...When Nell Williams was the director of revenue management responsible for the 400-room Long Wharf Marriott in Boston, there were certain days of the week-Wednesdays, Thursdays and Saturdays-when she could easily sell out the hotel twice over. But on other nights, like Sundays, occupancy rates dipped so dramatically that she would've been lucky to have filled the rooms three times a year. Both situations presented challenges for Williams, whose job was not just to sell rooms but to sell them in such a way that would make the most money for the hotel. She used a combination of pricing and inventory controls to maximize profits. On the high-demand nights, she had to be careful not to sell out early at low rates. She also had to consider lengths of stay. There were plenty of business travelers wanting to stay one night and willing to pay top dollar. But those customers would not help her fill the hotel on less busy days the way a three-night stay might. Meanwhile, on Sundays, she needed enough rooms available at the lower rates to attract customers, but not so many that she might give rooms away to someone willing to pay more. Back then (some 17 years ago), Williams and her counterparts tackled these challenges on an ad hoc basis, with only homegrown statistics and their wits to help them decide what rates to offer to any given customer. Such prognostication took up the better part of her day. Today, Marriott's revenue managers can do the same work in less than an hour thanks...
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...2013 AnnuAl RepoRt Find Your WorldSM ONLINE. TOuR OuR INTERACTIvE ANNuAL REpORT AT MARRIOTT.COM/INvESTOR. MARRIOTT INTERNATIONAL , INC. A MESSAGE FROM OuR EXECuTIvE CHAIRMAN J.W. Marriott, Jr. Executive Chairman and Chairman of the Board There are so many ways to Find Your World at Marriott International. Our more than 3,900 hotels in more than 70 countries provide the stage for you to close that important business deal, take your loved ones on a beach vacation, or explore new destinations on a journey of personal discovery. For our guests and approximately 325,000 associates at headquarters and our managed and franchised hotels, we are working hard to help you meet your goals, whether it’s creating lasting memories or building on life’s successes. I am so proud of our company. Something I’ve noticed even more in my role as Executive Chairman is that Marriott’s history and culture are the foundation for our future. Our stakeholders recognize this, too. I am confident we’ll continue our success and come even closer to realizing our vision of being the best lodging company in the world. In 2013, our strategy delivered great results. We grew our portfolio, and had more hotels in the pipeline than any time in Marriott’s history. Our leadership teams created new opportunities for growth across the globe, from opening one of every five new rooms in the u.S. and setting us up for growth in Africa, to accelerating our growth in Asia and creating and launching...
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...The Early Years 1927-1956: Marriott Takes Flight It all began with an A&W root beer stand. Founder J. Willard Marriott and his wife, Alice, got their young business off the ground by quenching people’s thirst during Washington D.C.’s hot, muggy summers. Good food and good service at a fair price became a guiding principle for Hot Shoppes restaurants--and for Marriott International as it grew. The Growth Years 1957-1985: A World of Hospitality Marriott made a historic shift into the hotel business in 1957. The world’s first motor hotel opened in Arlington, Virginia, under the management of J. Willard Marriott’s son, Bill. Over the next 25 years, Marriott became a diverse global enterprise, and Bill Marriott became a visionary CEO whose leadership transformed the hospitality industry. The Modern Years 1986-2011: A Bed for Every Traveler One company, many brands--that’s the innovative model that Marriott began building in the late 1980s. From pioneering the extended-stay business to launching distinctive brands geared toward the business traveler to increasing its presence overseas, Marriott International broke new ground in its quest to become the #1 hospitality company in the world. Looking Ahead 2012: Success Is Never Final Today we’re on a mission to shape the future of travel through technology and innovation. From mobile check-in and lobby Greatrooms to transforming the meeting experience with our Red Coat Direct app, we’re making travel more brilliant for our guests...
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...Marriott Corporation: The Cost of Capital Executive Summary J. Willard Marriott started Marriott Corporation in 1927 with a root beer stand, expanding it into a leading lodging and food service company with sales of over $6 billion by 1987. At the time, Marriott had three main lines of business, lodging, contract services and restaurants, with lodging generating about 51% of company’s profits. The four key elements of Marriott’s financial strategy were managing hotel assets rather than owning, investing in projects with the goal of increasing shareholder value, optimizing the use of debt, and repurchasing their undervalued shares. Marriott Corporation relied on measuring the opportunity cost of capital for investments by utilizing the concept of Weighted Average Cost of Capital (WACC). In April 1988, VP of project finance, Dan Cohrs suggested that the divisional hurdle rates at the company would have a key impact on their future financial and operating strategies. Marriott intended to continue its growth at a fast pace by relying on the best opportunities arising from their lodging, contract services and restaurants lines of businesses. To make the company managers more involved in its financial strategies, Marriott also considered using the hurdle rates for determining the incentive compensations. What is the weighted average cost of capital (WACC) for Marriott Corporation? WACC = (1 - τ)rD(D/V) + rE(E/V) D = market value of debt E = market value of equity V...
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...| | |Marriott Corporation: | |Cost of Capital | Concepts Covered Cost of Equity: Cost of Equity is the minimum rate of return a firm must offer to the shareholders. This is necessary as the shareholders who have taken a risk in investing would be waiting for returns. The formula for Cost of Equity is given by: Cost of Equity = (Dividend per share/ Current Market Value of Stock) * Growth rate of Dividends Cost of debt: - Cost of debt is the effective interest rate that a company pays on its debt. Cost of debt is usually calculated after the interest expenses are deducted Cost of debt = Cost of Debt before tax (i.e. Interest rate) * (1-Tax Rate) WACC: Weighted average cost of capital is one of the measures to calculate the cost of capital of the firm. Weighted Average Cost of Capital is the minimum return a firm must earn on existing assets to keep its stock price constant and satisfy its creditors and owners. [pic] c = weighted average cost of capital y = Expected rate of return on equity (cost of equity) b = Expected...
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...Marriott - The Cost of Capital 1/25/2012 Since Marriott and its three divisions all have debt and equity in their capital structure. The cost of capital is the same as Weighed average of cost of capital WACC. WACC = Rd x Wd x (1-T) + Re x We Cost of debt (pretax) = Rd | |Debt Rate Premium Over |Government Rate* |Pretax Cost of debt | | |Government | | | |Mariott |1.30% |8.95% |10.25% | |Lodging |1.10% |8.95% |10.05% | |Contract Services |1.40% |6.90% |8.30% | |Restaurants |1.80% |6.90% |8.70% | For each division, cost of debt is calculated by US government interest rate plus premium. For Marriott and Lodging, since they have longer useful lives, we use 30 year US government interest rate of 8.95%; for Contract service and restaurants, which have shorter useful life, we use 1 year US government interest rate of 6.9%. Tax rate From Income Statement, tax rates from 1978 to 1987 range from 37% to 47%, average of 42%...
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...Marriott Case Study In this summary, we are going to discuss Marriott’s strategy points for maintaining its status as a premier growth company, weighted average cost of capital (WACC), divisional hurdle rates, and justification of numbers used in calculations. Marriott’s strategic plan to maintain its status as a premier growth company can be broken into four distinct areas: managing (as opposed to owning) hotel assets, choosing investments that increase shareholder value, optimizing the use of debt within the capital structure, and repurchasing undervalued shares. The choice to manage hotel assets has the benefit of freeing up capital to invest in other opportunities. This allows for more growth throughout the company. Investing in projects that increase shareholder value through the use of a discounted cash flow technique also enhances growth opportunities. Optimizing the debt portion of their capital structure allows them to focus on the ability to service their debt, instead of targeting a debt to equity ratio. This ensures that their capital is efficiently utilized. The final financial strategy to discuss here is Marriott’s repurchasing of undervalued shares. This allows for more retained earnings, which again speaks to their efforts to efficiently utilize capital. All four of these strategic decisions ensure that capital is efficiently utilized towards growth, which is clearly in line with the company’s goal of remaining a premier growth company. Marriott uses the weighted...
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...Functions of Human Resource Management in Mariott Success Functions of HRM Human resource management of Marriott has a great role in contributing to the hotels success. Marriott is known for its hospitality and a smooth working environment. HRM has big role in the success of Marriott. A. Primary functions of human resource management in Marriott’s success 1. Staffing (recruitment and selection) Most appropriate and suitable person to a particular job is selected. Potential applicants are interviewed with a face meeting with members of management. One on one interviews, Panel interviews, Sequence interviews are performed to ensure the right person for the job. Background investigation and medical tests are also conducted. 2. Compensation and benefits There is an equitable internal wage structure, a competitive benefits package, as well as incentives for the Marriott employees. Salaries and Wages are given keeping in mind all the following factors: • Cost of living • Supply and demand of labor • Government requirements (minimum wage rates) • Competitor wage scales • Trade Union influences • Labor productivity • Health, safety and security of the employees is given the first priority. 3. Human Resource Planning: This is concerned with planning for both present and future demand and supplies. Marriott has done well in implementing a successful strategic plan and adaptions for the future changes in the market 4. Equal employment Marriott is...
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...Today, the Sheraton Hotel hosts the Rex Ball, and the Mariott Hotel hosts the Comus Ball. Previously, the two balls were held together in the city’s Municipal Auditorium with a large curtain dividing the two balls. The large curtain would be drawn back initiating the Meeting of the Courts, making the tradition very simple and open to everyone (Hémard). Unfortunately, the Municipal Auditorium suffered severe damage from the levees breaking during Hurricane Katrina forcing the two old-line organizations to change venues to two hotels on Canal Street (Hémard). The change of venue brought about a new tradition of rolling out a red carpet on Canal Street making a pathway for Rex, his Queen, and the court to head to the Comus Ball at the Marriott...
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...Functions of HRM Human resource management of Marriott has a great role in contributing to the hotels success. Marriott is known for its hospitality and a smooth working environment. HRM has big role in the success of Marriott. A. Primary functions of human resource management in Marriott’s success 1. Staffing (recruitment and selection) Most appropriate and suitable person to a particular job is selected. Potential applicants are interviewed with a face meeting with members of management. One on one interviews, Panel interviews, Sequence interviews are performed to ensure the right person for the job. Background investigation and medical tests are also conducted. 2. Compensation and benefits There is an equitable internal wage structure, a competitive benefits package, as well as incentives for the Marriott employees. Salaries and Wages are given keeping in mind all the following factors: • Cost of living • Supply and demand of labor • Government requirements (minimum wage rates) • Competitor wage scales • Trade Union influences • Labor productivity • Health, safety and security of the employees is given the first priority. 3. Human Resource Planning: This is concerned with planning for both present and future demand and supplies. Marriott has done well in implementing a successful strategic plan and adaptions for the future changes in the market 4. Equal employment Marriott is concerned with both moral and legal responsibilities and prevents...
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...of debt in the capital structure, supports the growth target, since debt is a cheaper than equity to finance the future growth. Strategy four, repurchasing undervalued shares, generates value for shareholders equivalent to positive NPV project. Q2: Ways Mariott uses its estimate of its cost of capital Marriott uses its estimate of its cost of capital to choose possible investment projects, determine incentive compensation and calculate the warranted equity value. Marriott uses different hurdle rates for different divisions to discount the future cash flow to decide which project to invest. It makes sense as projects for different divisions bear different risks. And Marriott sets different bonus awards for managers who have different responsibilities. And the awards are connected with divisional returns as well as divisional hurdle rates. This also makes sense as managers in different positions face different markets. At last, Marriott discounts the firm’s equity cash flows by its equity cost of capital, which is the hurdle rate for the equity of the whole company. It is the base to decide whether the Marriott should employ a repurchase. It also makes sense as the calculation is logical. Q3: Calculation of WACC for Mariott Corporation: assumptions of the risk free rate,...
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...Национальный исследовательский университет Высшая школа экономики Факультет экономики Кафедра экономики и финансов фирмы Домашнее задание №8 По курсу «Корпоративные финансы-2» Кейс на тему «Анализ дивидендной политики компании «Mariott» Выполнили студенты: Группа 1 Абдухамидов Антон Гусамов Степан Данилова Екатерина Жегусов Владимир Исайчев Дмитрий Козловская Анна Москва 2011 Цель работы: Проанализировать решение компании по выкупу акций Задачи: * Дать описание компании и ее положения на рынке * Обосновать решение компании на основе теории * Провести практический анализ решений компании * Сделать выводы по проделанной работе Постановка проблемы Компания “Marriott” считает, что ее акций существенно недооценены (на рынке торгуются по цене $19,625). В связи с этим компания планирует выкупить 10 млн. акций (из 32 млн. выпущенных). Однако, выкупать акции планирует по цене на $4 выше текущей рыночной. Описание компании Marriott Corporation была основа в 1927 году. Изначально, компания специализировалась на ресторанном бизнесе и предоставляла контрактные услуги по обеспечению питанием на самолетах. В начале 40-х годов компания начинает предоставлять услуги в сфере гостиничного бизнеса. Гостиничный бизнес (35% выручки): компания распоряжается 23,000 комнат в 55 отелях, расположенных, в основном, в США. 70% комнат принадлежат внешним инвесторам и управляются компанией на основе 70-летних соглашений. Контрактное питание (32% выручки):...
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...As an OJT practicumer I learned lots of knowledge by doing my assigned task. I was assigned in Concierge Department, in Concierge Department we are responsible in taking care of the baggage and other things of our guest. In 38 days of staying and having an OJT in Mariott Hotel and Resorts, I learned the importance of great impression. Because in our industry which is the Tourism Industry, our impression to our guest is very important. Just “show simple smile, be friendly and approachable with them it will give a good impact and also it encourage the guest to come back again in our establishment. Another one is the safety and security of the guest and also of their belongings. We all know that safety and security is the priority of our industry and the number one standards of a guest before staying in one place (where they are safe from danger or not) .Another one is the passion for service, a passion means having a passion for something and having a strong interest in it and like it very much. In this matter, I realize that we must have a passion in our works so we can do and done it very well. And at the same time were enjoying, because we loved what we’re doing even if this is hard nor easy. And last but not the least is courtesy to our valued guest. This kind of action must implement and develop in one of each personnel that are involved in Tourism Industry. This kind of action or act are consist of four aspects, first one is politeness, second one is respect, third one is...
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...Advanced Corporate Finance Marriott Case 1.The WACC for Marriot Corp is 10.68% if taken alone. Another way would be to use the standardized weights of all the other divisions lodging,restaurant and contract services WACC . This gives us a WACC of 10.21% for the Entire Entity. a.The risk free rate used was 4.58% (Long Term Us Government Bond Returns 1926-1987) as these represent an asset of similar risk and longevity(Lodging can be considered to be a long term business).The Market Risk used was the S&P 500 composite(1926-1987) which was 12.01% .The risk premium in this case turned out to be Market Risk-Risk Free = 7.43% 2. If they are opening a new restaurant or lodging facility one can use Mariotts WACC to decide whether to go ahead with the project proposal or not. 3.Lodging Division WACC = 9.17% , Restaurant Division WACC=11.83% a.For all the divisions the risk free rate used was 4.58% (Long Term Us Government Bond Returns 1926-1987) as these represent an asset of similar risk and longevity.The market risk and market risk premium used for all cases was the S&P index 12.01% and 7.43% respectively. b.Cost of Debt : Marriot Marriott =8.95%(Debt Equivalent 30 Yr Maturity) + 1.3% (Premium)=10.25% Lodging =8.95%(Debt Equivalent 30 Yr Maturity) + 1.1% (Premium)=10.05% Marriott and Lodging were considered to long term business with a shelf life of 30 years Lodging =8.72%(Debt Equivalent 10 Yr Maturity) + 1.4% (Premium)=10.35% Contract =8.72%(Debt Equivalent...
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...Marriott Corporation: The Cost of Capital (Abridged) Dan Cohrs, Vice President of Marriott Corporations project finance, prepared his annual recommendations for the hurdle rates. The year before, Marriott’s sales grew 24%, sales and earnings per share had doubled the last 4 years and the ROE stood at 22%. The strategy of Marriott was to remain a growth company. The goal was to be one of most preferred employer, the most profitable company and a preferred provider. The financial strategy of Marriott was about 4 criteria: 1. Manage rather than own Hotels assets 2. Invest in projects that increase shareholder value 3. Optimize the use of dept in the capital structure 4. Repurchase undervalued shares. Manage rather than own hotels assets Marriott became on of the largest commercial real estate developers in the US. Marriott sold hotels assets to limited partners but retained operating control as the general partner. 3% of revenue and 20% profit before depreciation typically equalled management fees. During 1987, 70 Courtyard hotels and 3 Marriott hotels were syndicated $890.000.000. The company operated about $7 billion worth oft he syndicated hotels in total. Invest in projects that increase shareholder value The company uses a discount cash flow technique and the hurdle rates to a specific project that was based on market interest rates, project risk and estimates of premium risk. They also used a cash flow forecast. Optimize the use of debt in the capital...
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