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Marriott Corporation, 1981 Annual Report
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Marriott International, Inc.. Marriott Corporation, 1981 Annual Report - Image 31. 1981. Hospitality Industry Archives, Conrad N. Hilton College of Hotel and Restaurant Management, University of Houston. University of Houston Digital Library. Web. August 9, 2020. https://digital.lib.uh.edu/collection/hiltonar/item/1445/show/1431.

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 31. 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/1431

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 31, 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 9, 2020, https://digital.lib.uh.edu/collection/hiltonar/item/1445/show/1431.

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 31
Format (IMT)
  • image/jpeg
File Name hiltonar_201609_053_031.jpg
Transcript Financing Hotel Growth Aggressive hotel room expansion provides an important basis for L Marriott's anticipated long-term annual corporate profit growth of at least 20%. However, changes in financing markets and national economic conditions have altered the relatively favorable climate which existed for hotel growth in the 1970s. □ Chronic inflation and economic uncertainty have adversely affected the cost and availability of hotel capital. In the 1970s capital was inexpensive relative to inflation and readily available for skilled hotel operators like Marriott. Now inflation has driven nominal interest rates to higher levels with investors requiring historically high real returns in response to an unusual degree of economic uncertainty. While Marriott hotel cash flows increase with inflation, it is difficult to sustain profitability at the unprecedented real economic returns above inflation sought by lenders in the present economic environment. Long-term interest rates of 16% are unsupportable when long- term inflation is projected by most economists to be under 7%. □ Also in the 1970s there existed a large number of active independent real estate developers capable of developing and financing hotels for Marriott management. The rapid increase in financing costs and reduced availability of funds have altered the structure of the real estate development industry. The smaller independent developers —the source of many hotel deals in the past—have severely curtailed their activities or have gone out of business altogether. □ The inverted yield curve and rise in general inflation rates have decimated insurance industry general accounts and stemmed the flow of pension funds into insurance company separate accounts. This has materially reduced institutional funds available for commercial real estate. Many investors have asked us how we expect to continue with our aggressive expansion plans in light of these fundamental changes in market conditions. The answer is that the company has implemented a two-pronged strategy to deal with these changes: □ Vertical integration of the development process. □ Establishment of alternative financing sources. These changes will permit Marriott to continue annual hotel rooms growth of 20%. Vertically Integrated Development Company Historically Marriott has internally developed over half of its company-operated rooms. The company has built the expertise and organizational structure to simultaneously site, design and construct large numbers of complex hotel projects. We are now the industry's only major, totally vertically integrated hotel developer. In fact, Marriott has become one of the world's largest real estate developers, creating about $1 billion of product annually. The inability of independent real estate developers to obtain project financing diminishes their anticipated contribution to Marriott's expansion plans. However, this materially improves the profitability of Marriott's expansion effort. By increasing its own development staff, Marriott has been able to internally develop projects originally slated for development by others. The company therefore avails itself of substantially greater profits that will increase dramatically in the 1980s. These are evidenced by the unrealized gains represented by the $421 million difference between the Current and Book Value of the company's owned hotels, and by the enhanced management fees flowing from the hotels developed or acquired by the company and placed with investors over the past several years. Diversified Funding Sources In 1981, as in 1975, institutional real estate funds virtually disappeared. The current inflation cycle has eliminated the savings and loan and life insurance industries' plentiful long-term, fixed-rate real estate funding at reasonable interest rates.We do not believe this favorable financing will reappear for a long time, if at all. From residential single family housing to office buildings, shopping centers and hotels, development in the real estate industry has been sharply curtailed. Marriott Corporation, however, has continued its development program by diversifying its funding sources. During 1981, to supplement its general corporate financing, Marriott obtained approximately $600 million of firm project financing commitments, and negotiations are in process for an additional $400 million of commitments. All of this funding has been supplied by new sources, primarily commercial banks. Hotel Rooms (in thousands) 30 77 78 79 80 81 82* Hn Franchised WBSOt Managed /Leased ■■■ Owned "Projected 29