marriottasd

8/9/2019 Marriottasd

1/22

"#$% &'()*+ ,#--./'' "/-0/-#'./1

23% "/$' /4 "#0.'#5

"#$#%& '($)#*

+#,)- .#//#00

1$&23(2 4&5%,3#$(

6(7,2 6#%8-9#

:8)(7#$ ;?@


2/22

1A B;B C,2&28,&0 D#8,%,(2 E&9,2F ,,

2#65% /4 "/1'%1'$

1. Are the four components of Marriotts financial strategy consistent with its growthobjective? ...................................................................................................................... 1

2. How does Marriott use its estimate of its cost of capital? Does this make sense? ...... 3

3. What is the weighted average cost of capital for Marriott Corporation? ..................... 4

4. What type of investments would you value using Marriotts WACC? ........................ 6

5. If Marriott used a single corporate hurdle rate for evaluating investment opportunitiesin each of its lines of business, what would happen to the company over time? ......... 7

6. What is the cost of capital for the lodging and restaurant divisions of Marriott? ........ 8

7. What is the cost of capital for Marriotts contract services division? How can youestimate its equity costs without publicly traded comparable companies? ................ 11

APPENDIX I Math Utilized to Derive WACC for Marriott .......................................... 13

APPENDIX II Math Utilized to Derive WACC for Divisions ...................................... 16


3/22

1A B;B C,2&28,&0 D#8,%,(2 E&9,2F ?

"#

$%& '(& )*+% ,*-.*/&/'0 *) 12%%3*''40 )3/2/,325 0'%2'&67 ,*/030'&/' 83'(

3'0 6%*8'( *9:&,'3;&?>P ONB>P \ ON?>?_P ON^>P XN>_^B

E&$$,())I% VA'' X _N^B`

@&N V-&) $,%9TG$## $&)# &23 $,%9 5$#/,H/ ,% H%#3 )( 8&08H0&)# )-# 8(%) (G #QH,)Ja

"-# $,%9TG$## $&)# (G > '(/5(%,)# d)(89 U23#S 6#)H$2% G(H23 (2

RS-,7,) ^ K&% H%#3 G($ G,23,2F )-# /&$9#) $,%9 5$#/,H/ OE64 X 6/T 6GX bNb> Y > '(/5(%,)# &23 f(2FT)#$/ gN dN .(L#$2/#2)

1(23 6#)H$2% F#(/#)$,8 &L#$&F# (G cNB@` )( &00(K G($ )-# 6,%9 4$#/,H/ )( 7# &) &

5(%,),L#= /(3#$&)# $,%9 0#L#0N

@7N ](K 3,3 J(H /#&%H$# E&$$,())I% 8(%) (G 3#7)a

"-# 8&%# %)H3J 5$(L,3#% gNdN F(L#$2/#2) G,S#3T$&)#% G($ )-# 8H$$#2) ),/#

5#$,(3 K-,8- %-(K% K-&) E&$$,()) K(H03 0,9#0J 7# 5&J,2F (2 3#7)N A0%(= ,) ,% 9#J )(

92(K )-&) E&$$,()) ,% 8(/5$,%#3 (G )-$## 5$,/&$J 3,L,%,(2%= &23 (2# O0(3F,2FP H%#%


7/22

1A B;B C,2&28,&0 D#8,%,(2 E&9,2F c

0(2FT)#$/ 3#7) K-,0# )-# ()-#$ )K( O$#%)&H$&2) &23 8(2)$&8) %#$L,8#%P H%# %-($)T

)#$/ 3#7)N "( 3#)#$/,2# )-# #S&8) $&)# (G 3#7) ,) ,% 2#8#%%&$J )( 8&08H0&)# & K#,F-)#3

&L#$&F# &/(2F%) )-# 5()#2),&0 ,2)#$#%) $&)#% G($ 3#7)N C$(/ "&70# 1= @>TJ#&$ O0(2FT

)#$/P ,% TJ#&$ O%-($)T)#$/P ,% &) `

@8N D,3 J(H H%# &$,)-/#),8 ($ F#(/#)$,8 &L#$&F#% )( /#&%H$# $&)#% (G $#)H$2a

.#(/#)$,8 &L#$&F#% K#$# H%#3 )( /#&%H$# $&)#% (G $#)H$2N .#(/#)$,8

&L#$&F#% K#$# 8-(%#2 %,28# &22H&0 ,2L#%)/#2) $#)H$2% &$# 2() ,23#5#23#2) (G #&8-

()-#$N d,28# & 7&3 ($ F((3 J#&$ ,2 $#)H$2% K,00 &GG#8) )-# 8&5,)&0 &L&,0&70# ,2 )-#

%H88##3,2F J#&$= F#(/#)$,8 &L#$&F#% &$# & /($# &88H$&)# K&J (G /#&%H$,2F )-#

&GG#8)% (L#$ & K,3# $&2F# (G ),/# K-#2 8(/5&$#3 )( &$,)-/#),8 &L#$&F#N 1J H%,2F )-#

F#(/#)$,8 &L#$&F#= )-# &8)H&0 $&)# (G $#)H$2 ,% H%#3 &23 &00(K% & /($#

8(/5$#-#2%,L# 8(/5&$,%(2 7#)K##2 $&)#% 5$#L,(H%0J H%#3 &23 GH)H$# -H$30# $&)#%)( 7# H%#3 7J E&$$,())N


8/22

1A B;B C,2&28,&0 D#8,%,(2 E&9,2F B

E#

C(2' '7.& *) 3/;&0'-&/'0 8*+5? 7*+ ;25+& +03/6 12%%3*''40 C$DDA4 ' A4>4@B

d,28# )-# $#%)&H$&2) 3,L,%,(2 ,% 8(2%,3#$#3 & %-($)T)#$/ ,2L#%)/#2)= )-# ?T

J#&$ /&)H$,)J $&)# K&% H%#3 ,2 8&08H0&),2F )-# 8(%) (G 3#7)W

%& '() *+,-.#/-#0 1#0-.-20 %"0-A56-".7 8-90 %"0- :.-/1;/ ?4 7 A>=4 ' =>D4B

B8N ](K 3,3 J(H /#&%H$# )-# 7#)& (G #&8- 3,L,%,(2a

"-#$# K#$# )-$## %)#5% ,2 3#)#$/,2,2F )-# 7#)& G($ )-# 0(3F,2F &23

$#%)&H$&2) 3,L,%,(2N

?N C,23 8(/5&2,#% %,/,0&$ )( )-# &55$(5$,&)# 3,L,%,(2 &23 F#) & K#,F-)

G($ #&8- (G )-(%# 8(/5&2,#%N "-# 8(/5&2J /(%) %,/,0&$ )( )-#

3,L,%,(2 $#8#,L#3 & -,F-#$ K#,F-)N

;N D#)#$/,2# )-# H20#L#$#3 7#)& G($ #&8- 3,L,%,(2 7J )&9,2F )-# %H/ (G

#&8- 8(/5&$&),L# 8(/5&2JI% K#,F-)#3 H20#L#$#3 7#)&N "( 3#)#$/,2##&8- 8(/5&2JI% K#,F-)#3 H20#L#$#3 7#)&= )-# G(00(K,2F G($/H0& K&%

H%#3W

iHX iZ?\O?T"PODZRP

iHX V#,F-)#3 H20#L#$#3 7#)& G($ #&8- 8(/5&$&),L# 8(/5&2J


12/22

1A B;B C,2&28,&0 D#8,%,(2 E&9,2F ?>

i X V#,F-)#3 7#)& G($ 8(/5&$&),L# 8(/5&2J

" X '($5($&)# )&S $&)#

DZR X V#,F-)#3 E&$9#) f#L#$&F# G($ )-# 8(/5&$&),L# 8(/5&2JN "-#

E&$9#) f#L#$&F# ,% G(H23 ,2 RS-,7,) @j )-,% L&0H# K&% /H0),50,#3 7J )-#

8(/5&$&),L# K#,F-) )( 8(/5H)# )-# K#,F-)#3 /&$9#) 0#L#$&F# L&0H#

G($ #&8- 8(/5&$&),L# 8(/5&2JN

@N :28# )-# K#,F-)#3 H20#L#$#3 7#)& G($ #&8- 3,L,%,(2 ,% 8&08H0&)#3= )-&)

7#)& ,% H%#3 ,2 )-# G(00(K,2F G($/H0& )( 8&08H0&)# )-# 7#)& G($ #&8-

3,L,%,(2W

ifX iHk?\O?T"PODZRPl

ifX 1#)& G($ )-# $#%)&H$&2)% 3,L,%,(2 O0#L#$#3P

iH

X V#,F-)#3 H20#L#$#3 7#)& G($ )-# $#%)&H$&2)% 3,L,%,(2" X '($5($&)# )&S $&)#

DZR X V#,F-)#3 E&$9#) f#L#$&F# G($ )-# $#%)&H$&2)% 3,L,%,(2

A55#23,S UU 8(2)&,2% 3#)&,0#3 ,2G($/&),(2 (2 )-# 8&08H0&),(2 )( 3#)#$/,2#

#&8- 3,L,%,(2%I 7#)& H23#$ )-# '(%) (G RQH,)J %#8),(2N


13/22

1A B;B C,2&28,&0 D#8,%,(2 E&9,2F ??

J#

C(2' 30 '(& ,*0' *) ,2.3'25 )*% 12%%3*''40 ,*/'%2,' 0&%;3,&0 ?3;303*/< >*8

,2/ 7*+ &0'3-2'& 3'0 &K+3'7 ,*0'0 83'(*+' .+953,57 '%2?&? ,*-.2%295&,*-.2/3&0` (G

E&$$,())I% )&$F#) 0#L#$&F# F(#% )( 3#7) )-# $#/&,2,2F 5($),(2 (G ,)% 8&5,)&0 /H%) F(

)( #QH,)J O&% [ X D\R= %( R /H%) #QH&0 [TDP

[= C,$/ [&0H#

[ X N^> \ NB> X ?

"-# $#/&,2,2F )K( 8(/5(2#2)% (G VA'' &$# )-# /(%) /&M($ &23 ,2G0H#2),&0N

"( %(0L# G($ )-#%# (2# /H%) 3#)#$/,2# /($# 9#J L&$,&70#%N


16/22

1A B;B C,2&28,&0 D#8,%,(2 E&9,2F ?^

$D= '(%) (G 3#7)

"-# 8&%# 5$(L,3#% gNdN F(L#$2/#2) G,S#3T$&)#% G($ )-# 8H$$#2) ),/# 5#$,(3

K-,8- %-(K% K-&) E&$$,()) K(H03 0,9#0J 7# 5&J,2F (2 3#7)N A0%(= ,) ,% 9#J )( 92(K

)-&) E&$$,()) ,% 8(/5$,%#3 (G )-$## 5$,/&$J 3,L,%,(2% &23 (2# O0(3F,2FP H%#% 0(2FT

)#$/ 3#7) &23 )-# ()-#$ )K( O$#%)&H$&2) &23 8(2)$&8) %#$L,8#%P H%# %-($)T)#$/ 3#7)N

"( 3#)#$/,2# )-# #S&8) $&)# (G 3#7) ,) ,% 2#8#%%&$J )( 8&08H0&)# & K#,F-)#3 &L#$&F#

&/(2F%) )-# 5()#2),&0 ,2)#$#%) $&)#% G($ 3#7)N C$(/ "&70# 1= @>TJ#&$ O0(2FT)#$/P ,%

TJ#&$ O%-($)T)#$/P ,% &) `

$R= '(%) (G RQH,)J

:G )-# )-$## /#)-(3% )( G,23 '(%) (G RQH,)J= E&$$,()) H%#% )-# '&5,)&0 A%%#)

4$,8,2F E(3#0 O'4AEPN V,)-,2 'A4E )-#$# &$# )-$## /&,2 8(/5(2#2)% )(3#)#$/,2#W

6GX 6,%9TG$## 6&)#

6GX `

"-,% $&)# ,% )-# F#(/#)$,8 &L#$&F# O(G &00 J#&$% G$(/ ?b;B Y ?b> '(/5(%,)# d)(89 U23#S 6#)H$2% G(H23 (2 RS-,7,) ^N U) ,% &2


17/22

1A B;B C,2&28,&0 D#8,%,(2 E&9,2F ?c

,3#&0 $&)# &% ,) %-(K% & 8(/5$#-#2%,L# &L#$&F# (G &00 %)(89 $#)H$2% %,28# ?b;BN U)

K&% 8-(%#2 (L#$ de4 c>> '(/5(%,)# &23 f(2FT)#$/ gN dN .(L#$2/#2) 1(23 6#)H$2%

F#(/#)$,8 &L#$&F# (G cNB@` )( &00(K G($ )-# E&$9#) 6,%9 4$#/,H/ OE64 X 6/T 6GP

)( 7# &) & 5(%,),L# /(3#$&)# $,%9 0#L#0N

i X 1#)& (G )-# A%%#)

"-# 8&%# 5$(L,3#% #QH,)J 7#)& &% Nb_N ](K#L#$= )-,% ,% & 0#L#$&F#3 7#)& )-&)

K,00 &GG#8) ()-#$ 7#)& #%),/&)#%N "( &L(,3 )-,% ,2G0H#28#= &2 &%%#) 7#)& /H%) 7#

8&08H0&)#3 &23 )-#2 8(2L#$)#3 ,2)( &2 H20#L#$&F#3 7#)&N C$(/ #S-,7,) @= #QH,)J 7#)&

ONb_P &23 /&$9#) 0#L#$&F# (G ^?` &$# 5$(L,3#3N U) %-(H03 7# 2()#3 )-&) /&$9#)

0#L#$&F# ,% )-# 7((9 L&0H# (G 3#7) 3,L,3#3 7J )-# %H/ (G )-# 7((9 L&0H# (G 3#7) 50H%

)-# /&$9#) L&0H# (G #QH,)JN "-#$#G($#= ,G R X [TD= K-,8- [XR\DX?= )-#2 RX?TN^?XNcb

ofX iHk ?\ O?T"P l &23 iHX

iH= = .6983

"( 7# 8(2L#$)#3 7&89 )( & G,$/ 0#L#$&F# 0#L#0= &550J )-# /&$9#) L&0H# (G 3#7)

&23 #QH,)J G($ D &23 R (G )-# #QH&),(2%

ofX NBb


18/22

1A B;B C,2&28,&0 D#8,%,(2 E&9,2F ?B

7889:;


19/22

1A B;B C,2&28,&0 D#8,%,(2 E&9,2F ?_

6R= '(%) (G RQH,)J AG)#$ "&S#%

g0),/&)#0J= )-# 'A4E G($/H0& O6C\ k6C T 6ElmiP K&% H%#3 )( 3#)#$/,2# )-#

8(%) (G #QH,)JN ](K#L#$= ,2 ($3#$ )( H%# )-,% G($/H0&= K# /H%) G,$%) 3#)#$/,2# )-#

H20#L#$#3 i G($ 0(3F,2FN "( G,23 )-# H20#L#$&F#3 i= )-# (G )-# K#,F-)#3 H20#L#$#3

7#)&% K&% H%#3N C(H$ 8(/5&2,#% K#$# H%#3 ,2 8&08H0&),2F )-# H20#L#$#3 7#)&j )-#

8(/5&2,#% /(%) %,/,0&$ )( )-# 0(3F,2F 3,L,%,(2 K#$# K#,F-)#3 /($# -#&L,0JN :28#

)-# K#,F-) K&% 3#)#$/,2#3= )-# K#,F-)#3 7#)& K&% 3#)#$/,2#3N "-# H20#L#$#3 7#)&

K&% )-#2 8&08H0&)#3 G($ #&8- 8(/5&$&),L# -()#0 H%,2F )-# G(00(K,2F G($/H0&W

iHX iZ?\O?T"PODZRP

iHX V#,F-)#3 H20#L#$#3 7#)& G($ #&8- 8(/5&$&),L# 8(/5&2J

i X V#,F-)#3 7#)& G($ 8(/5&$&),L# 8(/5&2J

" X '($5($&)# )&S $&)#

DZR X V#,F-)#3 E&$9#) f#L#$&F# G($ )-# 8(/5&$&),L# 8(/5&2JN "-# E&$9#)

f#L#$&F# ,% G(H23 ,2 RS-,7,) @j )-,% L&0H# K&% /H0),50,#3 7J )-# 8(/5&$&),L#

K#,F-) )( 8(/5H)# )-# K#,F-)#3 /&$9#) 0#L#$&F# L&0H# G($ #&8- 8(/5&$&),L#

8(/5&2JN

AG)#$ )-# K#,F-)#3 H20#L#$#3 7#)& K&% G(H23 G($ #&8- 8(/5&$&),L# 8(/5&2J=

)-#%# K#$# &33#3 )(F#)-#$ )( 8&08H0&)# )-# H20#L#$#3 7#)& G($ )-# 0(3F,2F 3,L,%,(2N

A33,),(2&00J= )-# K#,F-)#3 /&$9#) 0#L#$&F#% K#$# &33#3 )(F#)-#$ )( G,23 & K#,F-)#3

/&$9#) 0#L#$&F# L&0H# G($ )-# 0(3F,2F 3,L,%,(2N "-#%# )K( 8&08H0&),(2% &$# )-#2 H%#3

)( 8&08H0&)# )-# 7#)& G($ )-# 0(3F,2F 3,L,%,(2 7J H%,2F )-# G(00(K,2F G($/H0&W

ofX iHk?\O?T"PODZRPl

ofX 1#)& G($ )-# 0(3F,2F 3,L,%,(2 O0#L#$#3P

iHX V#,F-)#3 H20#L#$#3 7#)& G($ )-# 0(3F,2F 3,L,%,(2

" X '($5($&)# )&S $&)#

DZR X V#,F-)#3 E&$9#) f#L#$&F# G($ )-# 0(3F,2F 3,L,%,(2

"-# G,2&0 %)#5 )( 8&08H0&)# )-# 8(%) (G #QH,)J ,% )( H%# )-# 7#)& G($ )-# 0(3F,2F

3,L,%,(2 ,2 )-# 'A4E G($/H0&W

6G\ O6/T 6GPi

6C X 6,%9TG$## $&)# K-,8- ,% ^N;_` G(H23 ,2 #S-,7,) ^N "-# $&)# H%#3 ,% )-#

F#(/#)$,8 &L#$&F# G($ & 0(2FT)#$/ 7(23 &% )-# 0(3F,2F 3,L,%,(2 ,% 8(2%,3#$#3

0(2FT)#$/ ,2L#%)/#2)N


20/22

1A B;B C,2&28,&0 D#8,%,(2 E&9,2F ?

marriottasd

Documents