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| Title | Marriott Corporation, 1978 Annual Report |
| Creator (LCNAF) |
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| Publisher | Marriott International, Inc. |
| Date | 1978 |
| Description | Marriott Corporation Annual Report for the year ending on July 31, 1978. |
| Subject.Topical (LCSH) |
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| Subject.Name (LCNAF) |
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| Genre (AAT) |
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| Language | English |
| Type (DCMI) |
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| 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 |
| Title | Image 23 |
| Format (IMT) |
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| File Name | hiltonar_201609_049_023.jpg |
| Transcript | Financial Results, Asset Productivity Continue Significant Improvement • Net income rises 30%, or double the corporate growth objective of 15% per year. ■ ROI improves to 13.1% from 11.3% in '77; nearing 1982 goal of 15%. > Five hotels sold for $92 million; Marriott continues to operate for substantial future fees. • Debt drops to 38% of capital from 45% in '77, and high of 54% in '75. ■ Cash flow exceeds $100 million for first time. Fiscal '78 was another significant year in management's long-range strategy to improve shareholders' return on investment (ROI) as well as to maintain steady profit growth. All measures of asset productivity improved, and profits rose 30% to $46 million. The gain is double the corporate growth objective of minimum 15% annual growth in earnings—and maintains the 10-year compound growth rate of 20%. More Progress for ROI Program Four years ago, in fiscal 1975, the company commenced an aggressive program to improve asset productivity. It announced plans to dispose of or redeploy non-productive or marginal assets, and to leverage through hotel management contracts its management expertise rather than its balance sheet. The program has achieved significant results in both areas. In fiscal 1978, almost $22 million in non-productive assets were liquidated. This included idle land, a number of restaurants and other assets. Since 1975, $67 million of such assets have been liquidated. And over the same four-year span, 41 restaurants have been converted to more profitable concepts. Hotel Assets Controlled Major progress also was made in 1978 in the company's plan to operate a greater proportion of hotels owned by other investors. In just one year, the number of such hotel rooms under management jumped from 5,685 to 9,651 rooms, or from 39% to 57% of total rooms. Managed hotels are expected to grow to at least 15,000 rooms—or more than 60% of the total rooms—by 1981 when most of the foreign hotels now under construction will open. By fiscal 1981, over $750 million of hotel assets owned by others will be controlled by Marriott under long- term agreements, compared with about $100 million at tie beginning of fiscal 1975. Sale of Hotels Completed The company will continue to acquire and develop selected hotels on an owned basis. But the bulk of expansion in this capital-intensive industry will be financed with capital provided by others. The fiscal '78 sale of five hotels to a major financial institution was an important part of this strategy. In June, 1978, Marriott completed the sale of five hotels to The Equitable Life Assurance Society of the United States for $92 million. Under the terms of this sale, Marriott continues to operate the hotels for 75 years. Multiple Benefits from Sale The transaction has several advantages for Marriott: • It improves all the key financial balance sheet ratios and therefore enhances Marriott's position as an unsecured borrower and broadens its sources of capital. • Under the agreement Marriott will continue to participate substantially in future profits from these five properties. Yet it has no fixed-rent obligation if the hotels are not productive. • Most importantly, the transaction gives Marriott increased financial capacity to reinvest in additional productive assets and thereby increase 21 |