Marriott Case |

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

How did you measure the cost of debt for each division? Should the debt cost differ across divisions? Why?

The Marriott Corporation (MC), had seen a long, successful reign in the hospitality industry until the late 1980s. An economic downturn and the 1990 real estate crash resulted in MC owning newly developed hotel properties with no potential buyers in sight and a mound of debt. During the late 1980s, MC had promised in their annual reports to sell off some of their hotel properties and reduce their burden of debt. However, the company made little progress toward fulfilling that promise. During 1992, MC realized that financial results were only slightly up from the previous year and their ability to raise funds in the capital market was severely limited. MC was left with little choice, as they had to

How does Marriott use its estimate of its cost of capital? Does this make sense?

A correct response requires that you find an appropriate industry beta and measure for levered/unlevered betas and requires that you define cost of equity capital and free cash flow (FCF) – you may need a formula for FCF.

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 Warsaw Marriott case that’s assessed in this paper is a decision case where Stan Bruns (at the time general manager of the Warsaw Marriott) had to make important decisions regarding its pricing strategy and think of ways to protect Marriott’s work force from its comp set.

In calculating the cost of equity for the lodging division of Marriott, we used a risk-free rate of -2.69% which

2. How does Marriott use its estimate of its cost of capital? Does this make sense?

The hotel chain, Astor Lodge and Suites, Inc., operates 250 properties in 10 western and Rocky Mountain states. The company’s customer base primarily comprises business travelers. In addition, the locations of the properties surround airports, large regional shopping centers, and major highways close to suburban industrial sites as well as office complexes. Projections of 2005 fiscal year forecast a fifth consecutive year of a gross loss for the firm. The estimates include an anticipated $422.6 million in company lodging revenues but a net loss of $15.7 million for 2005. As a result, Joseph James, president and CEO of Astor Lodge and Suites, Inc., initiated a challenging goal for executive management to devise a strategy achieving net profits in two years and sustaining positive growth in the future.

• What is the cost of capital for Marriott’s as a whole at the prevailing capital structure vs. at the target capital structure.

Problem Losing Money: Astor Lodge & Suites, Inc., a 250 property hotel chain, is about to post its fifth consecutive unprofitable fiscal year. Requirements: Prepare Presentation for new President and CEO, Joseph James, describing each VPs 1) his or her initiatives, expenditures, and outcomes for each of the past two fiscal years, and 2) planned initiatives and budgetary needs for fiscal 2006. 3) Show how their staffs prior and planned initiatives and expenditures contributed the company's EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) - the corporate performance metric recently

Until the fifth year, when the net income would reach $356,188 under the 65/35 debt to equity ratio. This would ultimatley meet the client’s expectations. As opposed to using the 80/20 debt to equity ratio where the net income would only be $146,917 by year

As a gamer enters the extraordinary location of MGM Grand, located in the heart of Las Vegas, it is no wonder that most of their profitability comes from gambling. MGM Grand casino offers a multitude of games from blackjack, craps, roulette, slot machines, poker and more. Gaming profits are high in Las Vegas with the plethora of casinos available. The MGM Grand, not only is the second largest hotel in the world, but has one of the largest gaming floors in Las Vegas. However, the biggest question MGM Grand’s President and Chief Operating Officer, Gamal Aziz faces; how can the hotel advertise non-gaming entertainment to create more profitability? Understanding non-gaming customers has become a critical factor in the growth of MGM Grand. MGM Grand

The case is about the Accra Beach Hotel on the Caribbean island of Barbados. The hotel manager got a request from the West Indien Cricket Board (WICB) about hosting several cricket teams while the West Indien Cricket Servies, which is an important international sporting event. The head of the WICB was asking for a discount for 50 of the 141 rooms of the hotel. Now the sales manager has to decide whether to accept the inquiry or not. One important thing for her to consider is that business people, who are the most important guest group, would be stay away because of the cricket teams. On the other hand would hosting the teams have a publicity effect as the marketing