$43

Business Description

The franchisor is Marriott International, Inc. (“Marriott”), a corporation incorporated under the laws of the State of Delaware in 1997. We will refer to the franchisor as “we” or “Marriott” throughout this disclosure document. The terms “we” or “Marriott” do not include our corporate officers, employees, directors, stockholders, affiliates, or subsidiaries. We will refer to the person or entity that is considering purchasing a franchise as “you.” When we refer to the “United States” in this disclosure document, such term includes only the 50 states of the United States of America and the District of Columbia and does not include any possessions or territories of the United States. Capitalized terms not defined in this disclosure document have the meaning ascribed to them in the franchise agreement attached as Exhibit B. We are a publicly-traded corporation listed on the NASDAQ Stock Market. Our principal business address, and the principal business address of most of our affiliates, is 10400 Fernwood Road, Bethesda, Maryland 20817 (“Marriott Headquarters”).

Prior Experience

We and our predecessors have owned and managed Courtyard hotels since 1983, and we have offered franchises for Courtyard hotels since October 1990. As of December 31, 2018, we and our subsidiaries operated 259 Courtyard hotels in the United States and Canada.

Business Offered

Courtyard by Marriott hotels (“Courtyard hotels”) are designed to offer high quality accommodations and related services to the traveling public. Courtyard hotels cater to business persons, groups, families, and vacationers, depending on their location and market orientation. Courtyard hotels generally range in size from 90 to 175 rooms, and are generally located in urban or suburban markets. Most Courtyard hotels offer a food and beverage concept known as “The BistroTM,” and include the following amenities and services in their public space: Welcome Pedestals, Media Pods, Starbucks® coffee, communal table, upgraded exercise facilities, and an outdoor terrace. All franchised Courtyard hotels in the United States and Canada are part of a single system. If approved, we will offer you a non-exclusive franchise to use our “system” in connection with the establishment, development, and operation of a Courtyard hotel at a specific location. The “system” consists of the “Courtyard” trademark and other trademarks, design criteria, and specifications for Courtyard hotels; high standards of cleanliness, quality, and service; training programs and materials; advertising, marketing, and promotional programs, including loyalty programs; a reservation system; a property management system; a revenue management system; and a quality assurance program. We may unilaterally add to, merge, discontinue, or otherwise modify components of the system at any time. Modifications to the system may be made for all Courtyard hotels or any category of those hotels. A category may have specific physical and operating standards or merely be a descriptive designation or another designation as we determine.

Initial Fees

1. Application Fees and Related Fees A. Application Fees 1. New-to-System Courtyard Hotel. If you are submitting an application for a new-to-system Courtyard hotel, including the conversion of a non-Company Brand Hotel to a Courtyard hotel, the application fee is $90,000 plus $500 per guestroom in excess of 150 guestrooms. If you have not signed a franchise agreement with us within 60 days after we issue a first draft of the franchise agreement, we may withdraw our approval of the application unless you pay an extension fee of $10,000. If you have not signed a franchise agreement within 60 days after we grant an extension, we will have the right to withdraw our approval of your application. 2. Existing Courtyard Hotel. If you are submitting an application for an existing Courtyard hotel or to convert a hotel that is currently managed by us or one of our affiliates to a franchised Courtyard hotel, the application fee is the greater of $175,000 or $500 per guestroom. Hotel application fees are generally payable in full at the time you submit your franchise application. If we do not approve your application, we will deduct $10,000 plus our costs, and we will refund the balance of your application fee. We generally do not refund the application fee under other circumstances. B. Other Fees That May Apply to Your Transaction 1. Outside Counsel Costs. If you are acquiring an existing Courtyard hotel or converting a hotel that is currently managed by us or one of our affiliates to a franchised Courtyard hotel, we will engage outside counsel in connection with the transaction, and you will be required to pay our outside counsel costs directly to our outside counsel. These costs are payable and non-refundable, regardless of whether the transaction closes. 2. Extension Fees. Once you have signed a franchise agreement, if you wish to request an extension of the construction start deadline or the opening deadline, you must pay us $10,000 when you submit your written request that explains the need for such extension. No extension will be granted for more than six months. If we approve the extension request, you must execute an amendment to the franchise agreement that revises the applicable deadline. We may waive this fee or give you a credit if you meet the revised deadline, but we are not obligated to do so. If we do not approve your request, we will refund the $10,000 you submitted. 2. Pre-Opening Fees Listed below are certain estimated one-time non-refundable fees and reimbursements (excluding certain travel and related expenses) that you will pay to us on demand to open a Courtyard hotel. If you are acquiring or converting an existing hotel, your pre-opening fees and costs will vary depending upon, among other things, the systems in place and experience of personnel that are retained at the time of acquisition or conversion. A. Computer Hardware and Software Systems You must pay to us approximately $17,300 to $47,300 for pre-opening technology planning and installation services associated with the implementation of the required property management, reservation, yield management and opportunity management systems. These estimates do not include amounts payable to third parties (either directly or paid to us and remitted to third parties on your behalf) for hardware, software, or installation of the above systems or for other computer systems recommended or required for your hotel, or amounts payable to us for other recommended computer systems. The costs for such systems are subject to change. See Item 11 for a detailed description of our required and recommended computer systems. We anticipate replacing the current designated property management system with our proprietary property management system (“LightSpeed”). The cost to implement LightSpeed at a Courtyard hotel is not yet known. The amount paid to us by other select-service Company Brand Hotels for pre-opening technology planning and installation services associated with the implementation of LightSpeed and the required reservation, yield management, and opportunity management systems generally ranges from $37,300 to $76,700 for a 150-guestroom hotel. Optional hardware or additional services may be available at an additional cost. Your costs may exceed these estimates. B. Pre-Opening Training and Services The costs for pre-opening training and services provided by us (not including costs discussed elsewhere in this Item 5 or costs incurred when purchasing an existing Courtyard hotel, see Section 6 below) generally range from $64,549 to $101,175, are subject to change, and are nonrefundable. This amount includes: training costs for the property management system, management and executive training, pre-opening on-site task force training, the opening authorization process, associate orientation materials, and pre-opening operations and sales and marketing support, as well as an estimate of the travel and living expenses for our trainers, which you must pay. We used the average travel and living expenses for our trainers last year in the range above, but your costs may vary. The cost also varies based on the training that we provide you, which depends on the experience and prior training of you and your associates, as determined by us. Specifically, the costs include the following: 1. A team determined by us will conduct on-site training for the departments in your hotel prior to its opening. The amount of training time and the number of trainers will vary based upon the size of your hotel, the market, and the experience of your associates. The number of trainers ranges from two to four. The amount of training time ranges from 8 to 14 days and will include a postopening hotel visit of up to 5 days. We estimate that these on-site costs (including reimbursement for the team’s transportation, lodging, and meals) generally will range from $18,340 to $35,730 based on the experience level and prior training of your associates and the size of your hotel. The cost of the trainers (including transportation, lodging, and meals) is included in our estimate of pre-opening training and services costs listed in Item 7. We recommend that you hire the general manager and sales directors/managers at least four to six months prior to hotel opening to participate in pre-opening training and to prepare the hotel for opening. 2. We will provide pre-opening sales, marketing, and operations support at a cost generally ranging from $18,110 to $29,570 (which includes travel, lodging, and meals for the pre-opening team). This support may include (a) an in-market sales and marketing meeting approximately 90 to 120 days prior to opening to assist in the pre-opening direct sales effort, (b) follow-up webinars to support the pre-opening efforts, (c) opening operations support, including webinars and an opening certification visit, and (d) analysis of sales and marketing efforts. 3. We will provide support in connection with the activation of the hotel lobby (including the designated food and beverage concept known as “The BistroTM”) at a cost generally ranging from $25,099 to $28,375. The support will consist of on-site training during hotel opening and one additional on-site visit 45 to 90 days after the hotel opens. If the BistroTM operations do not meet our standards and service requirements, we will send a representative to your hotel to provide additional training at a cost generally ranging from $3,000 to $7,500, and you must provide complementary lodging. We also may require your staff to attend additional training programs as described in Item 11. New-to-Marriott franchisee executives must attend Executive Orientation. Up to five people may attend Executive Orientation prior to the opening of your hotel at no charge. Additional attendees (in excess of five) and all attendees with open or conversion hotels must pay $595 per person. If you desire to operate your new-build hotel but we determine that you are not qualified to do so without additional training, you must participate in the Franchisee Introduction to Marriott program (“FITM”). FITM includes executive level in-person meetings and self-paced, web-based training on the use of Marriott programs, systems, and services. You must pay our then-current FITM enrollment fee, presently $60,000, at least 16 months before the hotel opening deadline set forth in your franchise agreement. Alternately, if we determine that you are qualified to operate the hotel, but are unfamiliar with the system, we may require you to participate in the Franchisee OnBoarding for New Development program (“FOND”), through which we provide additional self-paced, web-based training on the use of Marriott programs, systems, and services. You must pay our then-current FOND enrollment fee, presently $10,000, at least 16 months before the hotel opening deadline set forth in your franchise agreement. Franchisees that participate in FITM or FOND must also undergo one non-accountable brand standard audit and, for a period of two years, participate in the Revenue Management Advisory Services program, the Customer Engagement Center Property Support Services program, the digital-only component of our Field Marketing program, and the sales programs we specify, at an additional cost. See Items 6 and 11 for more information regarding these programs. If you do not complete these programs by the timeframe specified by us, you may incur additional fees and charges. See Item 11 for additional details regarding these and other training and related fees that may apply to your hotel prior to opening. C. Pre-Opening Revenue Management Support and Optional Training The cost for pre-opening revenue management/reservation system rate loading and consultation is generally approximately $6,000 to $9,000, and does not include conversion of system data or training. If conversion of system data is required, you will be charged $500 per day for such services. If you desire, optional training in revenue management, reservation, or the yield management system is available for $500 per day. These costs are subject to change and are non-refundable. You must pay all of the travel and living expenses for our trainers. The cost of transportation varies greatly, and we are not able to give you a meaningful estimate. 3. Initial Design and Construction Review Services Fees We will make our standard design and construction criteria available to you and conduct up to three site visits at no cost to you to ensure that your hotel is constructed and designed in accordance with our standards. If we determine that additional pre-opening site visits are necessary, you may be required to pay our then-current charge per site visit, presently $1,500. These amounts are payable on demand and are not refundable. You may request additional services from Marriott Design & Construction in connection with the design and construction of your hotel to assure compliance with our standards. Your use of these services is voluntary. The cost of these services varies depending on the services you request. In some cases, we may require you to execute a written agreement detailing the full scope of services to be performed and the related cost. We do not refund these fees. If your hotel meets certain criteria (your hotel is a new-build hotel that has 250 or more guestrooms, is more than 6 stories tall, has 25,000 square feet or more of meeting space, or is a cobranded hotel, or if your hotel is an adaptive reuse of an existing building or a conversion of another hotel), we will inspect your hotel prior to opening to verify that it complies with our then-current fire protection and life safety standards, at our expense. For all other hotels, prior to opening, you must either (i) provide a certification that verifies your hotel complies with our then-current fire protection and life safety standards and your hotel’s fire protection and life safety systems are operational, or (ii) retain us to verify that. If you provide a certification, it must be from a third-party licensed fire protection engineer, engineer, or recognized expert consultant on fire and life safety requirements approved by us. We may require that the certification be issued by a party who has not participated in the design of your hotel’s fire protection and life safety systems. If you retain us and your hotel does not meet the criteria described above, you must pay us a fee generally ranging from $500 to $19,500 (which is based on the time needed for the testing and inspection, the size of your hotel, and the complexity of its design, and may be higher in some cases) and you must reimburse us for our expenses for travel, lodging, and meals. If you provide a certification, we reserve the right to visit the hotel to verify the information in the certification. The initial verification visit will be at our expense, but if any additional visits are required, you will be charged our then-current fees and charges. See Item 6. 4. Optional Purchasing and Supply Arrangements As described in Items 1 and 8, you and other franchisees may voluntarily purchase various products and services under the arrangements negotiated by us and our subsidiaries. Marriott Design & Construction charges for its procurement services. In 2019, we expect our procurement charges for these services to be: (i) for furniture, fixtures, and equipment, the greater of $3,500 or approximately 4.5% to 5% of the cost to us of the products and services provided; and (ii) for hotel opening operating supplies and equipment, the greater of $5,000 or approximately 4.5% to 5% of the cost to us of the products and services provided. MIP Americas does not charge for its procurement services. Instead, MIP Americas retains a portion of rebates received in connection with your purchases to cover the costs of providing such procurement services. These amounts are not refundable. 5. Pre-Conversion or Relicensing Property Improvement Plan Fee When converting a hotel (including another Company Brand Hotel) to a Courtyard hotel, transferring an existing Courtyard hotel, or converting a hotel that is currently managed by us or one of our affiliates to a franchised Courtyard hotel, as set forth in Item 6, you will be required to pay a property improvement plan fee of $10,000 for us to review the hotel to determine the renovations or other work necessary to bring the hotel into good repair and to conform the hotel to our then-current Courtyard standards, including fire protection and life safety standards, and prepare a property improvement plan (“PIP”). Payment is due when the review is requested. The PIP fee includes the cost of the initial Fire Protection and Life Safety Audit to determine the renovations or other work necessary to comply with our then-current fire protection and life safety standards (but does not include the cost of any additional audits that may be necessary). The PIP fee is non-refundable. If a site visit(s) is required after we issue the PIP, for any reason, including to enforce, review, or modify the requirements of the PIP, we may charge our then-current PIP Additional Site Visit fee for such visit, as set forth in Item 6. 6. Support and Training Services for Purchasing or Converting Existing Company Brand Hotels When converting another Company Brand Hotel to a Courtyard hotel, purchasing an existing Courtyard hotel, or converting a hotel that is currently managed by us or one of our affiliates to a franchised Courtyard hotel, we will assign a transition manager. In addition, we will assess the hotel and provide training and services if we deem it necessary or desirable based on the experience level and prior training of you or your management company (if you have retained an approved third-party management company to operate your hotel), and the number of other Company Brand Hotels owned or operated by you or your management company. In addition, certain franchisee personnel may be required to attend (i) Executive Orientation or other prescribed classes, and (ii) sales and marketing meetings at the hotel to analyze or assist in sales efforts. You will be required to pay $595 per attendee and all travel and living expenses of your personnel who attend Executive Orientation. You will be required to train your new managers and staff (or their replacements) and incur those costs as described in Item 11, as well as pay for training of replacement personnel who attend Executive Orientation. We estimate that the costs for on-site classes, training services, and relicensing assistance (not including reimbursement for Marriott personnel’s travel, food, and lodging costs) generally will range from $10,000 to $75,000 based on the experience level and prior training of your associates and the size of the hotel. In addition, if you desire to operate your hotel but we determine that you are not qualified to do so without additional training, you must participate in the FITM program (“FITM-R”), the cost of which is currently $60,000 and must be paid when you execute the franchise agreement. If we determine that you are qualified to operate the hotel, but are unfamiliar with the system, we may require you to participate in the Above Property Immersion program (“API”), through which we provide up to 12 conference calls or webinars and self-paced web-based training to familiarize franchisee executives with the system. You must pay our then-current API enrollment fee, presently $15,000, when you execute the franchise agreement. Franchisees that participate in FITM-R or API must also undergo one nonaccountable brand standard audit and, for a period of two years, participate in the Revenue Management Advisory Services program, the Customer Engagement Center Property Support Services program, the digital-only component of our Field Marketing program, and the sales programs we specify, at an additional cost. See Items 6 and 11 for more information regarding these programs. If you do not complete these programs within the timeframe we specify, you may incur additional fees and charges. 7. Other Fees Depending on the circumstances, certain of the fees discussed in Item 6 under the heading “Operations” may also apply to your hotel prior to opening. Such fees are noted with a statement in the “Remarks” column in Item 6.

Financing

Except as described below, generally we do not offer direct or indirect financing for franchised Courtyard hotels or guarantee any of your financing, loans, or other obligations. However, from time to time, under very limited circumstances and at our sole discretion, we may offer for certain hotels credit support in the form of a contingent guaranty of a portion of a loan provided by a third-party lender, or we may make a mezzanine loan. In determining whether to offer you credit support or make a mezzanine loan, we will consider, among other factors: (i) market penetration opportunities; (ii) the size and location of your hotel; (iii) the economic and financial environment; (iv) the cost to you to complete the development or conversion of the hotel; (v) whether our offer of credit or financial support would aid in the successful development or conversion of the hotel; (vi) whether you are willing to commit to playing an active role in growing the system; and (vii) whether you meet our then-current criteria. The decision whether to offer any type of credit support or loan is one that we will make in our sole discretion. Because we generally do not offer loan guaranties, if we do offer to make a contingent guaranty of a loan provided to you by a third-party lender, the terms and conditions of such guaranty may vary, such as the amount of the guaranty (for example, a percentage of the principal balance of the loan or a percentage of the hotel development costs), your repayment obligations, the guaranty fee, interest, fees, costs, penalties, security interests, default provisions, and requirements for a personal guaranty. You may be required to sign certain documents in connection with the loan guaranty, such as a Credit Enhancement Commitment Letter, Reimbursement Agreement, Equity Pledge, and Guaranty. Because the terms of these guaranties and related documents vary, we do not have standard form documents, but have included a sample of each in Exhibit O. These documents are samples, and the final documents may vary considerably depending upon which lender you select, the terms of the loan, and other lender requirements. Because we generally do not make mezzanine loans and they are subject to the unique financial terms related to your hotel, we cannot determine in advance the key terms of any such loan we may choose to make, such as the amount, the annual percentage rate, the term of the loan, the number and amount of the payments, the type of security required for the loan, personal guaranty requirements, and default provisions. We may sell or assign any interest we have in any promissory note you execute in our favor or any loan we may advance to you. We do not have sample mezzanine loan documents. Those documents, including the intercreditor agreement between your primary lender and us, will be determined at the time of loan origination. Development Incentive Program We offer a development incentive program to franchisees for certain Courtyard hotel development projects. To be eligible for the program, each of the following must be satisfied: (1) the project must be for the development of a new-to-system Courtyard hotel that is not a conversion of a Company Brand Hotel, (2) you must retain the manufacturer approved by us to construct each hotel guestroom (including the guestroom furniture and fixtures) in accordance with our modular prototype, (3) you must purchase the hotel furniture, fixtures, equipment, and hotel opening operating supplies we specify from Marriott’s global design procurement division; (4) the application for the project must be approved by our Hotel Development Committee by March 31, 2020, and (5) the construction of the hotel must commence within 15 months of the date of approval and the hotel must open as a Courtyard hotel within 13 months of the date of such construction commencement, unless we approve otherwise. If your project satisfies these criteria, your project will be eligible for an incentive payment in an amount of up to $250,000, to be paid by us to the franchisee 60 days after the opening of the hotel (“Key Money”). To be Except as described below, generally we do not offer direct or indirect financing for franchised Courtyard hotels or guarantee any of your financing, loans, or other obligations. However, from time to time, under very limited circumstances and at our sole discretion, we may offer for certain hotels credit support in the form of a contingent guaranty of a portion of a loan provided by a third-party lender, or we may make a mezzanine loan. In determining whether to offer you credit support or make a mezzanine loan, we will consider, among other factors: (i) market penetration opportunities; (ii) the size and location of your hotel; (iii) the economic and financial environment; (iv) the cost to you to complete the development or conversion of the hotel; (v) whether our offer of credit or financial support would aid in the successful development or conversion of the hotel; (vi) whether you are willing to commit to playing an active role in growing the system; and (vii) whether you meet our then-current criteria. The decision whether to offer any type of credit support or loan is one that we will make in our sole discretion. Because we generally do not offer loan guaranties, if we do offer to make a contingent guaranty of a loan provided to you by a third-party lender, the terms and conditions of such guaranty may vary, such as the amount of the guaranty (for example, a percentage of the principal balance of the loan or a percentage of the hotel development costs), your repayment obligations, the guaranty fee, interest, fees, costs, penalties, security interests, default provisions, and requirements for a personal guaranty. You may be required to sign certain documents in connection with the loan guaranty, such as a Credit Enhancement Commitment Letter, Reimbursement Agreement, Equity Pledge, and Guaranty. Because the terms of these guaranties and related documents vary, we do not have standard form documents, but have included a sample of each in Exhibit O. These documents are samples, and the final documents may vary considerably depending upon which lender you select, the terms of the loan, and other lender requirements. Because we generally do not make mezzanine loans and they are subject to the unique financial terms related to your hotel, we cannot determine in advance the key terms of any such loan we may choose to make, such as the amount, the annual percentage rate, the term of the loan, the number and amount of the payments, the type of security required for the loan, personal guaranty requirements, and default provisions. We may sell or assign any interest we have in any promissory note you execute in our favor or any loan we may advance to you. We do not have sample mezzanine loan documents. Those documents, including the intercreditor agreement between your primary lender and us, will be determined at the time of loan origination. Development Incentive Program We offer a development incentive program to franchisees for certain Courtyard hotel development projects. To be eligible for the program, each of the following must be satisfied: (1) the project must be for the development of a new-to-system Courtyard hotel that is not a conversion of a Company Brand Hotel, (2) you must retain the manufacturer approved by us to construct each hotel guestroom (including the guestroom furniture and fixtures) in accordance with our modular prototype, (3) you must purchase the hotel furniture, fixtures, equipment, and hotel opening operating supplies we specify from Marriott’s global design procurement division; (4) the application for the project must be approved by our Hotel Development Committee by March 31, 2020, and (5) the construction of the hotel must commence within 15 months of the date of approval and the hotel must open as a Courtyard hotel within 13 months of the date of such construction commencement, unless we approve otherwise. If your project satisfies these criteria, your project will be eligible for an incentive payment in an amount of up to $250,000, to be paid by us to the franchisee 60 days after the opening of the hotel (“Key Money”). To be Except as described below, generally we do not offer direct or indirect financing for franchised Courtyard hotels or guarantee any of your financing, loans, or other obligations. However, from time to time, under very limited circumstances and at our sole discretion, we may offer for certain hotels credit support in the form of a contingent guaranty of a portion of a loan provided by a third-party lender, or we may make a mezzanine loan. In determining whether to offer you credit support or make a mezzanine loan, we will consider, among other factors: (i) market penetration opportunities; (ii) the size and location of your hotel; (iii) the economic and financial environment; (iv) the cost to you to complete the development or conversion of the hotel; (v) whether our offer of credit or financial support would aid in the successful development or conversion of the hotel; (vi) whether you are willing to commit to playing an active role in growing the system; and (vii) whether you meet our then-current criteria. The decision whether to offer any type of credit support or loan is one that we will make in our sole discretion. Because we generally do not offer loan guaranties, if we do offer to make a contingent guaranty of a loan provided to you by a third-party lender, the terms and conditions of such guaranty may vary, such as the amount of the guaranty (for example, a percentage of the principal balance of the loan or a percentage of the hotel development costs), your repayment obligations, the guaranty fee, interest, fees, costs, penalties, security interests, default provisions, and requirements for a personal guaranty. You may be required to sign certain documents in connection with the loan guaranty, such as a Credit Enhancement Commitment Letter, Reimbursement Agreement, Equity Pledge, and Guaranty. Because the terms of these guaranties and related documents vary, we do not have standard form documents, but have included a sample of each in Exhibit O. These documents are samples, and the final documents may vary considerably depending upon which lender you select, the terms of the loan, and other lender requirements. Because we generally do not make mezzanine loans and they are subject to the unique financial terms related to your hotel, we cannot determine in advance the key terms of any such loan we may choose to make, such as the amount, the annual percentage rate, the term of the loan, the number and amount of the payments, the type of security required for the loan, personal guaranty requirements, and default provisions. We may sell or assign any interest we have in any promissory note you execute in our favor or any loan we may advance to you. We do not have sample mezzanine loan documents. Those documents, including the intercreditor agreement between your primary lender and us, will be determined at the time of loan origination. Development Incentive Program We offer a development incentive program to franchisees for certain Courtyard hotel development projects. To be eligible for the program, each of the following must be satisfied: (1) the project must be for the development of a new-to-system Courtyard hotel that is not a conversion of a Company Brand Hotel, (2) you must retain the manufacturer approved by us to construct each hotel guestroom (including the guestroom furniture and fixtures) in accordance with our modular prototype, (3) you must purchase the hotel furniture, fixtures, equipment, and hotel opening operating supplies we specify from Marriott’s global design procurement division; (4) the application for the project must be approved by our Hotel Development Committee by March 31, 2020, and (5) the construction of the hotel must commence within 15 months of the date of approval and the hotel must open as a Courtyard hotel within 13 months of the date of such construction commencement, unless we approve otherwise. If your project satisfies these criteria, your project will be eligible for an incentive payment in an amount of up to $250,000, to be paid by us to the franchisee 60 days after the opening of the hotel (“Key Money”). To be eligible for Key Money, you must have timely constructed the hotel in accordance with our standards. If the franchise agreement is terminated before the expiration of its term for any reason, the unamortized portion of the Key Money will be added to any amounts due upon termination. Any incentives that you are entitled to receive under the development incentive program are personal to you and will terminate and not transfer in connection with a transfer of the hotel to a third party, a change in control, or other relicensing transaction.

Franchisee Revenue and Profit

1. Occupancy, Rate, and RevPAR As of December 31, 2018, there were 1027 Courtyard hotels open and operating in the United States and Canada; of these, 768 were franchised and 672 were STR Included Franchised Hotels. “STR Included Franchised Hotels” means hotels that (a) had Smith Travel Research, Inc. (“Smith Travel”) data available and (b) were, as of December 31, 2018, open and operating as a franchised Courtyard hotel for at least two years and satisfied the Conditions. “Conditions” means the hotel did not undergo at any time during the preceding two years any one or more of the following: (1) a rooms renovation that resulted in five percent or more of the total number of available rooms at such hotel being taken out of service during the year in which the renovation occurred; (2) a public space renovation that resulted in revenue displacement during the year in which such renovation occurred of five percent or more of the annual available room nights at the average daily rate of the most recent year prior to the renovation during which the hotel satisfied each of the Conditions; or (3) an expansion that resulted in an increase in revenues of five percent or more of the annual available room nights (before the expansion) at the average daily rate of the most recent year prior to the expansion during which the hotel satisfied each of the Conditions. 2. Reservations Courtyard hotels received reservations from the following sources (collectively, “Reservation Channels”): (i) Marriott’s worldwide toll-free reservation phone numbers known as Marriott Worldwide Reservations (“Voice Reservations”), (ii) Marriott.com (including all international iterations of this site and Marriott’s mobile apps) (“Marriott.com”), (iii) global distribution systems that permit traditional travel agencies, as well as many third-party online travel websites, to reserve guestrooms (“GDS”), and (iv) online travel agencies with which we have distribution agreements (“OTAs”), such as Booking.com, Expedia and Hotels.com. Reservation Channels do not include group business and transient room nights booked directly at the property or through our area, regional or national sales offices. 3. Loyalty Program On August 22, 2018, Marriott created a new loyalty program for customers of Company Brand Hotels by combining Starwood Preferred Guest (“SPG”) with Marriott Rewards and The Ritz-Carlton Rewards programs. The new program, Marriott Bonvoy, offers enhanced benefits to approximately 125 million member accounts worldwide. Over 6,900 hotels and resorts in 130 countries and territories currently participate in Marriott Bonvoy. For the one-year period ended December 31, 2018, hotel guests at Included Franchised Hotels who were members of Marriott Bonvoy (or its predecessor loyalty program(s)) generated loyalty program eligible revenue that was approximately 60.5% of the total room night revenue at such hotels, with an average daily spend of $153. The total of all rewards room nights for such Included Franchised Hotels was approximately 13,179,000, generating approximately $2,013,702,000 in eligible spend, not including taxes and tips. 4. Bases and Assumptions Smith Travel, an independent research firm servicing the travel industry, compiles occupancy rate, average daily room rate, RevPAR, RevPAR Index, and other relevant information concerning the lodging industry and is used by substantially all of the major lodging companies for tracking this data. The information in this Item 19 used in calculating average occupancy rate, average daily room rate, average RevPAR, and RevPAR Index was compiled and reported by Smith Travel, and such information has not been audited or otherwise confirmed by us. The data in this Item 19 regarding reservations and the loyalty programs was not provided by Smith Travel, but instead was drawn from Marriott’s internal databases. Because of Smith Travel’s minimum competitive set reporting requirements, some hotels that are Included Franchised Hotels and are reflected in Marriott’s internal databases may not be included in the Smith Travel data and, as a result, would not be STR Included Franchised Hotels. These statements relate to historical performance of franchised Courtyard hotels in the United States and Canada that satisfy certain criteria as detailed above and are not projections of future performance of the system or a specific hotel. The figures above were based on hotels with at least two years of operating results. Hotels typically achieve lower results in their first year of operation. We do not claim or expect that you can or will expect to achieve the same average occupancy rate, average daily room rate, average RevPAR, RevPAR Index, reservations from Reservation Channels, or rewards room nights, as these figures will vary from hotel to hotel and will depend upon many variables and factors, including size, location, seasonality, competition, general economic conditions, the length of time your hotel has been open or affiliated with us, the condition and attractiveness of the hotel, the perception of your hotel by customers utilizing our distribution channels, the reputation for quality of service at the hotel, how effectively you participate in our programs and market your affiliation with us, and the efficiency with which you operate your hotel. Operating results are subject to numerous risks and uncertainties, including economic conditions, public reaction to terrorist attacks and political unrest, supply and demand changes for hotel rooms, competitive conditions in the hospitality industry, relationships with customers and property owners, and the availability of capital. The reservations and loyalty program information disclosed in this Item 19 relates to the performance of Included Franchised Hotels using the Reservation Channels and loyalty programs in effect in 2018. Your individual results are likely to differ substantially from the data and results indicated above. There is no assurance that you will do as well. If you rely upon the data and results above, you must accept the risk of not doing as well. We will provide you with written substantiation of the data used in preparing this Item 19 upon your reasonable request. The information described above that was provided to us by third parties has not been audited or otherwise verified by us. We are under no obligation to disclose specific information for a particular hotel in the system. Other than the preceding financial performance representation, we do not make any financial performance representations. We also do not authorize our employees or representatives to make any such representations either orally or in writing. If you are purchasing an existing outlet, however, we may provide you with the actual records of that outlet. If you receive any other financial performance information or projections of your future income, you should report it to the franchisor’s management by contacting Eric Jacobs, 10400 Fernwood Road, Bethesda, MD 20817, (301) 380-3488, the Federal Trade Commission, and the appropriate state regulatory agencies.