Marriott Corporation Cost Of Capital

Bethesda, Maryland is the headquarters of Marriott International Incorporate. This unique organization transpired from a root beer stand in 1927 into a world-renowned hospitality hotel chain in 1957. Information provided will focus on the evolution of the root beer stand into the Marriott International Incorporate vast hospitality empire. Today, the Marriott hospitality industry has 5,756 hotels with 30 brands in 118 countries with 1.1 million rooms. Additionally, the Marriott generated $14 billion in revenue during 2016 and had over 85 million combined loyalty members between the Marriott and Starwood Preferred Guest reward programs. Furthermore, Marriott partnered with Universal Music Group to bring their rewards member’s additional

By 1980, more than 23,000 rooms were offered through 55 hotels and resorts located primarily in the U.S. Approximately 70% of company-operated rooms were owned by outside investors and managed by Marriott under agreements averaging 70 years in length. These management agreements contributed approximately $40 million to operating profits in 1979—profits that tended to rise with inflation. Contract Food Service (32% of sales)—Marriott operated almost 300 contract food units, providing a wide range of food service capabilities to a variety of clients. It was the world 's leading supplier of catering services to airlines, with 62 flight kitchens serving domestic and international air travelers. The Food Service Management Division also managed restaurants, cafeterias, conference centers and other facilities for over 200 clients, including business, health care, and educational institutions. Restaurants (25% of sales)—Marriott 's Restaurant Group consisted of 476 company-owned units offering a variety of popularly priced food in 46 states. Roy Rogers fast food restaurants and Big Boy coffee shops accounted for 92% of the total units. Theme Parks and Cruise Ships (8% of sales)—The two Great America theme parks, located in Gurnee, Illinois, between Chicago and, Milwaukee, and in Santa Clara, California, were opened in 1976. Both parks combined a wide variety of thrill and

The Marriott family owns approximately 30% of MI, controlling roughly 14% of MI’s outstanding stock (Rosenwald, 2011). MI’s executive council is fairly similar to many other companies. Their executive council consists of 17 people, with a recent change due to J.W. Marriott stepping down from his CEO position. (Appendix 1.2) J.W. Marriott Jr. was CEO of MI from 1972 up until March 2012; though he has stepped down as CEO he is still an active and vocal contributor to MI. The new President and CEO of the company Arne M. Sorenson, is the first person without the Marriott name to take on a large role in the company. MI has nearly 3,800 properties in 74 countries and territories, 3,100 properties being in North America. There are over 275 properties in Europe, 65 in the Caribbean and Latin America, 40 in the Middle East and Africa and 29 in the Asia-Pacific. MI made up 4.8% of the market share in 2011, making it the number one ranked hotel globally (Marriott, 2013). Currently, MI has approximately 300,000 employees (Marriott, 2013).

For the risk-free rate, we decided to use the 30-year old Treasury yield, which is currently 4.6%. We believe it is important to match the time horizon when comparing financial assets. Given that stocks have essentially an endless time horizon, the 30-year Treasury seems a more reasonable asset by which to compare stocks. 1-month Treasury Bills, for instance, are comparable to safety-deposit boxes, which are completely safe, but cannot ever yield a return. It’s highly likely that no financial analyst would ever compare a stock to a deposit box; hence, it also doesn’t make sense to compare stocks with very short-term Treasury Bills.

Since its foundation in 1927 Marriott Corporation grew into one of the leading lodging and food services in the US. With three major business lines: lodging, contract services and related business, Marriott has the intention to remain a premier growth company. To achieve this goal the corporation’s strategy is to develop aggressively appropriate opportunities within their business lines. Marriott would like to be the preferred employer, the preferred provider and the most profitable company in each of the operating areas. The financial strategy includes four key elements:

The following case analysis portraits the use of capital asset pricing model to compute the weighted average cost of capital for Marriott and each of its divisions. The flow of events below is following a string of different evaluations, each of which is assessed separately.

First of all, if one’s ambition is without compassion, it can often manifest as greed-one of the prime vices of humanity. Often, there is a very thin line blurring the differences between ambition and greed, and this line is completely reduced to rubble in the absence of ambition. Moreover, many great leaders have had their ambitions corrupted into greed as a result of their own voracious hunger for power, at the expense of innocent lives. This exact lust for power was also illustrated in Shakespeare’s tragic play, Macbeth, in which the titular character is shown to be chief of this vile manifestation of ambition. This is proven when Macbeth is shown to be mulling about whether he should partake in the regicide of his King Duncan, his own

The compensation plan then reflects hurdle rates, which makes managers more sensitive to Marriott’s financial strategy and capital market conditions. Thirdly, Marriott could modify its hurdle rate to change its projected growth. A lower hurdle rate would expand the company faster than a higher one would.

Marriott’s flagship brand continues to target customers needing fine restaurants, meeting rooms, athletic facilities, and other upscale amenities. But Marriott added seven additional brands according to its view on market segments — Courtyard by Marriott, Fairfield Inn, Residence Inn, TownePlace Suites, SpringHill Suites,

In 2004, Majestica had a market capitalization of $1.7 billion1 and generated revenue of more than $2.3 billion (see Exhibit 2). Majestica earned revenue both from hotel management and hotel ownership operations. In the past five years, Majestica shifted away from owning hotels and focused on managing hotels. In 2004, 80 per cent of Majestica’s earnings before other

Kimi Ford is a portfolio manager at NorthPoint Group, a mutual-fund management firm. She is evaluating Nike, Inc. (“Nike”) to potentially buy shares of their stock for the fund she manages, the NorthPoint Large-Cap Fund. This fund mostly invests in Fortune 500 companies, with an emphasis on value investing. This Fund has performed well over the last 18 months despite the decline in the stock market.

Marriott International envisions itself to be the world’s lodging leader. Its mission is to provide the best possible lodging services experience to customers who vary in backgrounds, language, tradition, religion and cultures all around the world. Marriot is committed to environmental preservation through using environment-friendly technology and engages in social responsibility and community engagement.  We value our shareholder’s so we will only take steps that will ensure our growth. Most importantly, through our “spirit to serve”, we emphasize the importance of Marriott’s people and recognize the value they bring to the organization’s growth and success. It aims to increase revenues by 9% every year, to increase

In the case of Marriott it started evaluating using a controlled group of customers up to the stage of acquiring an enterprise tool known as One Yield to automate business processes and make better decision [12]. Lastly analytics takes a devoted group of people and infrastructure, according to Davenport the “most successful analytical competitors take an enterprise approach to analytics” [7]

c) There is not a lot of incentive in areas where minimal business takes place. Marriott chooses to keep businesses where it is less likely to have repeat visitors because it keeps them marketable and maintenance is minimal. However, where there is a lot of repeat business, such as downtown in cities, there is a lot of incentives for

When most people think of Marriot, they will often associate it with a large hotel chain. While this is true, the reality is that the firm is actively involved in managing different hospitality related properties. A few of the most notable include: Renaissance Hotels, Autograph Collection, Courtyard, Fairfield Inn & Suites, Spring Hill Suites, Residence Inn, Towne Place Suites, the Ritz-Carlton, Bulgari Hotels & Resorts and EDITION. However, to fully understand the firm's business model requires focusing on: the chairman / CEO's reports, the mission statement, the financial health of the organization and projecting the future performance of the company. Together, these different elements will highlight Marriot's underlying strengths and weaknesses. ("About Marriot," 2012)