Marriott Lodging reported a 13 percent increase in operating profit on 12 percent higher sales in 2000. Results reflected solid room rate growth at U.S. hotels and contributions from new properties worldwide. Lodging operating profit in 2000 was attributable to base management fees (28 percent of total), franchise fees (17 percent), land rent and other income (3 per- cent), resort timesharing (15 percent), and incentive manage- ment fees and other profit participations (37 percent). Across our full-service lodging brands (Marriott Hotels, Resorts and Suites; Renaissance Hotels, Resorts and Suites; and The Ritz-Carlton Hotels), REVPAR for comparable company- operated U.S. properties grew by an average of 7.2 percent in 2000. Average room rates for these hotels rose 6.3 percent, while occu- pancy increased slightly to 77.4 percent. In 2000, as a result of the termination of two Ritz-Carlton management agreements, we wrote off our $3 million investment in these contracts. In addi- tion, due to the bankruptcy of the owner of one hotel, we reserved $6 million of our investment in that management agreement. Our domestic select-service and extended-stay brands (Residence Inn, Courtyard, Fairfield Inn, TownePlace Suites and SpringHill Suites) added a total of 161 properties (18,870 rooms) and deflagged seven properties (1,500 rooms), primarily fran- chises, during the 2000 fiscal year. REVPAR for comparable properties increased 5.5 percent. Marriott Vacation Club International  contributed over  20 percent of lodging operating profit in 2001, after the impact of restructuring and other charges. Operating profit increased  7 percent, reflecting a 22 percent increase in contract sales, the 2001 acquisition of the Grand Residence Club in Lake Tahoe, California and note sale gains in 2001 of $40 million compared to $22 million in 2000, partially offset by higher marketing and selling expenses and severance expenses of nearly $2 million associated with the Company’s restructuring plan. International Lodging  reported a decrease in the results of operations, reflecting the impact of the decline in international travel and restructuring and other charges, partially offset by sales associated with new rooms. Over 35 percent of rooms added in 2001 were outside the United States. Marriott Lodging opened 313 properties totaling nearly 50,000 rooms across its brands in 2001, while 14 hotels (approximately 3,700 rooms) exited the system. Highlights of the year included: 39 percent of our total room additions for the year, were conversions from  other brands. At year-end 2001, we had over 300 hotel properties and more than 55,000 rooms under construction or approved for development. We expect to open  over 150 hotels and timesharing resorts (25,000 – 30,000 rooms) in 2002. These growth plans are subject to numerous risks and uncertainties, many of which  are outside our control. See “Forward- Looking Statements” and “Liquidity and Capital Resources.” 14 Marriott International, Inc. 2001 Annual Report ● Over 35 percent of new rooms opened were outside the United States. These include our first hotels in Belgium, Denmark and Ireland. ● Development of a new Marriott Vacation Club International resort in Phuket, Thailand, the EuroDisney resort, and the acquisition of The Grand Residence Club property in Lake Tahoe, California. ● One hundred and fifty properties (19,100 rooms) were added to our select-service and extended-stay brands. ● One hundred and forty-four properties (19,300 rooms), LODGING DEVELOPMENT 2000 Compared to 1999 Comparable Comparable U.S. properties systemwide Change Change 2000 vs. 1999 2000 vs. 1999 MARRIOTT HOTELS, RESORTS AND SUITES Occupancy 78.2% +0.4%pts. 75.7% +0.4%pts. Average daily rate $149.50 +6.2% $136.37 +4.9% REVPAR $116.95 +6.8% $103.27 +5.5% RITZ-CARLTON Occupancy 77.5% +0.1%pts. 77.5% +2.0%pts. Average daily rate $242.26 +9.2% $228.01 +8.9% REVPAR $187.75 +9.4% $176.75 +11.9% RENAISSANCE HOTELS, RESORTS AND SUITES Occupancy 73.3% +2.0%pts. 70.9% +2.7%pts. Average daily rate $142.27 +4.5% $119.95 +3.0% REVPAR $104.35 +7.5% $ 85.07 +7.0% RESIDENCE INN Occupancy 83.5% +0.7%pts. 82.2% +0.8%pts. Average daily rate $104.88 +5.1% $102.25 +4.3% REVPAR $ 87.61 +6.1% $ 84.10 +5.3% COURTYARD Occupancy 78.9% —%pts. 77.0% +0.2%pts. Average daily rate $ 97.68 +5.7% $ 93.51 +4.9% REVPAR $ 77.05 +5.7% $ 71.96 +5.1% FAIRFIELD INN Occupancy 69.7% –1.0%pts. 69.7% –1.0%pts. Average daily rate $ 61.32 +3.8% $ 61.32 +3.8% REVPAR $ 42.75 +2.4% $ 42.75 +2.4% 99 98 97 00 01 116,000 98,000 140,000 182,000 195,000 99 98 97 00 01 $94 $61 $123 $138 $147 MVCI ANNUAL OPERATING PROFIT (millions) MARRIOTT VACATION CLUB INTERNATIONAL (number of owners) LODGING ROOMS (actual room growth, including  all brands, excluding ExecuStay) 99 98 97 00 01 328,300 300,400 355,900 390,500 436,000