Marriot Case Brief 1. What is the weighted Average Cost of Capital for Marriot Corporation? WACC for Marriott Corp is 11.89 WACC of divisions: Lodging 10.29‚ Restaurant 13.49‚ Contract Services 13.615 a) What risk-free rate and the risk premium did you use to calculate the cost of equity? We used 8.95% as the risk free rate (LT Government Debt) and the MRP we used was 7.43%‚ which means are expected market return is 8.95+7.43=16.38% b) How did you measure Marriott’s cost of debt? We added
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Marriott Corporation: The Cost of Capital (Abridged) 1. How does Marriott use its estimate of cost of capital? Does this make sense? Marriot use cost of capital as the hurdle rate (minimum rate of return required to accept the project) to discount future cash flows for the investment projects of the three lines of business (Lodging‚ Contract Services and Restaurants). They use this rate to calculate NPV and net present value over cost to decide for the profit rate. Since cost of the project
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* βD = 8.95% + 3.06% * 0.3595 = 10.05% We calculated the weigth average of the βu of different pure plays in the hotel industry and got βu = 0.4113(details in Excel file) The assumption during the calculation of βu is that all the debts are risk free and there are no taxes for these hotels to simplify the calculation. In reality‚ it is impossible to have no taxes‚ but the case did not provide the relevant information and we can get an approximate result without big errors due to the feature
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Marriott Corporation The Cost of Capital Author Student Number 董晖 林桐 吴正浩 祝承懿 Shanghai Advanced Institute of Finance‚ Shanghai Jiao Tong University Table of Contents Background The hurdle rate is the required return or opportunity cost of each division and company. Only project with positive NPV discounted by hurdle rate will be invested‚ and the total return of Marriott up to all projects invested. Though there are many subjective aspects in estimation
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Strengths and Weaknesses The ideal joint partnership for Marriott will be with a corporation that has tangible and intangible resources (i.e.‚ assets‚ skilled employees) and years of experiences in the business which would be complementary (Schmitz‚ 2012; Jurevicius‚ 2013); therefore‚ assessing the strengths and weaknesses of a potential partner is vital. Strengths. Strengths of Frasers are analyzed to determine how they align with Marriott’s search for joint partnership (Fraser Centrepoint
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UNIVERSITY MARRIOTT CORPORATION BONDHOLDERS VERSUS EQUITY HOLDERS On October 5‚ 1992‚ Marriott Corporation announced a plan to restructure the company by splitting itself into two parts. The announcement caused immediate and opposite price movements for its stock and its bonds. Stockholders were happy and bondholders were in a furor‚ particularly those that bought a new issue of bonds in April. The Restructuring Plan The two separate companies were to be Marriott International and Host Marriott. The
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When J. Willard Marriott opened his first nine stool A&W restaurant in Washington D.C. on May 20‚ 1927 he had no idea what his name would mean to the world one day. John Willard Marriott was born on September 17‚ 1900. He was from a farm in Utah where he spent his childhood and young adult ages working for his parents. Early on‚ J. Willard was a young mind looking for business. When he was old enough his dad let him travel for the family business. While he was going through Washington D.C. he
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EXECUTIVE SUMMARY 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
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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
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Overview Location: Chevy Chase‚ MD Building Type: Hospitality – renovation of a hotel built in 1970 Project Scope: 125‚000 SF‚ 226-room hotel in an urban setting Completed: July 2009 Rating: LEED® for New Construction Ver. 2.2 Level: Gold candidate Courtyard by Marriott‚ Chevy Chase is a 226room hotel located in the Friendship Heights neighborhood of Chevy Chase‚ MD. The hotel primarily serves the business travelers visiting various corporate headquarters and institutions in the area‚ including National
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