Marriott Inc. 2018 Annual Report Analysis

Consolidation in the hotel industry has resulted in the formation of mergers and other acquisitions with a view of promoting business. Marriott’s acquisition of the Starwood Hotels and Resorts has impacted its business operations to a large extent. It is critical to analyze the hotel’s annual report in the year 2018 to gain a better understanding of the importance of hotel consolidation. The paper focuses on examining the hotel’s financial statements in a bid to gain a real picture of its business activities. An appropriate annual report indicates progress the company has made that ear regarding its operations (Lee & How, 2019). Also, improvements that the company has enjoyed courtesy of the flawless operations should be included in the annual report. In essence, the paper seeks to examine Marriott’s business operations for the year 2018, providing a critical review of achievements made.

Some items are crucial when one is analyzing an annual report of a corporate organization. First, an annual report must contain a letter to the shareholders with a description of the business operations. Marriott’s report is well descriptive of all activities that the company undertakes day by day. In its annual report, the corporation has listed who their primary customers are and the industry that it operates in. The statement issued examines the role that Marriot plays in ensuring that customers receive a satisfactory service. Marriott’s annual report notes with concern that it has acquired ownership of Starwood Hotel and Resort, which has been instrumental in boosting its financial position. By the end of the year 2018, the hotel had acquired over 2,020 company-operated properties, which includes full owned apartments and leased ones. The annual report for the corporation is indicative of its busy nature during operations.

Another important item that is listed in the annual report is the risk factors for the business. The report takes into consideration the fact that there are risks involved in the industry, which might restrict it from achieving the set objectives. The hospitality industry is competitive, which impacts the hotel’s ability to deliver the best of services to customers globally. The report notes that it is through distinguishing quality and value that a sustainable competitive advantage can be achieved. Economic downtowns can impact a company’s performance in the financial market as explained b the annual report. The diversion of resources to acquire the Starwood hotel is a possible challenge that could impact its results. Operational risks, financial constraints, and premature termination of franchise contracts can cripple the operations of the organization (Abdullah, Sofian & Bajuri, 2015). An appropriate annual report must list risks that the company has faced or will face in its operations.

Marriott’s annual report includes financial statements for operations of the year 2018. Investors who require a return on their capital must assess financial reports to determine its viability in the market. For instance, in the year 2018, the total revenue that the hotel earned upon acquiring the new Starwood hotel is $1,907,000. The figure is indicative of the change of business as the figure indicates an increment in the total revenue earned. Also, the selective financial data in the report indicate improvements that the corporation has been registering over the years regarding total revenue. The financial information presented also indicates the fact that with diversification and consolidation in the hotel sector, a corporation can be able to gain more revenue (Moeller, 2015). The report gives a summary of significant accounting policies that govern operations within the organization. Such policies are essential to all stakeholders for a better understanding of company operations. Moreover, the report has eliminated intercompany transactions, which could otherwise pose a threat to the computation of true financial information.

The report mentions dispositions that the company made in the year 2018, which include two North American full-service properties. Tremont Chicago Hotel at Magnificent mile and Le Centre Sheraton Montreal Hotel are some of the properties sold. The corporation managed to sell Westin Denarau Island Resort, Sheraton Fiji Resort, Sheraton Buenos Aires Hotel, and a luxury collection hotel. The major acquisition that has been made by the company since 2016 is the Starwood Hotel and Resort. Shareholders who invest in the company’s shares have a reason to smile as the value of shares has been rising since the establishment. The amount of tax that the organization paid in 2018 is indicative of its growing activities in the market. The annual report indicates the strong financial position that Marriott Hotel and Resort enjoys in the hospitality industry.

References

Abdullah, D. F., Sofian, S., & Bajuri, N. H. (2015). Intellectual capital as the essence of sustainable corporate performance. Pertanika Journal of Social Sciences and Humanities, 23, 131-144.

Issues in Tourism, 22(14), 1653-1658.

Lee, C. G., & How, S. M. (2019). Long-run causality between customer satisfaction and financial performance: the case of Marriott. Current

Moeller, S. (2015). Strategic and Financial Analysis of Lodging M&A Recent Effects of Consolidation, 2010–2015 (Doctoral dissertation, City, University London).