Case 1- Marriott Corporation: The Cost of Capital Some preliminary questions: 1. What do you think about Marriott’s policy of repurchasing shares? Repurchase whenever stock price < warranted equity value Does this mean the market is inefficient? 2. Why does Marriott manage rather than own hotel assets? Finding limited partners on a hotel project is equivalent to selling private equity in the project Is there any reason to
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organization that has embraced workplace diversity and has succeeded in practicing it is Marriott International. Marriott International is a worldwide leader in the hospital industry and at the same time a leader in workplace diversity. According to Marriott’s website “Our global workforce mirrors the communities where we live and work every day. Marriott ’s 137‚000 employees hail from dozens of nations‚ speak more than 50 languages and work under the Marriott banner in 70 countries and
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Marriott cost of capital Objective: 1) Calculate the divisional and the company cost of capital and explain the calculation. 2) Evaluate Marriott’s use of company cost-of-capital rate for the individual divisions. Cost of Capital for Lodging Division can be expressed as CC = We*Ce + Wd*Cd. For the weights of debt and equity (We and Wd)‚ the 1988 target-schedule rates of debt-to-assets and debt-to-equity were used as the only measures available in the case. Cost
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mission and vision statements should be clear and focused. The mission statement from Hyatt states that their mission is to provide authentic hospitality by making a difference in the lives of the people they touch every day (http://www.hyatt.com). Marriott’s mission statement reads‚ “we believe our strength is rooted in our core values: putting first‚ pursuing excellence‚ embracing change‚ acting with integrity and serving our world” (http://www.marriott.com). In comparing the two‚ it is obvious
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RITZ-CARLTON HOTEL COMPANY LLC. Marriott International believed that it could increase sales and profit margins for The Ritz-Carlton‚ a troubled chain with a significant number of properties either losing money or barely breaking even. The cost of Marriott’s initial investment was estimated to be about $200 million in cash and assumed debt. The next year‚ Marriott spent $331 million to take over The Ritz-Carlton‚ Atlanta and buy a majority interest in two properties owned by William Johnson‚ a real
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MARRIOTT RESTRUCTURING A Written Analysis of a Case by Lloyd Ty Brief Synopsis of Data On October 5‚ 1992‚ Marriott Corporation announced their plan to restructure the company by splitting itself into two separate companies. The first of the two companies‚ Marriott International (MI)‚ would manage and franchise over 700 hotels and motels. In addition‚ it would manage food and facilities for several thousand businesses‚ schools‚ retirement homes and health-care providers. On the other hand‚ Host
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timeshare‚ luxury and International. Each segment has several brands targeting different customer bases: luxury‚ upper moderate‚ moderate and lower moderate. As result‚ Marriott’s strong and rich brand portfolio gives it high brand recognition and diversified revenue resources.2 Another strategy on globalization is the Marriott’s Automated
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Strategic Management - Case Study Marriott International Introduction The report focuses on Marriott International putting strategic management at the center core of analysis and discussion that allows Marriott strengths and weaknesses to be known and be evaluated according to such SWOT related strategies‚ CPM‚ EFE‚ IE matrix and many other important points for strategic management recognition of Marriott International. There is important account to the strategic analysis of Marriott International
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components of Marriott’s financial strategy consistent with it’s growth objective? How does Marriott use its estimate of its cost of capital? Does this make sense? What is the weighted average cost of capital for Marriott Corporation? What risk-free rate and risk premium did you use to calculate the cost of equity? How do you measure Marriott’s cost of debt? Did you use arithmetic or geometric averages to measure rates of return? What type of investments would you value using Marriott’s WACC? If Marriott
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your assessment of Mr. Cohrs’ assertion that profitability decreases for increases in Marriott’s hurdle rate? – 10 marks c. What are the costs of capital for the three different divisions (lodging‚ contract services‚ and related business)? Calculate the WACC for each and clearly describe your assumptions and methods – 24 marks (8 marks for each division) d. If you were a financial analyst in Marriott’s corporate finance division‚ what would be your recommendation to the CFO regarding the
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