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Marriott Corporation, 1981 Annual Report
Image 27
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Marriott International, Inc.. Marriott Corporation, 1981 Annual Report - Image 27. 1981. Hospitality Industry Archives, Conrad N. Hilton College of Hotel and Restaurant Management, University of Houston. University of Houston Digital Library. Web. August 4, 2020. https://digital.lib.uh.edu/collection/hiltonar/item/1445/show/1427.

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.. (1981). Marriott Corporation, 1981 Annual Report - Image 27. 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/1445/show/1427

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, 1981 Annual Report - Image 27, 1981, Annual Reports from the Hospitality Industry Archives, Hospitality Industry Archives, Conrad N. Hilton College of Hotel and Restaurant Management, University of Houston, accessed August 4, 2020, https://digital.lib.uh.edu/collection/hiltonar/item/1445/show/1427.

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.

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Compound Item Description
Title Marriott Corporation, 1981 Annual Report
Creator (LCNAF)
  • Marriott International, Inc.
Publisher Marriott International, Inc.
Date 1981
Description Marriott Corporation Annual Report for calendar year 1981.
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 27
Format (IMT)
  • image/jpeg
File Name hiltonar_201609_053_027.jpg
Transcript Financial Review Despite recession, reduced air traffic and higher capital costs, Marriott Corporation continued to meet its principal financial goals of maintaining high capital productivity and 20% average annual earnings per share (EPS) growth. □ EPS grew 23% from $2.60 to $3.20, producing a five-year compound annual EPS increase of 30%. □ Return on shareholders' equity (ROE) of 23% maintains Marriott among the top 20% of Standard & Poor's 500 firms. Comparisons of Marriott's EPS and ROE to Standard & Poor's 500 are shown in the charts at right. Profit Growth Continues Sales and operating income increased 16% and 14%, respectively, fueled by unit expansion and inflation. Hotel sales rose 25%, driven by an additional 10,250 rooms and room rate increases that exceeded inflation. Operating income increased a disproportionate 12%, principally because an increasing proportion of hotels are managed. Marriott reports total sales of managed hotels yet earns only management fees. The owner's share of operating income, which must cover capital cost, is recorded as an operating expense. Thus an increasing element of ownership capital cost is present in Marriott's operating expenses. Capital cost for owned hotels is reflected as "interest expense", not operating expense. The top chart on page 26 shows that if Marriott reported only its management fees as sales, hotel profit margins would increase to 34% in 1981 and would show an increasing trend over the last five years. Consolidated profit margins would increase to 14.4% in 1981, compared to 13.9% in 1980. Some analysts feel this presentation more accurately reflects Marriott's operating performance and it will be included in future annual reports. Contract Food Services sales and operating income rose 13% and 14%, respectively, reflecting modest unit expansion and inflation. Aggressive marketing produced new customers to offset sales decreases from reduced air travel and domestic airline schedule cutbacks necessitated by the PATCO situation. Domestic divisions, paced by Terminals and Food Service Management, more than made up for a decline in international profits. Restaurant sales increased 8% with 6% more units, which reflected customer count declines and small price increases during 198 l's weak economy. However, operating income rose 17% due to stable food costs and improved labor productivity. Theme Park operating profit increased 7% with an 8% attendance gain. Net income increased 20% based on good operating performance, relatively small increases in corporate overhead and an aggressive program to utilize tax credits offered by the Economic Recovery Tax Act of 1981. Discretionary Cash Flow per share increased 30% to $5.84 as reflected in the Current Value Statement. Discretionary Cash Flow represents the company's economic profit. It reports Funds from Operations less actual capital expenditures (rather than accounting depreciation) required to maintain the competitive position of existing fixed assets. The table below shows that Discretionary Cash Flow has averaged over 80% higher than accounting earnings since 1977. Discretionary Cash Flow vs. Net Income (in millions) 1981 1980 1979 1978 1977 Cash Flow $157 $125 $118 $100 $ 81 Net Income 86 72 71 54 39 Capital Productivity Remains High ROE was 23% and return on total capital was 18%. Capital productivity has doubled since 1975 in response to Marriott's aggressive program to improve capital efficiency. Marriott plans to continue performing at these levels through the 1980s by carefully managing the balance sheet and continuing to expand hotels with management agreements. Several major transactions in 1981 boosted this program. EPS Growth Marriott vs. Standard & Poor's Return on Equity Marriott vs. Standard & Poor's 77 78 79 80 81 ■IH Marriott ■■BSS&P500 ° Projected 25