This action might not be possible to undo. Are you sure you want to continue?
. A Final Project Submitted to: Professor Carol B. Brown Manfred Steinfeld School of Hospitality and Tourism Management Hospitality and Tourism Management (BSHTM) By: Manerly Salvatore May, 2010
Wyndham Worldwide Corporation Company Overview
1.1. Company History Wyndham Worldwide Corporation (WYN.NYSE) is one of the leading providers of hospitality products and services in the world. Wyndham's is also the world's largest hotel franchiser and largest vacation exchange network, and largest vacation ownership company. According to Wyndham Worldwide (2010) website, their lodging business began operations in 1990 with the acquisition of the Howard Johnson and Ramada brands, each of which opened its first hotel in 1954. RCI, the best known brand in their vacation exchange and rentals business, was established in 1974, and their vacation ownership brands, Wyndham Vacation Resorts and Wyndham Resort Development Corporation, which operates as WorldMark by Wyndham, began vacation ownership operations in 1980 and 1989, respectively. The firm grew rapidly in the late 1990s, acquiring multiple portfolios of hotels and renaming them Wyndhams. In 1998, in an effort to build an upscale limited-service brand, the company acquired the Summerfield Hotel Corporation and renamed it Summerfield Suites by Wyndham, of which started to operate as Wyndham Garden Hotels. Later that year, the combined company introduced a short-lived luxury brand, Grand Bay Hotels & Resorts, which would include 11 hotels that the company had acquired over the past few years and would turn Patriot into a multi-brand hotel operating and ownership organization. However, the company's rapid growth drained cash and the firm was unable to continue to grow on its own. In March, 1999, the group agreed to a $1 billion restructuring when a consortium of private equity firms assumed control of the company. Later on, they renamed it Wyndham International. The company's paired share status was dropped, and Wyndham International re-emerged as a corporation.
1.2. Brand Overview
As one of the world's largest hospitality companies, Wyndham Worldwide offers individual consumers and business–to–business customers a broad suite of hospitality products and services across various accommodation alternatives and price ranges through its premier portfolio of world–renowned brands. Wyndham Hotel Group encompasses almost 7,000 franchised hotels and approximately 588,500 hotel rooms worldwide. Group RCI offers its 3.8 million members access to more than 73,000 vacation properties located in approximately 100 countries. Wyndham Vacation Ownership develops, markets and sells vacation ownership interests and provides consumer financing to owners through its network of over 150 vacation ownership resorts serving over 830,000 owners throughout North America, the Caribbean and the South Pacific. Wyndham Worldwide, headquartered in Parsippany, N.J., employs approximately 25,500 employees globally (Wyndham Worldwide, 2010). Wyndham Brands are as follows (Wyndham Worldwide, 2010):
· · · · ·
AmeriHost Baymont Days Inn Hawthorn Suites Howard Johnson
· · · · · · ·
Knights Inn Microtel Inns & Suites Ramada Worldwide Super 8 Travelodge Wingate by Wyndham Wyndham Hotels and Resorts
Wyndham Hotel Group: Franchise hotels in the upper upscale through economy segments of the lodging industry and provide property management services to upscale properties through Wyndham Hotel Management. Wyndham Vacation Ownership: Market and sell vacation ownership interests to individual consumers, provide consumer financing in connection with the sale of vacation ownership interests, and offer property management services at resorts. Group RCI: Provide vacation exchange products and services to customers who own vacation ownership intervals, and we market vacation rental properties primarily on behalf of independent owners. Brand Programs:
Wyndham ByRequest®: Wyndham breakthrough guest-personalization program. Women on their Way®: The first and most extensive program serving the female business traveler.
Wyndham Comprehensive Support Services
Field-based support teams
Assistance for property management in optimizing performance and enhancing customer service.
Staffed by a team of dedicated operators to help maximize every conversion opportunity.
To keep thestaff functioning at their best.
A global organization
The ability to reach group and meeting planners, corporate travel planners and travel agents around the world.
Exclusive marketing, public relations and e-commerce programs.
Full management company capabilities to support your revenue maximization. (Wyndham Worldwide, 2010, www.wyndham.com/corporate/franchise/main.wnt) According to Wyndham Worldwide (2010), their corporation’s vision and mission which also called as “The Power of Wyndham” are: Our vision - to be the world's premier branded hotel-operating company - creates an industry-leading drive for intelligent innovation. Innovation that delivers on their promise of choice and flexibility for owners and customers alike. Innovation that makes the Wyndham brand a smarter place to stay…and a smarter investment. We want to simplify our guests' lives. They work hard. They play hard. When they stay with us, we want to let them decide how to work, sleep, eat and just have fun. We provide the environment, style and self-serve conveniences to match their individual needs. And we do it all at a remarkable value. (http://www.wyndham.com/corporate/franchise/main.wnt) Being a part of Wyndham Hotel Group means being able to take advantage of the can-do infrastructure established for all franchisees. Through their wide array of resources in both
operations and marketing, the company provide their franchisee the tools and support to assist them as they build a progressive business. Detailed below are the following services and support franchisee will receive as a part of Wyndham Hotel Group (Wyndham Worldwide, 2010):
· · · · · · · · · · ·
Operations Marketing Property Opening and Integration Brand Marketing Design, Construction Wyndham Rewards® Procurement Services Loyalty Program Dedicated Franchisee Resources Global Sales Quality Assurance Global E-Commerce Training Reservation Centers Wyndham Worldwide Additional Information Wyndham hotels are primary in budget and economy, extended stay and business suite,
and mid-priced segment. Therefore, Hoovers (2010) stated that the top competitors of Wyndham Worldwide Corporation are Carlson Hotels Worldwide, Hilton Worldwide and Marriott International, Inc. The company has a large scale and flexible product offering. The branded, point-based system or the Wyndham Reward Program is also the strongest component of the company against its competitors. It is actually the largest travel rewards program of its kind in the lodging industry based on the number of participating hotels and was the gold winner of The Adrian Award in the category of Loyalty Program. “An international organization of sales and marketing professionals called Hospitality Sales and Marketing Association International (HSMAI) sponsors the Adrian Awards to honor best marketing campaigns in the segments of hospitality, travel and tourism. From over 1300 entries, judges
recognized the MHS campaign as one of the best in the Loyalty Program space”. (Wyndham Worldwide, 2010, http://www.wyndhamworldwide.com/careers/awards_and_statistics.cfm) Wyndham Hotel Group also participated with a company called Phoenix Marketing in a study called Scores Indicated Research that polled guests of all different hotel loyalty programs. According to the 2007 Hotel SCORES survey, the Wyndham Rewards® program has the highest level of member activity in all frequent guest programs at 74%. This beats both Marriott and Choice – both measured 63% in member activity. And when it comes to consumer awareness about the Wyndham Rewards program, results show a 34% increase from 2004 to 2007. Although the Wyndham Rewards® program is a relatively new player in the hotel loyalty rewards program, its strong results are competitive with more seasoned frequent guest programs such as Marriott Rewards®, Choice Privileges® and Starwood Preferred Guest®. Some of the company’s achievements as listed by Wyndham Worldwide (2010, http://www.wyndhamworldwide.com/careers/awards_and_statistics.cfm) are: • Named as one of the 15 Top Companies for Women in 2009 in the August/September issue of PINK magazine for being a leader in recruiting, hiring, promoting and retaining women at all levels; and for moving women into top executive positions. Women on Their Way by Wyndham Worldwide, received accolades as well. • Recognized as one of the top 100 greenest companies in America by Newsweek magazine, which also ranked the company in the top 10 of its Media, Travel and Entertainment Category • • Named to Diversity Inc's 25 Noteworthy Companies Being recognized as a Green Pioneer by ConEdison Solutions for its commitment to environmental preservation and for using electricity provided by Green Power
Named to FORTUNE’s 2009 Most Admired Companies list FORTUNE's Top 100 – ranked #2 Ranked #22 in the Top 100 Companies Based on Total Goods and Services sold in 2007
Company Financial Analysis
3.1. Wyndham Worldwide Corporation Income Statement
All amounts in millions of US Dollars except per share amounts.
Dec 09 Revenue Cost of Goods Sold Gross Profit Gross Profit Margin SG&A Expense Depreciation & Amortization Operating Income Operating Margin Nonoperating Income Nonoperating Expenses Income Before Taxes Income Taxes Net Income After Taxes Continuing Operations Discontinued Operations Total Operations 3,750.0 1,823.0 1,927.0 51.4% 1,093.0 178.0 594.0 15.8% 6.0 -107.0 493.0 200.0 293.0 293.0 -293.0
Dec 08 4,281.0 2,031.0 2,250.0 52.6% 1,391.0 184.0 -830.0 -19.4% 11.0 -68.0 -887.0 187.0 -1,074.0 -1,074.0 --1,074.0
Dec 07 4,360.0 2,118.0 2,242.0 51.4% 1,350.0 166.0 710.0 16.3% 7.0 -655.0 252.0 403.0 403.0 -403.0
Total Net Income Net Profit Margin Diluted EPS from Total Net Income Dividends per Share
293.0 7.8% 1.61 0.16
-1,074.0 -25.1% -6.05 0.16
403.0 9.2% 2.20 0.08
Figure 1. (Hoovers, 2010, http://hoovers.com/company/Wyndham_Worldwide_Corporation/rcrstif-1-1njea5.html) 3.2. Wyndham Worldwide Corporation Balance Sheet All amounts in millions of US Dollars except per share amounts. Assets Current Assets Cash Net Receivables Inventories Other Current Assets Total Current Assets Net Fixed Assets Other Noncurrent Assets Total Assets Liabilities and Shareholder's Equity Current Liabilities Accounts Payable Short-Term Debt Other Current Liabilities Total Current Liabilities 260.0 384.0 1,241.0 1,885.0 316.0 463.0 1,390.0 2,169.0 380.0 412.0 1,388.0 2,180.0 155.0 693.0 354.0 538.0 1,740.0 953.0 6,659.0 9,352.0 Dec 09 136.0 754.0 414.0 610.0 1,914.0 1,038.0 6,621.0 9,573.0 Dec 08 210.0 842.0 586.0 418.0 2,056.0 1,009.0 7,394.0 10,459.0 Dec 07 Dec 09 Dec 08 Dec 07
Long-Term Debt Other Noncurrent Liabilities Total Liabilities Shareholder's Equity Preferred Stock Equity Common Stock Equity Total Equity Shares Outstanding (thou.)
3,201.0 1,578.0 6,664.0
3,596.0 1,466.0 7,231.0
3,195.0 1,568.0 6,943.0
0.0 2,688.0 2,688.0 178,821.7
0.0 2,342.0 2,342.0 178,821.7
-3,516.0 3,516.0 178,821.7
Figure 2. (Hoovers, 2010, http://hoovers.com/company/Wyndham_Worldwide_Corporation/rcrstif-1-1njea5.html) 3.3. Wyndham Worldwide Corporation Cash Flow Statement All amounts in millions of US Dollars except per share amounts. Dec 09 Net Operating Cash Flow Net Investing Cash Flow Net Financing Cash Flow Net Change in Cash Depreciation & Amortization Capital Expenditures Cash Dividends Paid 689 -109.0 -561.0 19.0 178.0 -135.0 -29.0 Dec 08 109 -319.0 166.0 -74.0 184.0 -187.0 -28.0 Dec 07 10 -255.0 177.0 -59.0 166.0 -194.0 -14.0
Figure 3. (Hoovers, 2010, http://hoovers.com/company/Wyndham_Worldwide_Corporation/rcrstif-1-1njea5.html) Marriott International Inc Company Overview 4.1. Company History Marriott was founded by J. Willard Marriott in 1927 when he and his wife opened a root
beer stand in Washington DC (The Washington Post, 2007, 2). “As a missionary in the sweltering, humid summers in Washington, Marriott was convinced that what the city needed was a such a place to get a cool drink” (Marriott Blog, 2010, http://www.blogs.marriott.com/default.asp?item=595500). They later expanded their enterprises into a chain of restaurants and hotels. The Key Bridge Marriott in Arlington, Virginiais Marriott International’s longest operating hotel, and celebrated its 50th anniversary in 2009 (The Open Press, 2009). Marriott International was formed in 1992 when Marriott Corporation split into two companies, Marriott International and Host Marriott Corporation. In April 1995, Marriott International acquired a 49% interest in the Ritz-Carlton Hotel Company LLC. Marriott International believed that it could increase sales and profit margins at the Ritz, a troubled chain with a significant number of properties either losing money or barely breaking even. The cost of Marriott's initial investment was estimated to be about $200 million in cash and assumed debt. The next year, Marriott spent $331 million to take over the Ritz-Carlton Atlanta and buy a majority interest in two properties owned by William Johnson, a real estate developer who had purchased the Boston Ritz Carlton in 1983 and expanded his Ritz holdings over the next twenty years. Marriott’s son and current Chairman and Chief Executve Officer, J.W. (Bill) Marriott, Jr. has led the company to spectacular worldwide growth. Today, Marriott International has about 3,150 lodging properties located in the United States and 67 other countries and territories. Marriott's hotels include such full-service brands as Renaissance Hotels and its flagship Marriott Hotels & Resorts, as well as select-service and extended-stay brands Courtyard and Fairfield Inn. It also owns the Ritz-Carlton luxury chain and resort, and time-share properties operated by Marriott Vacation Club International. Marriott additionally provides more than 2,000 rental units
for corporate housing and manages 40 golf courses. The Marriott family, including CEO J. W. Marriott Jr., owns about 30% of the firm (Hoovers, 2010, http://hoovers.com/company/Marriott_International_Inc/hjfkxi-1-1njdap.html). 4.2. Brand Overview
Marriott International signs in at the top of the lodging industry. The company is one of the world's leading hoteliers with some 3,400 operated or franchised properties in more than 65 countries (Hoovers, 2010, http://hoovers.com/company/Marriott_International_Inc/hjfkxi-11njdap.html). Total number of employees are: • • • Year of 2007: 151,000 Year of 2008: 146,000 Year of 2009: 137,000 Marriott's operations are grouped into the following five business segments: • • • • • Full-service lodging - 65% Select-service lodging - 11% Extended-stay lodging - 5% Timeshare - 15% Synthetic fuel - 4% (primarily a tax shelter)
The core values established by the Marriott family over 80 years ago have served the company well and will continue to guide their growth into the future. Foremost of these core values is the enduring belief that their associates are their greatest assets (Marriott International Inc., 2010, http://www.marriott.com/corporateinfo/culture/coreValuesCulture.mi). The company stated those values as follows: Core Values: There is a "Marriott Way." It's about serving the associates, the customer, and the community. Marriott's fundamental beliefs are enduring and the keys to its continued success. Marriott Culture: It's the Marriott experience. We do whatever it takes to provide our associates with the utmost opportunities and our customers with superior service. Marriott's "spirit to serve" culture is captured in uplifting human interest stories about some of Marriott's finest associates. Their stories are about overcoming adversity, embodying a passion for service and achieving personal excellence. Marriott International has over 151.000 employees (2008 report) and Marriott brands are as the following: Full Service Lodging • Marriott Hotels & Resorts • JW Marriott Hotels & Resorts • Renaissance Hotels & Resorts • Marriott Conference Centers • Ritz-Carlton Hotels & Resorts • Edition Hotels & Resorts • Autograph Collection Hotels & Resorts Select Service Lodging
• Courtyard by Marriott • Fairfield Inn by Marriott • SpringHill Suites by Marriott Extended Stay Lodging • Residence Inn by Marriott • TownePlace Suites by Marriott • Marriott ExecuStay • Marriott Executive Apartments Timeshare • Marriott Vacation Club International (MVCI) • Marriott Grand Residence Club • The Ritz-Carlton Club • The Ritz-Carlton Destination Club Marriott International also offers Marriott Rewards, a loyalty (“rewards”) program that allows members to earn points or airline miles for their stays at participating Marriott brand hotels, in addition to other membership benefits.
Marriott International According to Hoover’s (2010), industries or segment where Marriott competes are lodging, leisure, extended stay and business suite hotels, mid-priced hotels and motels, upscale and luxury hotels. Meanwhile, top Hilton Worldwide competitors are listed as follows (Hoovers, 2010, http://www.hoovers.com/company/Hilton_Worldwide/rfkyyi-1-1njea3.html) • Choice Hotels International, Inc., Silver Spring, MD
• InterContinental Hotels Group PLC, Denham, Buckinghamshire • Marriott International, Inc., Bethesda, MD Marriott expects to add approximately 38,000 rooms to its worldwide hotel system in 2009, raising its guidance of 33,000 gross room additions for 2009 provided in its third quarter earnings press release(Hotel News Now, 2010, http://www.hotelnewsnow.com/Articles.aspx? ArticleId=2336). Marriott hotels outstanding awards and recognition as listed by Marriott International Inc. (2010) corporate information are: • Marriott International was ranked #42 out of 100 on Newsweek's first-ever list of "The Greenest Big Companies." • Marriott International received the “2009 Tourism for Tomorrow Award for Sustainability” in the Global Tourism Business category by the World Travel and Tourism Council (WTTC). The global award recognizes the company’s achievements in demonstrating sustainable tourism practices, including the protection of natural and cultural heritage, social and economic benefits to local people and environmentally-friendly operations. • The U.S. Environmental Protection Agency (EPA) awarded Marriott International the "2009 Sustained Excellence Award." Marriott has been named an EPA Partner of the Year since 2004. • Climate Counts, creator of a climate change corporate scoreboard, ranked Marriott tops within the hotel sector for 2008. • Buildings magazine ranked Marriott among the top 20 on their Who's Who in the Buildings Market for 2008.
Ceres Investor Coalition, an alliance of investors and environmentalists, named Marriott International "Tops in Travel & Leisure." The company was ranked #19 out of 63 companies Dec. 2008.
Marriott International has been honored by Travel + Leisure magazine with the 2008 "Global Vision Award" for green strategy. The magazine recognized Marriott’s environmental commitment, including protection of 1.4 million acres of Amazonas rainforest.
In 2007, Marriott International received the "World Savers Award" from Condé Nast Traveler magazine in recognition of its global community engagement programs.
In November 2009, Selling Power magazine has named Marriott one of the "50 Best Companies to Sell For."
October 2009 – Washingtonian magazine has named Marriott one of "Washingtonian's 50 Great Places to Work."
September 2009 – Marriott has been recognized by Working Mother magazine as one of the "Working Mother 100 Best Companies" for the 18th time. Recently, Marriott International headquarters has been awarded the gold medal for green buildings. After a three-year effort to become more sustainable and environmentally-friendly, the 30-year old building is celebrating its LEED® (Leadership in Energy and Environmental Design) Existing Building Gold status – an investment that saves the company $700,000 annually and up to $1.3 million in expected tax credits over three years– in an event today with the US Green Building Council (USGBC) (Marriott News Center, April 2010, para. 1). Listed below are additional recent news regarding Marriott International Inc. that might help in studying the company’s development, trends and market position (Forbes, 2010, para 2).http://finapps.forbes.com/finapps/BuyHoldSellAnalysis.do?tkr=mar):
On March 19, 2010, Marriott International Inc. announced the launch of the Courtyard by Marriott in Gurgaon, India.
On February 25, 2010, Salt River Devco has signed a hotel management agreement with Marriott International to manage the first Marriott-branded hotel on U.S. tribal land. The Courtyard by Marriott will be located on the Salt River Pima-Maricopa Indian Community just outside of Scottsdale, Arizona at the intersection of Jackrabbit and Pima Roads with access off the Loop 101 Freeway at McDonald. The hotel will open in 2012.
On February 11, 2010, Marriott International, Inc. announced its 4Q09 and FY09 financial results. Highlights are as follows: Net sales were 3.4 billion in 4Q09 versus $3.8 billion in 4Q08. Net sales were $10.9 billion in FY09 versus $12.9 billion in FY08. GAAP net income was 106 million in 4Q09 versus a loss of $10.0 million in 4Q08 and net loss was $346 million in FY09, versus net income of $359.0 million in FY08. GAAP EPS was 0.28 in 4Q09 versus ($0.03) in 4Q08 and ($0.97) in FY09 versus $0.97 in FY08. On January 25, 2010, MAR announced at the American Lodging Investment Summit that seven iconic hotels from The Kessler Collection will be the first to join the Autograph Collection, the company's newest brand that features independent hotels and resorts from around the world representing upper-upscale and luxury properties with distinctive personalities. All seven hotels are set to join the Autograph portfolio by the end of April 2010.
Company Financial Analysis 6.1. Marriott International Inc. Income Statement All amounts in millions of US Dollars except per share amounts.
Dec 09 Revenue Cost of Goods Sold Gross Profit Gross Profit Margin SG&A Expense Depreciation & Amortization Operating Income Operating Margin Nonoperating Income Nonoperating Expenses Income Before Taxes Income Taxes Net Income After Taxes Continuing Operations Discontinued Operations Total Operations Total Net Income Net Profit Margin Diluted EPS from Total Net Income Dividends per Share 10,908.0 9,673.0 1,235.0 11.3% 722.0 185.0 -152.0 -1.4% -173.0 -93.0 -418.0 -65.0 -353.0 -353.0 0.0 -353.0 -353.0 -3.2% -0.97 0.09
Dec 08 12,879.0 11,256.0 1,623.0 12.6% 803.0 190.0 785.0 6.1% 53.0 -694.0 350.0 344.0 359.0 3.0 362.0 362.0 2.8% 0.98 0.33
Dec 07 12,990.0 11,034.0 1,956.0 15.1% 785.0 197.0 1,188.0 9.1% 112.0 -1,137.0 441.0 696.0 697.0 -1.0 696.0 696.0 5.4% 1.73 0.28
Figure 4 (Hoovers, 2010, http://hoovers.com/company/Marriott_International_Inc/hjfkxi-11njea5.html) 6.2. Marriott International, Inc. Balance Sheet All amounts in millions of US Dollars except per share amounts. Assets Current Assets Cash 115.0 134.0 332.0 Dec 09 Dec 08 Dec 07
Net Receivables Inventories Other Current Assets Total Current Assets Net Fixed Assets Other Noncurrent Assets Total Assets Liabilities and Shareholder's Equity Current Liabilities Accounts Payable Short-Term Debt Other Current Liabilities Total Current Liabilities Long-Term Debt Other Noncurrent Liabilities Total Liabilities Shareholder's Equity Preferred Stock Equity Common Stock Equity Total Equity Shares Outstanding (thou.)
838.0 1,444.0 454.0 2,851.0 1,362.0 3,720.0 7,933.0 Dec 09
898.0 1,981.0 355.0 3,368.0 1,443.0 4,092.0 8,903.0 Dec 08
1,148.0 1,557.0 535.0 3,572.0 1,329.0 4,041.0 8,942.0 Dec 07
562.0 64.0 1,661.0 2,287.0 2,234.0 2,270.0 6,791.0
704.0 120.0 1,709.0 2,533.0 2,975.0 2,015.0 7,523.0
789.0 175.0 1,912.0 2,876.0 2,790.0 1,847.0 7,513.0
-1,142.0 1,142.0 361,332.0
-1,380.0 1,380.0 361,332.0
-1,429.0 1,429.0 361,332.0
Figure 4 (Hoovers, 2010, http://hoovers.com/company/Marriott_International_Inc/hjfkxi-11njea5.html) 6.3. Marriott International Inc. Cash Flow Statement
All amounts in millions of US Dollars except per share amounts. Dec 09 Net Operating Cash Flow Net Investing Cash Flow Net Financing Cash Flow Net Change in Cash Depreciation & Amortization Capital Expenditures Cash Dividends Paid 868 -69.0 -818.0 -19.0 185.0 -147.0 -63.0 Dec 08 641 -483.0 -356.0 -198.0 190.0 -357.0 -115.0 Dec 07 778 125.0 -762.0 141.0 197.0 -671.0 -105.0
Figure 6 (Hoovers, 2010, http://hoovers.com/company/Marriott_International_Inc/hjfkxi-11njea5.html)
Comparative Analysis Financial Analysis Net profit Margin = Net Income : Total Revenue Debt/Equity = Total Liabilities : Total Owner’s Equity Return on Equity (ROE) = Return on Assets (ROA) = Net Income : Average Owner’s Equity Net Income : Average Total Assets
Wyndham Worldwide Corporation and Marriott International Inc. 2009 Net Profit Margin Debt/Equity Return on Equity (ROE) Return on Assets (ROA) Wyndham Worldwide Corp.
7.8% 2,479 2.578 -0.0313
Marriott International Inc.
- 3.2% 5,946 0.734 -0.0444
2008 Net Profit Margin Debt/Equity Return on Equity (ROE) Return on Assets (ROA)
Wyndham Worldwide Corp.
- 251% 3, 0875 0.322 0.1122
Marriott International Inc.
- 2.8% 5.4514 0.650 0.04067
2007 Net Profit Margin Debt/Equity Return on Equity (ROE) Return on Assets (ROA)
Wyndham Worldwide Corp.
9.2% 1.975 0.2395 0.0385
Marriott International Inc.
2.8% 5.258 0.8034 0.07817
Asset Turnover Ratio = 2009 0.4009 Wyndham 1.375 Marriott
Total Revenues : Average Total Assets 2008 2007
0.4472 1.4465 0.4168 1.4527
Inventory Turnover Ratio (Property and Equipment Turnover) A ratio showing how many times a company's inventory is sold and replaced over a period. the inventory turnover ratio
2009 Wyndham Marriott
1,823/ 354.0=5.1497 9,673/1,444=6.699
Receivable Turnover Ratio = 2009 3,750/693=5.411 Wyndham 10,908/838=13.016 Marriott Current Ratio =
Revenue : Average Account Receivable 2008 2007
4,281/754=5.677 12,879/898=14.34 4,360/842=5.178 12,990/1148=11.315
Current Assets : Currents Liabilities
2009 Wyndham Marriott
Solvency Ratio =
After Tax Net Profit + Depreciation Long-Term Liabilities + Short-Term Liabilities
“The solvency ratio measures the size of a company's after-tax income, excluding noncash depreciation expenses, as compared to the firm's total debt obligations. It provides a measurement of how likely a company will be to continue meeting its debt obligations” (Investopedia, 2010, para.1 ). Acceptable solvency ratios will vary from industry to industry, but as a general rule of thumb, a solvency ratio of greater than 20% is considered financially healthy. Generally speaking, the lower a company's solvency ratio, the greater the probability that the company will default on its debt obligations (Investopedia, 2010, para. 2). 2007
Wyndham Marriott Marriott
Debt to Equity Ratio = 2009 Wyndham Marriott
Total Liabilities : Total owner’s Equity 2008 2009
3.087 5.451 1.975 5.257
Sales 2009 Wyndham Marriott
Net Income 2008
2007 Wyndham Revenue ($ mil.) Net Income ($ mil.) 4.360 293
Total Revenue Growth 2008 Wyndham 4.281 -1,074 Marriott 12,879 362
2009 Wyndham 3.750 -403 Marriott 10,908 -353
Marriott 12,990 696
Employees 300,000 151,000 320,000 146,000 255,000 137,000 Total revenue growth is the annualized rate of total amount of a company's sales and other sources of income. It is important to note that revenue is distinct from earnings or profits profits, which takes expenses into account. Obviously, however, high total revenue is desirable for any company (Financial Dictionary, 2010, http://www.thefreedictionary.com).
Additional Information & Analysis According to Wyndham Worldwide Reports Fourth Quarter and Full Year 2009 Results Wyndham Worldwide generated fourth quarter diluted earnings per share (EPS) of $0.40, compared with Company-issued guidance of $0.35 - $0.38. For the year ended December 31, 2009, the Company generated net cash from operating activities of approximately $690 million, compared with $109 million in 2008. The Company’s Board of Directors authorized an increase of the quarterly cash dividend to $0.12 from $0.04 per share, beginning with the dividend that is expected to be declared in the first quarter of 2010. With this increase, the dividend is equivalent to an annual rate of $0.48 per share. Balance Sheet Information as of December 31, 2009: • Cash and cash equivalents of approximately $155 million compared with $135 million at
December 31, 2008 • Vacation ownership contract receivables, net, of $3.1 billion compared with $3.3 billion at December 31, 2008 • • Vacation ownership and other inventory of $1.3 billion, unchanged from December 31, 2008 Securitized vacation ownership debt of $1.5 billion compared with $1.8 billion at December 31, 2008 • Other debt of $2.0 billion, unchanged from December 31, 2008; remaining borrowing capacity on the revolving credit facility was approximately $870 million compared with approximately $290 million as of December 31, 2008 The Wyndham Worldwide Corporation’s full-year 2010 guidance is: Revenues of $3.5 – $3.9 billion Adjusted EBITDA of $775 – $825 million Meanwhile, Marriott Fourth Quarter 2009 results are as follows (Marriott News Center, 2010, http://news.marriott.com/2010/02/marriott-international-reports-fourth-quarterresults.html): • Fourth quarter 2009 adjusted income from continuing operations attributable to Marriott totaled $118 million, a 2 percent decline over the year-ago quarter, and adjusted diluted earnings per share (“EPS”) from continuing operations attributable to Marriott shareholders totaled $0.32, down 3 percent. On October 8, 2009, the company forecasted fourth quarter adjusted diluted EPS of $0.20 to $0.23. • Revenue per available room (REVPAR) for the company’s worldwide comparable companyoperated properties declined 12.2 percent (12.4 percent using constant dollars) in the 2009 fourth quarter and REVPAR for the company’s worldwide comparable systemwide properties declined
12.3 percent (12.5 percent using constant dollars). • Marriott Revenues totaled approximately $3.4 billion in the 2009 fourth quarter compared to $3.8 billion for the fourth quarter of 2008. Base management and franchise fees declined 12 percent to $282 million reflecting lower REVPAR, offset in part by fees from new hotels. Fourth quarter incentive management fees declined 28 percent to $59 million. • The percentage of company-managed hotels earning incentive management fees decreased to 22 percent in the 2009 fourth quarter compared to 39 percent in the year-ago quarter. Approximately 70 percent of incentive management fees came from hotels outside North America in the 2009 quarter compared to 55 percent in the 2008 quarter. U.S. Lodging Industry’s Future Analysis A Deutsche Bank North America analyst, Chris Woronka predicted, “Growing supply coupled with a continued slowdown in consumers' discretionary spending will likely pressure the lodging sector into 2010” (New Jersey Business News, 2008, para. 1). The industry has struggled as consumers continue to curb their spending in the face of the ongoing housing downturn, increased food costs, eroding credit and unemployment concerns. “As consumers cope with dismal economic conditions, lodging companies have pulled back their forecasts for revenue per available room. Revenue per available room, also known as RevPAR, is a key gauge of a hotel company's performance” (New Jersey Business News, 2008, para. 2). Woronka downgraded Wyndham Worldwide Corp. and Marriott International Inc. to "Hold" from "Buy." He explained, “Although Parsippany-based Wyndham earlier this month reiterated its fourth-quarter earnings forecast and said it will scale back its timeshare business, since the company does not have any near-term catalysts that could boost its stock price” (New Jersey Business News, 2008, para. 6). However, Woronka also viewed 2010 as a transition year
for Marriott. "Despite Marriott's solid balance sheet, strong brands and deep, recession-tested management team, it is incrementally difficult for us to identify tangible catalysts to move shares meaningfully higher" (New Jersey Business News, 2008, para. 9). In addition, Rushmore (2009, p. 3) stated, “The current bad scenario of U.S. lodging industry are severe recession, rapidly declining hotel demand, falling occupancies, declining room rates, large loss of RevPAR, erosion of hotel values, mortgage defaults and lack of new financing”. However he also added, “The good news are minimal new hotel supply, recovery will be rapid and strong and huge buying opportunities” (p. 4). Past recessions show that lowering rate rarely induces demand and this cycle will adversely impact the luxury segment, convention and group hotels, and commercial hotels with negotiated corporate rates”. (Rushmore, 2009, p. 25)
Figure 5 (Rushmore, 2009, http://www.hospitalitynet.org/file/152003812.pdf) In addition, Forbes Analysts (2010, para. 1) also listed the major issues to consider when assessing and analyzing the Marriott International Inc.:
Key Positive Arguments Differentiated Business Model: Analysts appreciate Marriott's differentiated business model. Strong Portfolio of Brands: MAR's portfolio of well-known brands supports multiple price points across diverse regions. Marriott gained share by leveraging its strong brands to third-party owners seeking better performance and professional direction. Robust Pipeline of Unit Growth: Analysts are optimistic about the company's ability to achieve unit growth despite a challenging global environment. A robust pipeline of units scheduled for conversion will result in share gains, as industry fundamentals turn favorable.
Key Negative Arguments Lower Leverage to Economic Recovery: Leverage for the company's managed/franchised business model is based on accelerating incentive fees, which are late cycle by nature. Aggressive Financing: Aggressive off-balance sheet financing arrangements, including loan guarantees and equity investments, are frequently used to encourage third-party owners to join a Marriott-branded chain. Limited Upside Surprises Near Term: Priced-in high expectations will likely inhibit near-term price appreciation and lower the stock's outlook in the near future.
Rushmore also claimed that “hotel values will rebound to peak levels in 2014” (p. 11). Apparently, this prediction seems to become true when it comes to Wyndham Worldwide Corporation. According to Forbes (April 28, 2010) article, “Wyndham Worldwide posted an 11% increase in first quarter earnings, to $50 million, or $0.27 per share, from $45 million, or $0.25 per share, in the same quarter last year”.
References Forbes. (2010). Marriott International Inc: Recent News. Retrieved May 2010, from http://finapps.forbes.com/finapps/BuyHoldSellAnalysis.do?tkr=mar Forbes. (April, 28 2010). Wyndham, Host Hotels Post Earnings. US Equity. Retrieved May 2010, from http://www.forbes.com/2010/04/28/wyndham-host-hotels-post-earningsmarketnewsvideo.html Hotel News Now. (2010). Retrieved May, 2010 from http://www.hotelnewsnow.com Hoovers. (2010). Retrieved May, 2010 from http://www.hoovers.com Marriot International Inc. (2010). Retrieved May, 2010 from www.marriott.com/ Marriott Blogs. (2010). Retrieved May, 2010 from http://www.blogs.marriott.com/default.asp?item=595500 Marriott News Center. (April 7, 2010). Marriott Headquarters Wins the Gold Medal for Green Buildings. Retrieved May, 2010 from http://news.marriott.com/2010/04/marriottheadquarters-wins-the-gold-medal-for-green-buildings-1.html New Jersey Business News. (December 17, 2008). Analyst downgrades Wyndham, Marriott. Retrieved May, 2010 from http://www.nj.com/business/index.ssf/2008/12/analyst_downgrades_wyndham_mar.html
Rushmore, S. (June 2009). Hotel Valuation and Transaction Trends for the U.S. Lodging Industry. HVS. Retrieved May, 2010, from http://www.hospitalitynet.org/file/152003812.pdf Smartbrief. (2010).Wyndham Worldwide Reports Fourth Quarter and Full Year 2009 Results. Retrieved May 2010, from http://www.smartbrief.com/news/ahla/industryPR-detail.jsp? id=4FCC8F1F-8E1C-4FEE-B535-E5152405FD0C The Handbook of Texas Online. (2010). Conrad Hilton. Retrieved May, 2010, from http://www.tshaonline.org/handbook/online/articles/HH/fhi39.html The Open Press. (2009). Key Bridge Marriott Hotel Prepares for 50th Anniversary With $30 Million Renovation of Event Space. Retrieved May, 2010, from http://www.theopenpress.com/index.php?a=press&id=38294 Smith Travel Research. (2010). Retrieved from http://www.strglobal.com/ Wikinvest. (2010, April 30). Retrieved from http://www.wikinvest.com Wyndham World Wide. (2010). Retrieved May, 2010 from www.wyndhamworldwide.com
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue listening from where you left off, or restart the preview.