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By: Allie Leon

By: Allie Leon. Valuation using the Agr valuation model. Operations. 3900 lodging properties in 72 countries Hopes to open 100 new properties, addin g 18 countries by the end of 2014 The largest hotel chain in the world Controls about 10 % of US hotel market and 1% worldwide

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By: Allie Leon

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  1. By: Allie Leon Valuation using theAgrvaluation model

  2. Operations • 3900 lodging properties in 72 countries • Hopes to open 100 new properties, adding 18 countries by the end of 2014 • The largest hotel chain in the world • Controls about 10 % of US hotel market and 1% worldwide • Main operations are in the US, although strong presence in Canada, the UK, and China • Made up of 19 brands • Ritz Carlton, JW Marriott, Fairfield Marriott, Courtyard Marriott, etc. • Most revenue from franchise arrangements

  3. TheAgrmodel • Agrvalue is derived directly from forecasted accounting data, usingcapitalized earningsas an anchor • Based on income statement values • Enterprise value is mathematically equivalent to the DCF and the REI amounts • AgrModel is best because more value is captured in a shorter horizon that you are more comfortable with • With DCF and REI models, more reliance is placed on the terminal value than Agr

  4. Value using DCF -sales growth through 2018 = 6% -perpetual sales growth = 2.25% - WACC = 9.76%

  5. Valuation using REI Enterprise value = NEA + PV of REI + PV of terminal value *assume same growth rates -forecasted up to 2021 to get the REI growth rates to stabilize

  6. Valuation using Agr Enterprise value = capitalized (EPAT + PV w/I horizon + PV continuing value) *assume same growth rates as before

  7. Breakdown of value based on horizon -Total enterprise value is the same, although the component values differ -Total value for DCF is simply the sum of the two PVs (calculation of FCF takes into consideration the initial NEA) -Total value for REI = NEA + PV fund w/i horizon + PV continuing value -Total value for Agr = capitalized (EPAT + PV w/I horizon + PV continuing value)

  8. Questions??

  9. Sources • Marriott International, Inc. 2012 Annual Report • Yahoo Finance • NASDQ

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