott network (for non-Marriott-managed systems) and make Oracle (formerly MICROS) Simphony a Global Brand Standard effective January 1, 2017. More details will be shared in the coming weeks.

BUDGET GUIDELINES
For additional details, review the budget instructions via the following links.

REVENUE-GENERATING & COST-REDUCING INITIATIVES
While not included in the budget guidelines, there are a number of initiatives underway at Marriott which may be drivers of profitability and productivity. These efforts include Your Choice, which was made available as an option for most RH, MH, CY, FF and SHS hotels, as well as In-Room Dining, which is currently under development and is being tested in select MH properties. We continue to seek opportunities to protect your profit margins and balance the investments we ask you to make in your hotels. As always, we welcome your feedback and suggestions related to these efforts.

BRAND EXECUTIVE SUMMARIES
The brand-specific Brand Executive Summaries provide context around the strategic direction and priorities for each brand. Please continue to review the budget instructions for details regarding approved programs/initiatives.

Thank you for your ongoing commitment to our brands and business. Should you have any questions or concerns, please reach out to your account executive.