Keyword
in
Collection
Date
to
Marriott Corporation, 1980 Annual Report
Image 24
Citation
MLA
APA
Chicago/Turabian
Marriott International, Inc.. Marriott Corporation, 1980 Annual Report - Image 24. 1980. Hospitality Industry Archives, Conrad N. Hilton College of Hotel and Restaurant Management, University of Houston. University of Houston Digital Library. Web. July 7, 2020. https://digital.lib.uh.edu/collection/hiltonar/item/1134/show/1113.

Disclaimer: This is a general citation for reference purposes. Please consult the most recent edition of your style manual for the proper formatting of the type of source you are citing. If the date given in the citation does not match the date on the digital item, use the more accurate date below the digital item.

Marriott International, Inc.. (1980). Marriott Corporation, 1980 Annual Report - Image 24. Annual Reports from the Hospitality Industry Archives. Hospitality Industry Archives, Conrad N. Hilton College of Hotel and Restaurant Management, University of Houston. Retrieved from https://digital.lib.uh.edu/collection/hiltonar/item/1134/show/1113

Disclaimer: This is a general citation for reference purposes. Please consult the most recent edition of your style manual for the proper formatting of the type of source you are citing. If the date given in the citation does not match the date on the digital item, use the more accurate date below the digital item.

Marriott International, Inc., Marriott Corporation, 1980 Annual Report - Image 24, 1980, Annual Reports from the Hospitality Industry Archives, Hospitality Industry Archives, Conrad N. Hilton College of Hotel and Restaurant Management, University of Houston, accessed July 7, 2020, https://digital.lib.uh.edu/collection/hiltonar/item/1134/show/1113.

Disclaimer: This is a general citation for reference purposes. Please consult the most recent edition of your style manual for the proper formatting of the type of source you are citing. If the date given in the citation does not match the date on the digital item, use the more accurate date below the digital item.

URL
Embed Image
Compound Item Description
Title Marriott Corporation, 1980 Annual Report
Creator (LCNAF)
  • Marriott International, Inc.
Publisher Marriott International, Inc.
Date 1980
Description Marriott Corporation Annual Report for calendar year 1980.
Subject.Topical (LCSH)
  • Hospitality industry
  • Hotel management
  • Corporation reports
Subject.Name (LCNAF)
  • Marriott International, Inc.
Genre (AAT)
  • annual reports
  • business records
Language English
Type (DCMI)
  • Text
  • Image
Original Item Location Marriott Hotels Collection
Digital Collection Annual Reports from the Hospitality Industry Archives
Digital Collection URL http://digital.lib.uh.edu/collection/hiltonar
Repository Hospitality Industry Archives, Conrad N. Hilton College of Hotel and Restaurant Management, University of Houston
Repository URL http://www.uh.edu/hilton-college/About/hospitality-industry-archives
Use and Reproduction No Copyright - United States
File Name index.cpd
Item Description
Title Image 24
Format (IMT)
  • image/jpeg
File Name hiltonar_201609_052_024.jpg
Transcript Financial Strategy During 1979 and 1980, Marriott Corporation repurchased 13 million shares of its common stock for $259 million. I nvestors have placed various interpretations on this strategy. Actually, this action represented the most reasonable alternative for using the substantial excess debt capacity which accumulated in the late 1970s. Interest Coverage* 76 77 78 79 80 "The ratio of earnings before net interest taxes and non-cash cha rges, less required capital replacements, divided by net interest expense. Excess Debt Capacity In 1975, Marriott Corporation conducted a strategic self-appraisal which concluded that maintaining 20% earnings' growth and improving return on investment would be the principal financial objectives for the remainder of the decade. Management designed and implemented a three-pronged program to: □ Sell idle and low yielding assets. □ Increase return requirements on new capital investment □ Reduce capital intensity of the hotel business by emphasizing management agreements. By the end of 1979 the program had exceeded expectations: Return on investment had doubled, net income had grown at a 31 % compounded rate and interest coverage had risen from 3.8 to 6.8 times. Internal projections indicated that during the 1980s the company would realize its targeted 20% average annual earnings'growth rate within existing business lines, without acquisition or further diversification. Projections also indicated interest coverage would continue to rise and the company would build substantial excess debt capacity. Maintaining excess debt capacity is inconsistent with the goal of maximizing shareholder wealth: □ Unused debt capacity is comparable to unused plant capacity, because the existing equity base can support additional productive assets. Fully utilizing this capacity maximizes shareholders' returns. □ Debt is less expensive than equity because it is tax deductible. High proportions of debt therefore, reduce a company's weighted cost of capital and increase the real returns to shareholders. □ Debt-financed real estate provides distinct advantages in an inflationary environment Strategic Alternatives Four possible alternatives existed for utilizing Marriott's excess debt capacity: 1. Accelerate growth of existing businesses. Since Marriott already was growing its businesses rapidly, further acceleration could outpace the company's ability to develop sufficient operating management 2. Diversify. Senior management's attention was focused on an aggressive hotel expansion program. The risk of diluting these energies in a concurrent diversification effort seemed imprudent Further, many other firms were attempting to solve their excess liquidity problems by acquisition—resulting in unattractive prices for quality opportunities. 3. Increase dividends. Marriott could pay out large dividends if investments yielding returns in excess of the compa ny's cost of capital were unobtainable. However, dividends would be taxed at ordinary income tax rates. 4. Repurchase shares. If the company's shares were undervalued, share repurchase could yield high financial returns. Further, the company also could utilize its debt capacity without straining operating management or assuming the risks associated with diversification. After a thorough study of the company's business prospects and projected cash flows, management concluded that the shares were undervalued. 20