SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the Quarter Ended June 19, 1998 Commission File No. 1-13881

MARRIOTT INTERNATIONAL, INC.

Delaware 52-2055918
(State of Incorporation) (I.R.S. Employer Identification Number)

10400 Fernwood Road
Bethesda, Maryland 20817
(301) 380-3000

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.

Yes [X] No [_]

Shares outstanding
Class at July 17, 1998
- -------------------- ------------------
Class A Common Stock,
$0.01 par value 250,132,541

MARRIOTT INTERNATIONAL, INC.
(FORMERLY "NEW MARRIOTT MI, INC.")
INDEX

Page No.
-----------

Forward-Looking Statements 3

Part I. Financial Information (Unaudited):

Condensed Consolidated Statements of Income -
Twelve and Twenty-Four Weeks Ended June 19, 1998 and June 20, 1997 4

Condensed Consolidated Balance Sheet -
as of June 19, 1998 and January 2, 1998 5

Condensed Consolidated Statement of Cash Flows -
Twenty-Four Weeks Ended June 19, 1998 and June 20, 1997 6

Notes to Condensed Consolidated Financial Statements 7-11

Management's Discussion and Analysis of Results of Operations
and Financial Condition 12-18

Quantitative and Qualitative Disclosures About Market Risk 18

Part II. Other Information and Signature:

Legal Proceedings 19

Changes in Securities 19

Defaults Upon Senior Securities 19

Submission of Matters to a Vote of Security Holders 20

Other Information 20

Exhibits and Reports on Form 8-K 21

Signature 22

FORWARD-LOOKING STATEMENTS

When used throughout this report, the words "believes," "anticipates,"
"expects," "intends," "hopes," "estimates," "projects," and other similar
expressions, which are predictions of or indicate future events and trends
identify forward-looking statements. Such statements are subject to a number of
risks and uncertainties which could cause actual results to differ materially
from those projected, including: competition within each of the Company's
business segments; business strategies and their intended results; the balance
between supply of and demand for hotel rooms, timeshare units and senior living
accommodations; the Company's continued ability to obtain new operating
contracts and franchise agreements; the Company's ability to develop and
maintain positive relations with current and potential hotel and retirement
community owners; the effect of international, national and regional economic
conditions; the availability of capital to fund investments; the Company's
ability to achieve synergies and performance improvements subsequent to closing
on acquisitions; the ability of the Company, and other parties upon which the
Company's businesses also rely, to modify or replace on a timely basis, their
computer software and other systems in order to function properly prior to, in
and beyond, the year 2000; and other risks described from time to time in the
Company's filings with the Securities and Exchange Commission, including those
set forth on Exhibit 99 filed herewith. Given these uncertainties, readers are
cautioned not to place undue reliance on such statements. The Company also
undertakes no obligation to publicly update or revise any forward-looking
statement to reflect current or future events or circumstances.

PART I -- FINANCIAL INFORMATION

Item 1. Financial Statements
- -------- --------------------

MARRIOTT INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
($ in millions, except per share amounts)
(Unaudited)

Twelve weeks ended Twenty-four weeks ended
--------------------------------- -------------------------------
June 19, June 20, June 19, June 20,
1998 1997 1998 1997
------------ ------------- ----------- ------------

SALES
Lodging
Rooms.................................................... $ 1,260 $ 1,061 $ 2,326 $ 1,959
Food and beverage........................................ 531 393 934 714
Other.................................................... 342 260 647 491
------- ------- ------- -------
2,133 1,714 3,907 3,164
Contract Services.......................................... 406 481 824 940
------- ------- ------- -------
2,539 2,195 4,731 4,104
------- ------- ------- -------
OPERATING COSTS AND EXPENSES
Lodging
Departmental direct costs
Rooms.................................................. 292 232 525 429
Food and beverage...................................... 402 289 685 528
Remittances to hotel owners (including $181,
$147, $359 and $288, respectively, to
related parties)....................................... 540 361 922 680
Other operating expenses................................. 721 689 1,439 1,263
------- ------- ------- -------
1,955 1,571 3,571 2,900
Contract Services.......................................... 398 465 811 910
------- ------- ------- -------
2,353 2,036 4,382 3,810
------- ------- ------- -------
OPERATING PROFIT
Lodging.................................................... 178 143 336 264
Contract Services.......................................... 8 16 13 30
------- ------- ------- -------
Operating profit before corporate
expenses and interest.................................. 186 159 349 294
Corporate expenses.......................................... (24) (20) (49) (40)
Interest expense............................................ (6) (8) (9) (15)
Interest income............................................. 8 6 18 11
------- ------- ------- -------
INCOME BEFORE INCOME TAXES.................................. 164 137 309 250
Provision for income taxes.................................. 63 53 119 97
------- ------- ------- -------
NET INCOME.................................................. $ 101 $ 84 $ 190 $ 153
======= ======= ======= =======

BASIC EARNINGS PER SHARE.................................... $ .40 $ .33 $ .75 $ .60
======= ======= ======= =======

DILUTED EARNINGS PER SHARE.................................. $ .37 $ .31 $ .70 $ .57
======= ======= ======= =======

DIVIDENDS DECLARED PER SHARE................................ $ .095 $ .095
======= =======

See notes to condensed consolidated financial statements.

MARRIOTT INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
($ in millions)

June 19, January 2,
1998 1998
------------ ------------
ASSETS (Unaudited)

Current Assets
Cash and equivalents.......................................................... $ 318 $ 289
Accounts and notes receivable................................................. 793 724
Other......................................................................... 389 354
-------- --------
1,500 1,367
-------- --------

Property and equipment............................................................. 1,812 1,537
Intangibles........................................................................ 1,737 1,448
Investments in affiliates.......................................................... 264 530
Notes and other receivable......................................................... 382 414
Other.............................................................................. 294 261
-------- --------
$ 5,989 $ 5,557
======== ========

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities
Accounts payable.............................................................. $ 858 $ 839
Other......................................................................... 817 800
-------- --------
1,675 1,639
-------- --------

Long-term debt..................................................................... 352 112
Other long-term liabilities........................................................ 993 910
Convertible subordinated debt...................................................... 316 310
Shareholders' Equity
Class A common stock, 255.6 million shares issued............................. 3 -
Additional paid-in capital.................................................... 2,701 -
Retained earnings............................................................. 75 -
Treasury stock, at cost....................................................... (126) -
Investments and net advances from Old Marriott................................ - 2,586
-------- --------
2,653 2,586
-------- --------
$ 5,989 $ 5,557
======== ========

See notes to condensed consolidated financial statements.

MARRIOTT INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
($ in millions)
(Unaudited)

Twenty-four weeks ended
---------------------------------------
June 19, June 20,
1998 1997
----------- ------------

OPERATING ACTIVITIES
Net income...................................................................... $ 190 $ 153
Adjustments to reconcile to cash provided by operations:
Depreciation and amortization.................................................. 62 53
Income taxes and other......................................................... 74 84
Timeshare activity, net........................................................ 34 (10)
Working capital changes........................................................ (55) (19)
-------- --------
Cash provided by operations..................................................... 305 261
-------- --------

INVESTING ACTIVITIES
Acquisitions.................................................................... (48) (854)
Dispositions.................................................................... 89 182
Capital expenditures............................................................ (369) (201)
Loan advances................................................................... (18) (34)
Loan collections and sales...................................................... 122 24
Other........................................................................... (53) (73)
-------- --------
Cash used in investing activities............................................... (277) (956)
-------- --------

FINANCING ACTIVITIES
Issuances of long-term debt..................................................... 701 7
Repayments of long-term debt.................................................... (460) (7)
Advances (to) from Old Marriott................................................. (114) 779
Issuances of Class A common stock............................................... 2 -
Dividends paid.................................................................. (12) -
Purchases of treasury stock..................................................... (116) -
-------- --------
Cash provided by financing activities........................................... 1 779
-------- --------
INCREASE IN CASH AND EQUIVALENTS.................................................... 29 84
CASH AND EQUIVALENTS, beginning of period........................................... 289 239
-------- --------
CASH AND EQUIVALENTS, end of period................................................. $ 318 $ 323
======== ========

See notes to condensed consolidated financial statements.

MARRIOTT INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1. Basis of Presentation
---------------------

The accompanying condensed consolidated financial statements present the
results of operations, financial condition and cash flows of Marriott
International, Inc. (together with its subsidiaries, the Company), formerly
New Marriott MI, Inc., as if it were a separate entity for all periods
presented. Until March 27, 1998, the Company was a wholly-owned subsidiary of
the former Marriott International, Inc. (Old Marriott).

The accompanying condensed consolidated financial statements have been
prepared without audit. Certain information and footnote disclosures normally
included in financial statements presented in accordance with generally
accepted accounting principles have been condensed or omitted. The Company
believes the disclosures made are adequate to make the information presented
not misleading. However, the condensed consolidated financial statements
should be read in conjunction with the combined financial statements and
notes thereto included in the Company's Annual Report on Form 10-K for the
fiscal year ended January 2, 1998. Capitalized terms not otherwise defined
herein have the meanings specified in the Annual Report.

In the opinion of the Company, the accompanying condensed consolidated
financial statements reflect all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial position of
the Company as of June 19, 1998 and January 2, 1998, the results of
operations for the twenty-four weeks and twelve weeks ended June 19, 1998 and
June 20, 1997 and cash flows for the twenty-four weeks ended June 19, 1998
and June 20, 1997. Interim results are not necessarily indicative of fiscal
year performance because of seasonal and short-term variations. All material
intercompany transactions and balances between Marriott International, Inc.
and its subsidiaries have been eliminated.

2. Spinoff
-------

On March 27, 1998, all of the issued and outstanding common stock of the
Company was distributed, on a pro rata basis, as a special dividend (the
Spinoff) to holders of common stock of Old Marriott, and the Company was
renamed "Marriott International, Inc." Old Marriott's historical cost basis
in the assets and liabilities of the Company has been carried over. Old
Marriott received a private letter ruling from the Internal Revenue Service
that the Spinoff would be tax-free to it and its shareholders. For each share
of common stock in Old Marriott, shareholders received one share of Company
Common Stock and one share of Company Class A Common Stock. On May 21, 1998,
all outstanding shares of Company Common Stock were converted, on a one-for-
one basis, into shares of Company Class A Common Stock. Company Class A
Common Stock is listed on the New York Stock Exchange.

Also on March 27, 1998, Old Marriott was renamed Sodexho Marriott Services,
Inc. (SMS) and its food service and facilities management business was
combined with the North American operations of Sodexho Alliance, S.A.
(Sodexho), a worldwide food and management services organization.

For purposes of governing certain of the ongoing relationships between the
Company and SMS after the Spinoff and to provide for orderly transition, the
Company and SMS entered into various agreements including the Employee
Benefits and Other Employment Matters Allocation Agreement, Liquid Yield
Option Notes (LYONs) Allocation Agreement, Tax Sharing Agreement, Trademark
and Trade Name License Agreement, Noncompetition Agreement, Employee Benefit
Services Agreement, Procurement Services Agreement, Distribution Services
Agreement and other transitional services agreements. Effective as of the
Spinoff date, pursuant to these agreements, the Company assumed sponsorship
of certain of Old Marriott's employee benefit plans and insurance programs
and succeeded to Old Marriott's liability to LYONs holders under the LYONs
Indenture, nine percent of which was assumed by SMS.

Changes in Investments and Net Advances from Old Marriott represent the net
income of the Company plus the net cash transferred between Old Marriott and
the Company, and certain non-cash items.

Prior to the Spinoff, the Company operated as a unit of Old Marriott,
utilizing Old Marriott's centralized systems for cash management, payroll,
purchasing and distribution, employee benefit plans, insurance and
administrative services. As a result, substantially all cash received by the
Company was deposited in and commingled with Old Marriott's general corporate
funds. Similarly, operating expenses, capital expenditures and other cash
requirements of the Company were paid by Old Marriott and charged directly or
allocated to the Company. Certain assets and liabilities related to the
Company's operations were managed and controlled by Old Marriott on a
centralized basis. Prior to the Spinoff such assets and liabilities were
allocated to the Company based on the Company's use of, or interest in, those
assets and liabilities. In the opinion of management, the methods for
allocating costs, assets and liabilities prior to the Spinoff were
reasonable. The Company now performs these functions independently and the
costs incurred have not been materially different from those allocated prior
to the Spinoff.

3. Earnings Per Share
------------------

For periods prior to March 27, 1998, the number of weighted average shares
outstanding and the effect of dilutive securities used in the earnings per
share calculations are based upon the weighted average number of Old Marriott
shares outstanding, and the Old Marriott effect of dilutive securities for
the applicable period, adjusted (i) for the distribution ratio in the Spinoff
of one share of Company Common Stock and one share of Company Class A Common
Stock for every share of Old Marriott common stock, and (ii) to reflect the
conversion of Company Common Stock into Company Class A Common Stock on May
21, 1998.

The following table illustrates the reconciliation of the earnings and number
of shares used in the basic and diluted earnings per share calculations (in
millions, except per share amounts).

Twelve weeks ended Twenty-four weeks ended
------------------------- -----------------------
June 19, June 20, June 19, June 20,
1998 1997 1998 1997
--------- --------- --------- --------

Computation of Basic Earnings Per Share

Net income................................... $ 101 $ 84 $ 190 $ 153
Weighted average shares outstanding.......... 254.1 253.4 253.8 253.0
------- ------- ------- --------

Basic Earnings Per Share..................... $ .40 $ .33 $ .75 $ .60
======= ======= ======= ========

Computation of Diluted Earnings Per Share

Net income................................... $ 101 $ 84 $ 190 $ 153
After-tax interest expense on convertible
subordinated debt........................... 2 2 4 4
------- ------- ------- --------

Net income for diluted earnings per share... $ 103 $ 86 $ 194 $ 157
======= ======= ======= ========

Weighted average shares outstanding.......... 254.1 253.4 253.8 253.0

Effect of Dilutive Securities
Employee stock purchase plan............... - - - -
Employee stock option plan................. 9.1 7.7 9.1 7.5
Deferred stock incentive plan.............. 5.7 5.8 5.6 5.8
Convertible subordinated debt.............. 9.5 9.5 9.5 9.5
------- ------- ------- --------
Shares for diluted earnings per share....... 278.4 276.4 278.0 275.8
------- ------- ------- --------

Diluted Earnings Per Share................... $ .37 $ .31 $ .70 $ .57
======= ======= ======= ========

The effect of dilutive securities is computed using the treasury stock method
and average market prices during the period. The if-converted method is used
for convertible subordinated debt.

4. Acquisitions
------------

Renaissance Hotel Group N.V. On March 29, 1997, the Company acquired
substantially all of the outstanding common stock of Renaissance Hotel Group
N.V. (RHG). The purchase cost of $937 million was funded by Old Marriott. The
Company's reported results of operations include RHG's operating results from
the date of acquisition. Unaudited pro forma results of operations of the
Company for the twenty-four weeks ended June 20, 1997, as if RHG had been
acquired on January 4, 1997, would have resulted in sales of $4,302 million,
net income of $148 million, and diluted earnings per share of $.55 after
deducting pro forma interest expense of $12 million as if the acquisition
borrowings had been incurred by the Company. The unaudited pro forma results
of operations do not reflect the Company's expected future results of
operations.

The Ritz-Carlton Hotel Company LLC. On March 19, 1998, the Company increased
its ownership interest in The Ritz-Carlton Hotel Company LLC to approximately
98 percent for consideration of approximately $90 million. The Company
expects to acquire the remaining two percent within the next several years.
The acquisition has been accounted for using the purchase method of
accounting. Prior to March 19, 1998, the Company's investment in The Ritz-
Carlton Hotel Company LLC was accounted for using the equity method of
accounting.

5. Commitments
-----------

The Company issues guarantees to lenders and other third parties in
connection with financing transactions and other obligations. These
guarantees are limited, in the aggregate, to $251 million at June 19, 1998,
including $80 million applicable to guarantees by or debt obligations of Host
Marriott, partnerships in which Host Marriott is the general partner or other
affiliated entities. New World and another affiliate of Dr. Cheng (a Director
of the Company) have severally indemnified the Company for guarantees by RHG
of leases with minimum annual payments of approximately $59 million.

As of June 19, 1998, the Company had extended approximately $168 million of
loan commitments to owners of lodging and senior living properties. Letters
of credit outstanding on the Company's behalf at June 19, 1998 totaled $122
million, the majority of which related to the Company's self-insurance
program. At June 19, 1998, the Company had a repurchase obligation of $72
million related to notes receivable from timeshare interval purchasers that
have been sold with limited recourse.

6. Comprehensive Income
--------------------

In 1998, the Company adopted Statement of Financial Accounting Standards
(FAS) No. 130, "Reporting Comprehensive Income" by including footnote
disclosure of comprehensive income. All components of other comprehensive
income up to the date of the Spinoff were reflected within Investments and
Net Advances from Old Marriott during such periods. Total comprehensive
income was $115 million and $76 million, respectively, for the twelve weeks
ended June 19, 1998 and June 20, 1997, and was $200 million and $144 million,
respectively, for the twenty-four weeks ended June 19, 1998 and June 20,
1997. The principal difference between net income and total comprehensive
income relates to foreign currency translation adjustments.

7. New Accounting Standards
------------------------

The Company will adopt FAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information" in the fourth quarter of 1998. The
Company will adopt FAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities", which is expected to have no material effect on the
Company's consolidated financial statements, in the fourth quarter of 2000.

On November 20, 1997, the Emerging Issues Task Force (EITF) of the Financial
Accounting Standards Board reached a consensus on EITF 97-2 "Application of
FASB Statement No. 94 and APB Opinion No. 16 to Physician Practice Management
Entities and Certain Other Entities with Contractual Management
Arrangements." EITF 97-2 addresses the circumstances in which a management
entity may include the sales and expenses of a managed entity in its
financial statements. As a result of EITF 97-2, and related discussions with
the staff of the Securities and Exchange Commission, in the 1998 fourth
quarter the Company will change its accounting policy to no longer include
the working capital and sales of managed hotels and retirement communities in
its financial statements. Instead, the Company's sales will include fees
earned plus costs recovered from owners of managed hotels and retirement
communities. Prior periods will be restated. Reflecting this change in
accounting policy in the Company's financial statements would have reduced
each of sales and operating expenses by approximately $596 million and $457
million for the twelve weeks ended June 19, 1998 and June 20, 1997,
respectively, and by approximately $1,092 million and $825 million for the
twenty-four weeks ended June 19, 1998 and June 20, 1997, respectively, and
each of current assets and current liabilities by approximately $526 million,
as of June 19, 1998, with no impact on operating profit, net income, earnings
per share, debt or equity.

Item 2. Management's Discussion and Analysis of Results of Operations and
- --------------------------------------------------------------------------
Financial Condition
- -------------------

RESULTS OF OPERATIONS/(1)/

Twelve Weeks Ended June 19, 1998 Compared to Twelve Weeks Ended June 20, 1997
- -----------------------------------------------------------------------------

The Company reported net income of $101 million for the 1998 second quarter, on
sales of $2,539 million. This represents a 20 percent increase in net income and
a 16 percent increase in sales over the second quarter of 1997. Diluted
earnings per share of $.37 for the quarter increased 19 percent over the 1997
amount.

LODGING operations reported a 24 percent increase in operating profit on 24
percent higher sales. The results reflect room rate growth at U.S. hotels well
in excess of inflation, contributions from new units, and expansion of Marriott
Vacation Club International. Sales for full-service and luxury brands comprised
over 75 percent of total lodging sales.

A net total of 48 hotels (7,241 rooms) were added during the second quarter of
1998, increasing the Company's total hotels to 1,554 (309,964 rooms). Hotels by
brand are as indicated in the following table, which reflect a total of 32
Courtyard, Renaissance and Marriott Hotels, Resorts and Suites properties (9,338
rooms) which were "reflagged" from Ramada International and New World in the
1998 second quarter.

Hotels at June 19, 1998
-----------------------------------
Company-operated Franchised
------------------ ---------------
Units Rooms Units Rooms
-------- --------- ------- -------

Marriott Hotels, Resorts and Suites......... 207 89,601 134 40,590
Ritz-Carlton................................ 34 11,628 - -
Renaissance................................. 68 27,220 14 5,483
New World................................... 7 3,651 - -
Ramada International........................ 11 2,038 39 6,576
Courtyard................................... 232 34,870 150 18,241
Residence Inn............................... 117 15,472 160 17,448
Fairfield Inn and Suites.................... 51 7,136 314 27,714
TownePlace Suites........................... 3 285 5 507
Marriott Executive Residences and Other..... 8 1,504 - -
----- ------- ---- -------
Total....................................... 738 193,405 816 116,559
===== ======= ==== =======

Sales for Marriott Hotels, Resorts and Suites increased nine percent over the
prior year period. An eight percent increase in average room rates, to $141,
partially offset by a slight decrease in occupancy to 81 percent, generated a
REVPAR increase of six percent. REVPAR growth was reduced during the 1998
quarter due to the timing of the Easter holiday. Profits increased as improved
REVPAR generated higher base management, franchise and incentive fees at many
hotels.

____________
/(1) /Average daily rate, occupancy and REVPAR statistics are based on
comparable Company-operated U.S. properties, except for Fairfield Inn and
Suites, which data also include comparable franchised units.

Renaissance hotels posted a REVPAR increase of seven percent due to a seven
percent increase in average room rates to $134 with occupancy unchanged at 73
percent. Renaissance is now integrated into the Marriott reservation system, as
well as sales, marketing and other programs.

Ritz-Carlton reported an increase in average room rates of nine percent, to
$218, with occupancy down two percentage points to 78 percent, resulting in a
seven percent increase in REVPAR. The results of Ritz-Carlton properties have
been consolidated following the increase in the Company's ownership interest to
approximately 98 percent on March 19, 1998, resulting in sales of approximately
$220 million during the 1998 quarter, with no impact on net income.

The combined limited-service lodging brands reported 11 percent higher sales.
Profit growth over the prior year reflected increased base and incentive
management fees on Company-operated properties and the expansion of franchising
programs. The limited-service brands added a net of 40 properties (4,472
rooms), primarily franchises, during the second quarter of 1998.

. The Company's quality tier extended-stay brand, Residence Inn, posted a
REVPAR increase of four percent, due to an increase in average room rates of
five percent to $100, partially offset by a one percentage point decrease in
occupancy to 85 percent. Residence Inn opened 13 properties during the
quarter.

. Courtyard, the Company's moderate-price lodging brand, achieved a 12 percent
increase in sales. Courtyard's average room rates increased eight percent to
$91, while occupancy decreased slightly to 82 percent, resulting in a REVPAR
increase of seven percent. Courtyard opened 11 properties during the quarter.

. Fairfield Inn and Suites, the Company's economy lodging brand, posted an
increase in average room rates of four percent to $56, which was partially
offset by a slight decrease in occupancy to 77 percent, resulting in an
increase in REVPAR of four percent. Fairfield Inn and Suites opened 14
properties during the quarter.

Marriott Vacation Club International posted substantial profit growth in the
1998 second quarter. The division generated a 14 percent increase in contract
sales, reflecting strong sales activity at timeshare resorts in South Carolina,
Hawaii and California, as well as higher financing income.

CONTRACT SERVICES reported operating profit of $8 million on sales of $406
million in the 1998 second quarter, representing 50 percent and 16 percent
decreases, respectively, from the second quarter of 1997. Profit growth was
impacted by the April 1997 sale of five senior living communities and the June
1997 sale of 29 communities, all of which the Company continues to operate under
long-term agreements. Operating profit for Contract Services increased four-
fold from the 1997 second quarter after adjusting for the impact of these
transactions.

Marriott Senior Living Services reported higher sales, and solid profit growth
in the 1998 second quarter, adjusting for the impact of the real estate
transactions cited above. Results were aided by contributions from 16 senior
living communities added over the past 12 months. Occupancy for comparable
communities increased one percentage point to 94 percent in the quarter. The
division now operates 95 independent full-service and assisted living
communities totaling approximately 18,400 units. Marriott plans to add more
than 200 senior living communities over a five-year period (1998-2002).

Marriott Distribution Services (MDS) achieved higher profits in the 1998 second
quarter, despite lower sales. The division benefited from consolidation of its
food distribution facilities, and the realization of operating efficiencies
following a period of rapid expansion in 1996-97.

CORPORATE ACTIVITY. Interest expense decreased by $2 million, primarily due to
Host Marriott's assumption of $187 million of mortgage debt associated with the
June 1997 sale of 29 senior living communities, partially offset by the interest
costs arising from 1998 investing activities and share repurchases of
approximately $116 million during the quarter. Interest income increased by $2
million reflecting higher notes receivable balances. Corporate expenses
increased due to year 2000 software modification costs of $3 million as well as
non-cash items associated with investments generating significant income tax
benefits. The effective income tax rate decreased from 39 percent to 38.5
percent primarily due to the increased proportion of foreign operations in
countries with low effective tax rates.

Twenty-Four Weeks Ended June 19, 1998 Compared to Twenty-Four Weeks Ended June
- ------------------------------------------------------------------------------
20, 1997
- --------

The Company reported net income of $190 million for the first two quarters, on
sales of $4,731 million. This represents a 24 percent increase in net income and
a 15 percent increase in sales over the same period in 1997. Diluted earnings
per share of $.70 for the period increased 23 percent over the corresponding
1997 period.

LODGING operating profits were up 27 percent, on a sales increase of 23 percent.
The revenue increase primarily resulted from REVPAR growth across all brands and
the addition of 434 hotels since the beginning of 1997. This revenue growth
resulted in the Company earning higher base management and franchise fees and
also contributed to higher house profits which resulted in higher incentive
management fees. Sales for full-service and luxury brands comprised 75 percent
of total lodging sales.

Sales for Marriott Hotels, Resorts and Suites increased eight percent over the
prior year period. An eight percent increase in average room rates, partially
offset by a one percentage point decline in occupancy, generated a REVPAR
increase of seven percent. Profits increased as improved REVPAR generated
higher base management fees and higher house profits, resulting in increased
incentive fees at many hotels.

Renaissance hotels achieved a REVPAR increase of seven percent due to a seven
percent increase in room rates to $134, partially offset by a slight decrease in
occupancy to 71 percent. Renaissance is now integrated into the Marriott
reservation system, as well as sales, marketing and other programs.

Ritz-Carlton reported an increase in average room rates of 10 percent, to $216,
while occupancy decreased two percentage points to 77 percent, resulting in a
seven percent increase in REVPAR.

Limited-service brands represented about 18 percent of total lodging sales for
the first two quarters, and each of the brands increased REVPAR for this period.

. Residence Inn posted a REVPAR increase of four percent, due to an increase in
average room rates of six percent to $100, partially offset by a decrease in
occupancy to 84 percent. Sales growth in 1998, of 10 percent, also benefited
from the addition of 53 properties since the beginning of fiscal year 1997.

. Courtyard achieved a 12 percent increase in sales. Courtyard's average room
rates increased nine percent to $91, while occupancy dropped slightly to 80
percent, resulting in a REVPAR increase of seven percent. Sales and profits
also reflect the addition of 70 units since the beginning of fiscal year 1997.

. Fairfield Inn and Suites achieved a four percent increase in REVPAR, driven by
a five percent increase in average room rates to $56, marginally offset by a
one percentage point decrease in occupancy to 73 percent. Fairfield Inn and
Suites has opened 81 properties since the beginning of fiscal year 1997.

Marriott Vacation Club International generated a 10 percent increase in contract
sales. The Company experienced increased profits from resort development,
together with increased financing income.

CONTRACT SERVICES reported operating profit of $13 million on sales of $824
million in 1998, representing 57 percent and 12 percent decreases, respectively,
from the first two quarters of 1997. Profit growth was impacted by the April
1997 sale of five senior living communities, and the June 1997 sale of 29
communities, all of which the Company continues to operate under long-term
agreements. Operating profit for Contract Services more than doubled over the
first two quarters of 1997 after adjusting for the impact of these transactions.

Marriott Senior Living Services reported higher sales for the first two quarters
of 1998, before the impact of the real estate transactions cited above. Results
were boosted by contributions from 23 senior living communities added since the
beginning of 1997 and an increase in occupancy for comparable communities to 95
percent.

Marriott Distribution Services generated higher profits in the first two
quarters of 1998, despite lower sales, reflecting increased operating
efficiencies.

CORPORATE ACTIVITY. Interest expense decreased by $6 million, primarily due to
Host Marriott's assumption of $187 million of mortgage debt associated with the
June 1997 sale of 29 senior living communities, partially offset by the interest
costs arising from 1998 investing activities and share repurchases of
approximately $116 million during 1998. Interest income increased by $7 million
reflecting higher notes receivable balances. Corporate expenses increased due to
year 2000 software modification costs of $6 million as well as non-cash items
associated with investments generating significant income tax benefits. The
effective income tax rate decreased from 39 percent to 38.5 percent primarily
due to the increased proportion of foreign operations in countries with low
effective tax rates.

LIQUIDITY AND CAPITAL RESOURCES

Cash and equivalents totaled $318 million at June 19, 1998, an increase of $29
million from year end. Cash provided by operations of $305 million increased 17
percent over 1997. EBITDA increased by $62 million, or 19 percent, to $380
million. EBITDA is an indicator of operating performance which can be used to
measure the Company's ability to service debt, fund capital expenditures and
expand its business. However, EBITDA is not an alternative to net income,
operating profit, cash from operations, or any other operating or liquidity
measure prescribed by generally accepted accounting principles.

Net cash used in investing activities totaled $277 million for the first two
quarters of 1998, primarily comprising the increase in the Company's ownership
interest in The Ritz-Carlton Hotel Company LLC, together with expenditures for
the development of limited-service lodging properties and senior living
communities, partially offset by proceeds from loan collections and sales. Cash
generated from dispositions of $89 million was primarily due to the sales of
limited-service lodging properties and senior living communities.

The Company continues to grow its businesses, in part, by investing in new
units. The Company's principal investments will continue to include loans,
minority equity interests, business acquisitions and direct development and
ownership of certain lodging and senior living services projects. The Company
expects to sell certain lodging and senior living service properties under
development, or to be developed, while continuing to operate them under long-
term agreements. The Company believes that cash generated by operations,
together with its borrowing capacity and proceeds from the sale of assets, will
be sufficient to finance its planned growth and capital requirements.

The Company purchased 3.5 million shares in the twelve weeks ended June 19,
1998, at a cost of $116 million. As of June 19, 1998, the Company had been
authorized by its Board of Directors to purchase a further 16.5 million shares.

In 1996 MDS became the exclusive provider of distribution services to Boston
Chicken Inc. (BCI). In May 1998, BCI disclosed that its independent auditors had
expressed substantial doubt about BCI's ability to continue as a going concern.
MDS continues to distribute to BCI and has been receiving full payment in
accordance with the terms of its contractual relationship with BCI. If the
contract were to terminate, or if BCI were to cease or substantially curtail its
operations: (i) MDS may be unable to recover some or all of an aggregate of
approximately $32 million (calculated as of June 19, 1998) in contract
investment, receivables, and inventory; and (ii) MDS would have warehouse
capacity and rolling stock in excess of its likely future requirements.

The Company, like most computer users, will be required to modify or replace
significant portions of its computer software and other systems so that they
will function properly prior to, in the year 2000, and beyond. The Company has
assembled a dedicated team to address the year 2000 issue. This team has
completed an inventory of most significant systems requiring modification, and
has completed the remediation of some significant systems. Many of the costs to
be incurred will be reimbursed to the Company or otherwise paid directly by
owners and clients, pursuant to existing contracts. Estimated pre-tax
costs to be borne by the Company are approximately $40 to $50 million and will
be expensed as incurred. These amounts are subject to numerous estimation
uncertainties including the extent of work to be done, availability and cost of

consultants and the extent of testing required. The Company believes that it has
allocated adequate resources for this purpose and expects its year 2000 program
to be completed on a timely basis. However, there can be no assurance that the
systems of other parties upon which the Company's businesses also rely will be
converted on a timely basis. The Company could be materially adversely affected
by the failure of its systems and applications, or those operated by other
parties, to properly address the year 2000 issue.

Item 3. Quantitative and Qualitative Disclosures About Market Risk
- -------------------------------------------------------------------

There have been no material changes to the Company's exposures to market risk
since January 2, 1998.

PART II -- OTHER INFORMATION

Item 1. Legal Proceedings
- --------------------------

There are no material legal proceedings pending against the Company.

On May 27, 1998, the Company entered into a settlement agreement (the Settlement
Agreement) with Interstate Hotels Company (Interstate), Patriot American
Hospitality, Inc. (Patriot American) and Wyndham International, Inc. (Wyndham),
which settled certain litigation described in the Company's Form 10-Q for the
quarter ended March 27, 1998. The Settlement Agreement provides for, among
other things, the following: (i) the spinoff by Patriot American, within 180
days after the merger of Interstate and Wyndham (which was reported to have
occurred on June 2, 1998), of an independent, publicly-traded company
encompassing Interstate's third-party management business, including the
management of 42 Marriott-branded properties; (ii) the assumption by the Company
of management of 10 Marriott-branded hotels currently owned and operated by
Interstate; and (iii) the conversion by Patriot American of 10 Marriott-branded
hotels owned by Interstate to Wyndham-branded hotels. Each of the Company and
Patriot American will own four percent of the outstanding shares of the spun off
company, and each will have the right to elect two directors of the nine-member
board of directors until such time as Patriot American, on the one hand, or the
Company, on the other hand, owns less than 50 percent of their original
investment in the spun off company. The new company will have two principal
subsidiaries, and own an approximately 35 percent managing interest in the
subsidiary that will conduct Interstate's third-party hotel management business.
Patriot American will retain an approximately 65 percent non-voting ownership
interest in that subsidiary. The new company will also own 99.99 percent of its
other subsidiary, which will enter into a management agreement with the Company,
and the Company will own a 0.01 percent interest in this subsidiary allowing
certain consent rights with respect to its management agreements. The settlement
also includes the amendment of existing contracts to give the Company rights of
first refusal on future sales of certain Marriott-branded hotels owned by
Patriot American, and the amendment of certain territorial restrictions to allow
the Company to operate additional hotels in certain markets and to permit
Patriot American to convert existing Marriott hotels in certain markets to
Wyndham hotels. If the spinoff does not occur, the parties have agreed that
neither Patriot American, Wyndham nor any of their affiliates will qualify as
approved Marriott hotel operators, and that the Company will be free to enforce
its rights under the amended franchise agreements, including rights to
liquidated damages with respect to Marriott-branded properties where Interstate
is the owner/manager or manager and franchisee. The agreements now provide that
the Company will have rights to purchase several of the hotels at appraised
value, and the right to demand an approved operator for the remaining Marriott-
branded hotels.

Item 2. Changes in Securities
- ------------------------------

On May 21, 1998, all of the outstanding shares of Company Common Stock were
converted, on a one-for-one basis, into shares of Company Class A Common Stock.
This action was taken by the Board of Directors under authority granted by the
Company's certificate of incorporation, as a result of the shareholder vote at
the Registrant's Annual Meeting of Shareholders described in Item 4 below.

Item 3. Defaults Upon Senior Securities
- ----------------------------------------

None.

Item 4. Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------

On May 20, 1998, the Company held its Annual Meeting of Shareholders. The
shareholders (i) re-elected directors Gilbert M. Grosvenor, Richard E. Marriott
and Harry J. Pearce to terms of office expiring at the 2001 Annual Meeting of
Shareholders, (ii) ratified the adoption of the Company's 1998 Employee Stock
Purchase Plan and the reservation of 5 million shares of Common Stock for
issuance thereunder, (iii) defeated a proposal to retain two classes of the
Company's common stock in the current form, (iv) defeated a proposal to retain
two classes of the Company's common stock, with certain modifications, (v)
defeated a shareholder proposal to adopt cumulative voting for the election of
directors, and (vi) defeated a shareholder proposal with respect to certain
attributes of individuals to be directors of the Company. The following table
sets forth the votes cast with respect to each of these matters.

- ----------------------------------------------------------------------------------------------------------------
MATTER FOR AGAINST WITHHELD ABSTAIN BROKER
NON-VOTES
- ----------------------------------------------------------------------------------------------------------------

Re-election of
Gilbert M. Grosvenor 1,245,653,848 17,704,621
- ----------------------------------------------------------------------------------------------------------------
Re-election of
Richard E. Marriott 1,245,845,000 17,513,469
- ----------------------------------------------------------------------------------------------------------------
Re-election of
Harry J. Pearce 1,245,581,050 17,777,419
- ----------------------------------------------------------------------------------------------------------------
Ratification of 1998
Employee Stock Purchase Plan,
and reservation of 5 million
shares of Common Stock for
issuance thereunder 1,242,053,492 15,746,391 5,558,586
- ----------------------------------------------------------------------------------------------------------------
Proposal to retain two classes of
Common Stock in current form 660,435,293 502,763,391 8,797,008 91,362,777
- ----------------------------------------------------------------------------------------------------------------
Proposal to retain two classes of
Common Stock, with certain
modifications 644,609,692 517,976,380 9,409,620 91,362,777
- ----------------------------------------------------------------------------------------------------------------
Proposal to adopt cumulative
voting for the election of
directors 165,618,800 964,522,420 41,854,472 91,362,777
- ----------------------------------------------------------------------------------------------------------------
Proposal with respect to certain
attributes of individuals to be
directors of the Company 78,663,355 1,070,556,761 22,775,576 91,362,772
- ----------------------------------------------------------------------------------------------------------------

Item 5. Other Information
- --------------------------

None.

Item 6. Exhibits and Reports on Form 8-K
- ------------------------------------------

(a) Exhibits

Exhibit
No. Description
--- -----------

27 Financial Data Schedule for the Registrant.

99 Forward-Looking Statements.

(b) Reports on Form 8-K

(1) The Company filed a report dated May 21, 1998, disclosing the
conversion, on a one-for-one basis, of all of the outstanding shares of
Company Common Stock, into shares of Company Class A Common Stock.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

MARRIOTT INTERNATIONAL, INC.

/s/ Stephen E. Riffee
July 31, 1998 ----------------------------
Stephen E. Riffee
Vice President, Finance and
Chief Accounting Officer