Hbs Marriott Corporation

$.57 per share in 1988. The stock carries an historical Price to Earnings ratio of 59, and there were

earnings. The income from the sale fueled a further diversification of the company, but also a

In the open market share repurchase, the firm may or may not declare the repurchase. Depending on the market condition and the firm’s position in the industry, the firm can decide when and how many

J. Willard Marriott and Alice, his wife, started their entrepreneurship in 1927 by opening an A&W root beer stand with nine seats in Washington D.C. (Marriott, 2017). Seizing an opportunity, the Marriott’s decided to diversify the A&W root beer menu by incorporating hot food items, thus creating Hot Shoppes. When the business strategy called for expansion in 1928, two additional Hot Shoppes opened creating the first East Coast drive-in (Marriott, 2017). Concentrating on other areas of development, Hot Shoppes delivered boxed lunches to the Hoover Airport in Washington D.C. in 1937. During the mid-1960s, Hot Shoppes reached its pinnacle with approximately 75 stores in roughly a dozen states (Ambrose, 1999). Changing times caused the Marriott to re-examine the restaurant strategy and realized that they should sell off the profitable, slow-growing family restaurant that included the Roy Rogers Family Restaurants and Bob’s Big Boy (Ambrose, 1999). Sadly, the last Hot Shoppes closed in December of 1999, which ended the Marriott restaurant experience.

Marriott Corporation began from root bear stand, and developed to be the leading supplier of food services and leading logging company in the U.S. The leading parts of the business were lodging, contract services, and restaurants. Their intentions regarding the business strategy was to focus on employees and customer satisfaction. In that way, they can remain the leading growth company. The financial strategies used were:

According to the article, “[i]n 1987, Marriott’s sales grew by 24% and its return on equity stood at 22%. Sales and earnings per share had doubled over the previous four years, and the operating strategy was aimed at continuing this trend” (HBR, 9-298-101, p.1). The article also noted that the company intends to “…aggressively develop opportunities within [their] chosen line of business” (HBR, 9-298-101, p.1). Currently, Marriott’s four components of their financial strategy are:

The idea of repurchasing shares was no stranger to Bill Marriott by January 1980. Almost five million shares of common stock had been repurchased on the open market by Marriott Corporation during 1979 at a total cost of $74 million and an average price of $15.16 in the belief that they were undervalued—a belief that still was not fully reflected in the market price. At $19 5/8, the stock was selling at only six times cash flow per share; and its price/earnings ratio of nine was a far cry from historical multiples as high as fifty times as recently as 1973. Its low price seemed to offer once again an obvious opportunity to benefit shareholders. However,

Our team chose the hotel industry in the United States for our economic analysis. The hotel business has existed since the earliest times, and has influenced the development of the economy since the founding of this country.

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:

Analyst , on average , viewed the company not as much appealing at the lower price. On the other hand, back in the end of August 2000, analyst were

In January 1980, the management of the Marriott Corporation found itself in an interesting dilemma: not only did the corporation have considerable excess debt capacity, but projections of future operations and cash flows indicated that this capacity was on the rise. For Marriott, excess debt capacity was viewed as comparable to unused plant capacity because the existing equity base could support additional productive assets. Management was therefore faced with two problems. First, it needed to determine the amount of funds that would be available if Marriott's full debt capacity were utilized. Second, management needed to decide whether to invest excess funds in new or existing businesses, or to return them to the companies shareholders

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.

Despite insider buying, recent poor performance has kept the stock price at a very low level; an examination of valuation multiples and a DCF analysis imply a 50-70% upside.

RELATIVE VALUATION- ANALYSIS  Company has a higher EV/EBITDA multiple compared to peer group showing it to be undervalued. It also reflects in the value of share computed on lower side (3.5 USD)  A lower EV/EBITDA multiple (< 10) shows a matured industry with concentrated players evident in the company mix in major South American markets( Exhibit 1-5)  Price/Sales method showing a lower value due to vastly different operating margins of peer group and also

In 2016, the United States hotels & motels industry is forecast to have a value of $179.5 billion, an increase of 30.6% since 2011.