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Marriott Corporation Split

In 1993, the Marriott Corporation announced plans to split into two separate companies: Host Marriott and Marriott International. From a management perspective, the split made sense in that the company had two distinct businesses, real estate and property management. Host Marriott would concentrate on the real estate part of the business, while Marriott International would continue to run the corporate-owned Marriott Hotels (many of which are franchises). The plan ran into considerable resistance when it was announced because bondholders would hold paper on the new Host Marriott company rather than on Marriott International, and the debt of Host Marriott was considerably higher than that of Marriott International. This research examines the details of the proposed split and the resolution at the 1993 annual meeting.

On June 19, 1993, Marriott issued its annual proxy statement to shareholders in preparation for its annual meeting, scheduled for July 23. Contained in that several hundred page document was a plan to divide the company into two publicly held companies: Host Marriott and Marriott International. The reasoning was that there was a natural division between the two entities under current operating procedures. Marriott also considered that by investing relatively small amounts of capital, it could expand its presence in the lodging industry by purchasing distressed properties. Also, the company considered that there was some confusion and misunderstanding in the investment community about the company since it combined its management and services businesses with its ownership-oriented businesses. For example, the depreciation associated with lodging properties and other capital assets drove down the book value of the company, but those who favored the separation of the company noted that the book value is hardly a fair measure for evaluating the performance of property investments.

The initial move to split the c...

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Marriott Corporation Split. (1969, December 31). In LotsofEssays.com. Retrieved 17:58, March 28, 2024, from https://www.lotsofessays.com/viewpaper/1680728.html