Marriott Case Analysis
Marriott Corporation: Case Introduction
Marriott is renowned for its elegant and comfortable hotels and resorts. The company caters to a targeted customer base, ranging from the frequent corporate business traveler to the family enjoying their occasional weekend get-away. Marriott has continued its rise in the lodging, contract services, and restaurant industries. The company continuously strives to meet the needs and wants of its customers while strategically maneuvering the rigors of today’s competitive and ever-evolving market of glamorous destinations and convenient services. In order to remain relevant in a highly-competitive environment, Marriott must strike that successful balance of minimizing costs, and gaining and effectively using financial leverage to grow its business, while also aligning its goals and value-driven strategies to maximize share holder wealth, and achieve its short- and long-term objectives through delivering the value and services that the marketplace requires.
The following discussion presents an in-depth analysis of Marriott’s financial position (through 1987) according to the Harvard Business Review Case, Marriott Corporation: The Cost of Capital (9-298-101). The case takes a detailed look at Marriott’s financial strategy and performance in efforts to determine the appropriate capital structure for the company. The analysis will further provide methodology for calculating Marriott Corporation’s weighted average cost of capital (WACC), as well as an assessment of Marriott’s investments that continuously aide the corporation in achieving a competitive advantage over their top industry competitors.
Marriott Corporation: Company Background
In 1927, newly weds J. Willard Marriott and his wife, Alice Sheets, opened a nine-stool A&W Root Beer stand called the “The Hot Shoppe” in Washington, D.C. The small venture would later flourish under a management contract for food-services with the United States Treasury, and over the next
Marriott is renowned for its elegant and comfortable hotels and resorts. The company caters to a targeted customer base, ranging from the frequent corporate business traveler to the family enjoying their occasional weekend get-away. Marriott has continued its rise in the lodging, contract services, and restaurant industries. The company continuously strives to meet the needs and wants of its customers while strategically maneuvering the rigors of today’s competitive and ever-evolving market of glamorous destinations and convenient services. In order to remain relevant in a highly-competitive environment, Marriott must strike that successful balance of minimizing costs, and gaining and effectively using financial leverage to grow its business, while also aligning its goals and value-driven strategies to maximize share holder wealth, and achieve its short- and long-term objectives through delivering the value and services that the marketplace requires.
The following discussion presents an in-depth analysis of Marriott’s financial position (through 1987) according to the Harvard Business Review Case, Marriott Corporation: The Cost of Capital (9-298-101). The case takes a detailed look at Marriott’s financial strategy and performance in efforts to determine the appropriate capital structure for the company. The analysis will further provide methodology for calculating Marriott Corporation’s weighted average cost of capital (WACC), as well as an assessment of Marriott’s investments that continuously aide the corporation in achieving a competitive advantage over their top industry competitors.
Marriott Corporation: Company Background
In 1927, newly weds J. Willard Marriott and his wife, Alice Sheets, opened a nine-stool A&W Root Beer stand called the “The Hot Shoppe” in Washington, D.C. The small venture would later flourish under a management contract for food-services with the United States Treasury, and over the next