Marriott Corporation: The Cost of Capital (Abridged) General Approach The company is split into 3 divisions Lodging‚ Contract Services and Restaurants. The WACC for each of the 3 divisions and then subsequently the entire corporation’s WACC need to be calculated. This will be done through calculating the WACC for each of the 3 divisions and then taking a weighted average of these 3 divisional WACC numbers to get the overall Marriott Corporation WACC. 1. Calculating the Beta a
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Executive Summary This report is prepared to be the first document evaluating Myanmar’s attractiveness for consideration of establishing Marriott Hotels and Resorts in this country. The best location for the hotel is chosen to be the city called Yangon since it offers a wide variety of activities for travelers with different interests. Yangon Marriott Hotels and Resorts will be attracted to upscale visitors who wish to stay in a luxury‚ five-star hotel with exceptional service quality‚ while
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capital for Marriott as a whole to be 9.68%. The divisions of Lodging‚ Contract Services and Restaurants had WACCs of 8.14%‚ 13.33%‚ and 9.63% respectively. The only variable between these divisions that remains consistent is the tax rate. Marriott has a target rate for each of the divisions’ capital structures‚ which affects their debt and equity betas. Also‚ there are stark differences between the betas in the segments‚ as well as the different assumptions a financial analyst must use when calculating
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Analysis of Marriott International: A closer look Marriott International was founded on May 15‚ 1927 by J. Willard Marriott in Washington D.C. It started out as a root beer stand which grew into a chain of restaurants and hotels (Marriott International Inc.‚ 2013). Now Marriott International has around 3‚150 properties for lodging in the United States and 67 in other countries (Marriott International Inc‚ 2012). The Executive Chairman is Bill Marriott and the President and CEO is Arne Sorenson.
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13% of sales in 1987 respectively. Marriott is determined to develop and to enhance its position in each division and remain a premier growth company as stated in the annual report (1987). This key objective implies to become the most profitable company‚ be the preferred provider as well as preferred employer. Analysis the four key elements of Marriott’s financial strategy we arrive at the following conclusion: a) Managing rather than owning hotels assets‚ Marriott can become more focused on its core
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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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Marriott Rooms Forecasting Case Study This case involves the study of the Hamilton Hotel and the use of forecasting to help predict their demand on a specific day. Marriott Hotels operated the Hamilton hotel. Marriott has been known for a culture that puts people first. Marriott is recognized worldwide for their enduring values‚ their spirit to serve‚ and their corporate commitment to creating better places to live and work. 1) Critical Issue: The critical issue is the manager has to choose
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was to find the hurdle rates for Marriott’s three divisions and for the firm as a whole. Marriott should find the hurdle rates for its divisions separately because its divisions operate in separate industries and therefore face different business risks. Marriott’s vice president says that increasing the hurdle rate by 1% would decrease the present value of project inflows by 1%. Since finding appropriate hurdle rates is critical to accepting or rejecting projects‚ Marriott should be precise by calculating
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Alice S. Marriott open the first A&W root beer franchise. Hot Mexican food is added to the menu. The addition of hot food inspires the name The Hot Shoppe. Two more Hot Shoppes are added‚ including the East’s first drive-in restaurant. “In-flight” airline catering debuts when Hot Shoppes begins delivery of boxed lunches to passengers at Hoover Airport. Hot Shoppes‚ Inc. stock becomes public at $10.25/share and sells out in two hours of trading. The 365-room Twin Bridges Marriott Motor Hotel
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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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