| || |
Company Profile of Marriott Corporation -
May 11th, 2011
Marriott Corporation was a hospitality company that operated from 1927–1993, founded originally by J. Willard Marriott and Frank Kimball as Hot Shoppes, Inc. In 1957, Marriott Corporation opened its first hotel in Arlington County, Virginia, United States as the Twin Bridges Motor Hotel (demolished 1990). Marriott Corporation's first international property was opened in Acapulco, Mexico in 1969. Hot Shoppes became Marriott Corporation in 1967, which subsequently split into Marriott International Corporation and Host Marriott Corporation in 1993.
Marriott International, Inc.--formed in 1993 when Marriott Corporation split into two separate companies--is the world's leading lodging and contract services company. Marriott International has two operating groups: Marriott Lodging, which generates about 60 percent of company revenue, and the Marriott Service Group, its contract services operation. Marriott Lodging manages or franchises more than 1,350 lodging properties under 10 hotel brands worldwide. It also operates more than 30 timeshare vacation properties through Marriott Vacation Club International, and 25 U.S. conference centers through Marriott Conference Centers. The Marriott Service Group includes Marriott Management Services, which provides food and facilities management for business, education, and health care clients; Marriott Senior Living Services, which manages 75 senior living communities; and Marriott Distribution Services, which operates 15 distribution centers nationwide that provide food and related products to internal Marriott and external clients.
J. Willard Marriott, who had relocated with his business partner Hugh Colton and his wife Alice from Utah to Washington, D.C., started the company in 1927, when he operated a curbside food stand selling A&W Root Beer in the Columbia Heights neighborhood of Washington at 14th Street and Park Road NW. He would later rename the food stand The Hot Shoppe, adding Mexican food items to the menu. Marriott's business expanded to Baltimore, Maryland, in 1934, shortly after which the company started its food services division. During the Second World War, the business expanded to include the management of food services in defense plants and government buildings, such as the U.S. Treasury. Then in the 1950s, Hot Shoppes, Inc. started providing food services to public schools and to Children's Hospital in 1955, a contract which they held for 35 years.
Marriott's restaurant chain grew, and the company went public in 1953. In 1957, he expanded his business to hotels, opening the first Marriott hotel—actually a motel, the Twin Bridges Motor Hotel—in Arlington County, Virginia. The company became Marriott, Inc., in 1967. Two large chains were added to the group, the Big Boy family restaurants in 1967 and Roy Rogers Family Restaurants in 1968.
Over the years, Marriott's company interests expanded. Continuing with food services, Marriott eventually invented airline in-flight food service. This segment of their enterprise continues to be a large part of their business, providing food services to many major airlines. Ultimately, Hot Shoppes, Inc. changed its name, becoming the Marriott Corporation in 1967.
In 1976, Marriott opened two theme parks called Marriott's Great America in California and Illinois. The parks had replicas of the first Hot Shoppes. Both parks were sold in the mid-1980s. In 1980, the company purchased the Howard Johnson's restaurant chain and acquired Host International in 1982. By 1984, Marriott had formed a vacation time-share division, now called Marriott Vacation Club International, and a senior-living division.
The Marriott Corporation ended its existence as a single company in 1993, when it was split into two separate entities: 1) Marriott International Corporation, which operated the hotel and lodging aspect of the business and Marriott Vacation Club International, and 2) Host Marriott Corporation, the new name for the original Marriott Corporation and operating the Marriott Food Services Management. The last Hot Shoppes restaurant, located in the Marlow Heights Shopping Center, closed on December 2, 1999.
Marriott International signs in at the top of the lodging industry. The company is one of the world's leading hoteliers with some 3,500 operated or franchised properties in 70 countries. Its 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 provides more than 2,000 rental units for corporate housing and manages 40 golf courses. The firm is spinning off its time-share business, Marriott Vacation Club International. The Marriott family, including CEO J. W. Marriott Jr., owns about 30% of Marriott International.
Marriott was forced to make a much more drastic--and dramatic move--in the early 1990s. Bill Marriott's method of building a hotel, then selling it but still managing it had worked for years. But a 1986 change in the tax law sharply reduced real estate tax shelters and came in the midst of a company building boom. Unable to sell as many of these properties as it wished, the company was left saddled with a large debt load of $3.4 billion, built up to finance all the building. By the early 1990s, the debt burden left Marriott unable to expand.
In 1992 Bill Marriott and his CFO, Stephen Bollenbach, conceived of a plan--announced in October of that year&mdashř divide Marriott Corporation into two separate publicly traded companies, one that would own hotel properties and another that would manage them. The following October, Marriott completed the division of its operations, with Host Marriott Corporation formed to own lodging properties, as well as handling Marriott's airport and turnpike concessions; and Marriott International, Inc. created to manage the Marriott family of hotel brands and the senior living communities, along with Marriott's food and services management business.
The division was initially controversial, mainly because about two-thirds of Marriott Corporation's $2.9 billion of debt was assigned to Host Marriott. But Host Marriott and Marriott International went on to post strong earnings well into the 1990s. (Host Marriott subsequently underwent a further split in 1996, when Host Marriott Services Corporation, another separate publicly traded company, was formed to operate the airport and turnpike concessions, with Host Marriott left to concentrate only on owning hotels and real estate.)
Marriott International managed about 760 hotels and other lodging properties at the time it was formed. By early 1997, the company had added more than 600 properties to its management portfolio, approaching the 1,400 hotel mark. Relieved of a heavy debt burden, Marriott International was free to aggressively pursue acquisitions and launch new hotel brands.
In April 1995 the company spent $200 million to acquire 49 percent of The Ritz-Carlton Hotel Company LLC and planned to acquire the remaining 51 percent over the next several years. The deal brought Marriott International a leading brand in the luxury hotel segment, and by 1996 there were 33 Ritz-Carltons in 15 states and seven countries. In March 1996 Fairfield Suites by Marriott was launched as an all-suite economy hotel. In June of that same year, Marriott Senior Living Services was bolstered with the $303 million acquisition of Forum Group, Inc., a leading operator of senior housing in the quality sector. The following March, Marriott International sold 29 of the 42 Forum retirement centers to Host Marriott for $225 million in cash and $315 million in notes and assumed debt, but the company would continue to manage them. By 1996, Marriott International's revenues had surpassed $10 billion, increasing 14 percent over the preceding year, while net income was also on the rise, growing from $490 million in 1995 to $629 million in 1996, a jump of 24 percent.
Following the February 1997 naming of William J. Shaw as president and chief operating officer of the company (Bill Marriott remaining chairman and CEO), Marriott International continued to launch new brands and make major acquisitions. In February 1997, the company introduced Marriott Executive Residences, which are designed for the international traveler on an extended assignment and which were initially targeted for Europe (the first to open in Budapest, Hungary) and the Middle East (Jeddah, Saudi Arabia). The following month saw the opening in Newport News, Virginia, of the first TownePlace Suites by Marriott, which provided moderately priced lodging for the extended stay traveler.
Later in March 1997, Marriott International acquired Renaissance Hotel Group N.V. for $916 million in cash and the assumption of $54 million in debt, the largest acquisition in Marriott history. The addition of Renaissance doubled Marriott International's overseas operations, bringing with it the Renaissance brand of full-service, luxury hotels located throughout the world; high-quality, full-service New World hotels located in the Asia-Pacific region; and Ramada International mid-priced hotels located outside the United States and Canada. At the time of the purchase, Renaissance operated or franchised 150 hotels in 38 countries.
Marriott International neared the turn of the century with an impressive, and growing, array of hotel brands ranging from economy Fairfield Inns and Suites to the upscale Marriott, Ritz-Carlton, Renaissance, and New World brands. The company's continuing focus on managing rather than owning lodging properties was clearly paying dividends. With the hospitality industry predicted to grow healthily well into the 21st century, Marriott International was poised for further growth.
Principal Divisions: Marriott Service Group consists of three divisions: Marriott Management Services; Marriott Senior Living Services; and Marriott Senior Living Services.
Principal Operating Units: Marriott Lodging; Marriott Service Group.
Chairman and CEO J. W. Marriott E-mail
Vice Chairman John Marriott E-mail
Executive Director Frank Podpechan E-mail
Sales: $10.17 billion (1996)
Stock Exchanges: New York Midwest Pacific Philadelphia
SICs: 5812 Eating Places; 6513 Operators of Apartment Buildings; 6531 Real Estate Agents & Managers; 7011 Hotels & Motels
Washington, D.C. 20058