Keyword
in
Collection
Date
to
Marriott Corporation, 1979 Annual Report
Image 22
Citation
MLA
APA
Chicago/Turabian
Marriott International, Inc.. Marriott Corporation, 1979 Annual Report - Image 22. 1979. Hospitality Industry Archives, Conrad N. Hilton College of Hotel and Restaurant Management, University of Houston. University of Houston Digital Library. Web. January 18, 2020. https://digital.lib.uh.edu/collection/hiltonar/item/637/show/620.

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.. (1979). Marriott Corporation, 1979 Annual Report - Image 22. 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/637/show/620

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, 1979 Annual Report - Image 22, 1979, Annual Reports from the Hospitality Industry Archives, Hospitality Industry Archives, Conrad N. Hilton College of Hotel and Restaurant Management, University of Houston, accessed January 18, 2020, https://digital.lib.uh.edu/collection/hiltonar/item/637/show/620.

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, 1979 Annual Report
Creator (LCNAF)
  • Marriott International, Inc.
Publisher Marriott International, Inc.
Date 1979
Description Marriott Corporation Annual Report for calendar year 1979.
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 22
Format (IMT)
  • image/jpeg
File Name hiltonar_201609_051_022.jpg
Transcript Financial Strategy Helps Marriott Withstand Effects Of Inflation In 1980s purchase and higher interest rates. In the prior year, interest expense decreased because debt was reduced, primarily by the sale of five hotels. Capital gains on dispositions in '79 did not match the '78 gains recorded on sales of land adjacent to the California theme park. Also, the company recorded a $1 million reserve in 1979 for possible losses on foreign hotel investments. Advertising and sales promotion expense increased at a faster rate than sales in both '78 and '79 due to expanded marketing programs. Increases in other costs and expenses in both years resulted primarily from increased sales, operating units and employees. In 1979, the effective income tax rate declined slightly as lower capital gains moderated the effect of a reduction in the statutory rate. The 1978 effective income tax rate decreased from '77 primarily because of the favorable effect of higher capital gains. Sales in 1978 increased 15% and net income gained 39% over 1977, primarily from the opening of new units, higher occupancies, improved productivity and higher prices. Stock Information The range of Marriott stock prices by quarters is: 1979 1978 Quarters Ended In High Low High Low March $14</4 $11% $1314 $10'/2 June 15% 12% 14 12'/2 September 17 13 15% 10% December 18% 15% 16% 10% Marriott common stock (MHS) is listed on the New York, Pacific, Midwest and Philadelphia Stock Exchanges. Call options are traded on the Philadelphia Exchange. Inflation looms as the most significant external economic force that will impact business in the 1980s. It impacts various industries and individual companies differently. While the effect is largely negative for most firms, certain factors in Marriott's business profile enable the company to largely offset and even benefit from inflation. Inflation's Financial Impact On American Business One of the principal economic impacts of inflation is that a firm's cost of capital increases with the expected inflation rate. Lenders add anticipated inflation to required real returns to arrive at interest rates. Likewise, equity investors require increased returns from dividends and capital appreciation to protect them from inflation. A firm must either increase profits sufficiently to cover these increased capital costs, or seek capital cost reductions. Failure to do so results in both a deteriorating financial position due to reduced interest coverage, and declining stock market values. Tax Law Affects Strategy The U.S. tax structure in large part accounts for the significant difference between the after-tax cost of debt and equity financing. For example, studies indicate that investors currently seek a 17%-18% return on their investment in Marriott stock (dividends plus capital appreciation). This is nearly three times the approx imately 6% after-tax cost of the company's debt. Both the cost of equity and the cost of debt increase with inflation. However, as inflation accelerates, tax deductibility partially offsets the rising cost of debt. On the other hand, business absorbs the full inflationary impact of equity cost increases. A firm which prudently utilizes its full debt capacity substitutes marginally cheaper debt for more expensive equity, thus optimizing the weighted cost of capital. This strategy requires less incremental profits to offset inflation-induced increases in capital costs. Furthermore, after-tax cash flows do not benefit from proportionate increases in allowable tax depreciation deductions in an inflationary environment. Inflation diverts porportion- ately more funds toward taxes and makes coverage of capital costs more difficult. In addition, since depreciation expense based on historical costs does not increase directly with inflation, asset replacement at inflated prices may require additional capital infusion. In this economic environment, raising prices at rates exceeding inflation is generally the only realistic strategy to maintain cash profit margins; but few companies have the market leverage to sustain this strategy. Performance Measurement Changing Traditionally the inflation problem has been exacerbated by a performance measurement system based on historical costs that ignores inflation and gives management, providers of capital, and government a distorted 20