1. By: Allie Leon Mod 11: Adjusting Enterprise Operations

2. The Lodging Industry • Marked by intense competition • Over 850 lodging management companies in the US alone • Experienced significant decreases in room reservations during the recession • Large trend toward international expansion (especially into Africa) • Key competitors: Intercontinental Hotel Group, the Starwood Hotels, Hyatt, and Hilton Hotels & Resort

3. Marriott International, Inc. • 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. • 3900 lodging properties in 72 countries • Plans to open 100 new properties, adding 18 countries, by the end of 2014 • Most revenue from franchise arrangements • Primary customers are business travelers

4. Projecting EPAT - Revenues -Determined I wanted overall sales growth to be around 7% -grew total revenues at 7% -looked at revenue composition over last four years to help break down the percents …

5. Projecting EPAT - Expenses -calculated common size statements to determine each line item as a percent of sales -averaged 2010-2013, made adjustments (i.e. notes receivable) -multiplied that percent by the projected sales in 2014-2022 Average …

6. Projected EPAT …

7. Projecting NEA -calculated common size statements to determine each line item as a percent of sales -averaged 2010-2013, made adjustments (i.e. notes receivable) -multiplied that percent by the projected sales in 2014-2022 Average …

8. Projected NEA …

9. Projected NEA …

10. Valuing the Enterprise - DCF … Key assumptions: WACC = 9.47% Continuing value growth = 3.5%

11. Adjustments Half year adjustment = Enterprise value * (1.0947)^(6/12) Valuation date adjustment = Enterprise value * (1.0947)^(113/365) Debt adjustment = NFL – BV LT debt + FV LT debt = 3,671 – 3,147 + 3,199

12. Questions??

13. Sources • Bloomberg • Marriott International, Inc. 2013 10K • Yahoo Finance