American University in Bosnia and Herzegovina

American School of Technology

Case Study 1

Marriott Corporation

Professor: Zinaida Pai

Student: Eldar Softi
1.What was the main problem for the Marriott Corporation in late
1980s and 1990, and what caused it?
The collapse of prices in real estate market. A decrease of market prices
leaded to loss and bankruptcy for a plenty of competitors. Additionally, we
should outline that right now it is very difficult to sell the property, because
of collapsing market. The company will try to sell the property when the
market become more stabilized.

2. Shortly describe the Project Chariot.

The main goal of the project is to split company into to new companies. One
of them will be profitable, because it will represent basically all the sectors
of the hotel except real estate and land and will be named Marriott
International. However, second company will include the real estates of
the old company and because of the major contribution of debt is related to
real estate and lands it will pay huge amount of interests, this
company will be less profitable and will be named Host Marriott.

3.Do a small research what is going on with Marriott Corporation now.

From 1995 to today Marriott continues to aggressively purchase properties
and companies in the hotel industry, the value of the whole company is not
changed, the main idea of the project is the distribution of dividends. The MI
and HM combined will have the same close to zero net income and inability
to pay its debt in the future. The company as a whole will have the same
gain and losses, but the difference now is who is going to pay those losses
and get the gains.