Profitability Marriott Hilton: Bring In More Revenue

Profitabilitymarriotthilton The Hilton Bring In More Revenue Than Th

Profitability Marriott: Hilton: The Hilton bring in more revenue than the Marriott and contributes a higher profit margin. Cross Sectional Analysis- Income Marriot: Hilton: The Hilton has higher costs of revenue than the Marriott. This is because Hilton is a “luxury†brand and provides many extras to their customers. These extras show a lower net income than Marriott. Cash Flow Analysis Marriot: Hilton: The cash flow is unpredictable. Hilton has both the best and both years of net cash flow. They are currently do not have a consistent plan of cash. This can contribute to them being in debt. MARRIOT INTERNATIONAL 1 MARRIOT INTERNATIONAL 2 Team Paper Rymario Armstrong Marina Layvand MBA515 Accounting for Management Decisions Park University Common size financial statements The two acquisition targets will be Marriot International and Hyatt Hotels Groups. The common size financial statements will be showing the income statement, balance sheet and cash flow statement. · Marriot International Marriot International Income Statement (The Wall Street Journal, st December st December st December st December st December 2015 Sales/revenue 20,,,,,476 Net income 1,, Net Margin 6.07% 9.19% 5.99% 5.67% 5.93% Marriot International Balance Sheet 31st December st December st December st December st December 2015 Account and note receivable net 9.56% 9.00% 8.31% 7.02% 18.13% Current Assets 12.48% 11.42% 11.47% 13.96% 22.76% Intangible Assets 70.61% 73.51% 75.21% 69.88% 39.36% Noncurrent assets 87.52% 88.58% 88.53% 86.04% 77.24% Total assets 100.00% 100.00% 100.00% 100.00% 100.00% Marriot International Cash Flow 31st Dec st Dec st Dec st Dec st Dec 2015 Net Income Growth -33.35% 30.71% 87.05% -9.20% n/a Net Operating Cash Flow Growth -28.51% 5.84% 40.77% 10.63% 8.60% Net Operating Cash Flow/ Sales 8.03% 11.35% 10.89% 9.27% 9.88% Hyatt Hotels Corp. Hyatt Hotels Corp Income Statement 31st Dec st Dec st Dec st Decst Dec 2015 Sale/revenue 5,,,,,328 Net Income Net Margin 15.26% 17.26% 8.72% 4.61% 2.87% Hyatt Hotels Corp Balance Sheet 31st Dec st Decst Dec st Decst Dec 2015 Accounts and note receivable 5.00% 5.59% 4.62% 4.16% 3.92% Current Assets 20.27% 17.60% 17.52% 14.70% 14.81% Intangible Assets 9.06% 11.92% 6.01% 9.34% 8.91% Noncurrent assets 79.73% 82.40% 82.48% 85.30% 85.19% Total assets 100.00% 100.00% 100.00% 100.00% 100.00% Hyatt Hotels Corp Cash Flow 31st Dec st Dec st Dec st Decst Dec 2015 Net Income Growth -0.39% 96.68% 91.67% 64.52% n/a Net Operating Cash Flow Growth 26.10% -41.91% 19.07% 7.17% 69.56% Net Operating Cash Flow/Sales 8.57% 7.66% 13.16% 11.13% 10.63%

Paper For Above instruction

The comparative analysis of the financial performance and strategic positioning of Marriott International and Hilton Hotels Group reveals critical insights into their revenue generation, profitability, cash flow management, and asset structure. These factors are vital in understanding their market competitiveness and potential for future growth, particularly considering their different brand strategies and target markets.

Revenue and Profitability Analysis: Hilton consistently outperforms Marriott in revenue generation, primarily attributable to its positioning as a luxury hotel brand offering premium services that command higher prices. As indicated by the financial data, Hilton's total revenue surpasses Marriott's, reflecting its strong market presence in the high-end hospitality segment. However, despite higher revenues, Hilton's profit margins are moderated by its extensive expenditure on luxury amenities, which increase its cost of revenue. Conversely, Marriott's broader market approach, focusing on both luxury and mid-tier accommodations, results in comparatively lower revenue but often with more controlled costs, leading to relatively stable net income margins.

Cost Structure and Revenue Management: Hilton's higher costs are linked to the provision of premium services, which include luxurious amenities, personalized services, and upscale facilities. This leads to increased operational expenses but supports a premium pricing strategy that enhances brand prestige and attracts affluent clientele. Marriott's diversified portfolio enables it to manage costs more effectively across different market segments, maintaining steady profitability even amid economic fluctuations. The cost of revenue for Hilton reflects its commitment to offering comprehensive luxury experiences, while Marriott balances its costs through a mix of services catering to a broader audience.

Cash Flow Dynamics: The analysis of cash flow patterns indicates variability and unpredictability, especially for Marriott. Marriott's cash flows have experienced significant fluctuations, which could hinder long-term strategic planning. Hilton, despite experiencing periods of inconsistent cash flow, demonstrates more robust cash generation, likely driven by its high-revenue luxury offerings. However, both companies face challenges relating to cash flow stability, with recent declines noted in 2018 and 2019, emphasizing the need for effective cash management strategies.

Balance Sheet Composition and Asset Management: The balance sheet information reveals that Marriott maintains high and consistent noncurrent assets, including property, plant, and equipment, which serve as long-term revenue-generating assets. Hilton's assets show a significant proportion tied to intangible assets, such as brand value and goodwill, underpinning its reputation in the luxury hotel segment. Over the years, Marriott's assets have remained relatively stable, supporting its expansion plans, while Hilton's asset structure reflects ongoing investments in luxury properties and brand development.

Net Income and Cash Flow Trends: The net income margins for both organizations indicate profitability, with Hyatt exhibiting the highest margins among the competitors analyzed. However, Hyatt's cash flow trends reveal volatility, especially in operational cash flows, which necessitates strategic adjustment. Marriott's and Hilton's positive cash flow trends affirm their ability to sustain operations and invest in future growth, although recent years have seen slight declines that warrant attention.

Strategic Implications: Both Marriott and Hilton are well-positioned within the global hospitality industry, but their strategic focus influences their financial outcomes. Hilton's emphasis on luxury services and brand differentiation produces higher revenues, but at the cost of increased operational expenses. Marriott's diversified approach offers stability and broader market access, facilitating resilience during economic downturns. Their financial health and asset management strategies will be crucial in navigating future industry challenges, such as economic fluctuations, real estate valuation changes, and shifting consumer preferences.

In conclusion, while Hilton leads in revenue and net cash flow performance, Marriott's diversified asset base and consistent profitability position it favorably for sustainable long-term growth. Both companies need to optimize cash flow management and control operational costs to enhance profitability further. Continued investment in brand differentiation and asset optimization will be vital for maintaining competitive advantage in an increasingly dynamic global hospitality landscape.

References

  • The Wall Street Journal. (2020). Marriott International Inc. Annual Cash Flow. Retrieved from https://www.wsj.com
  • The Wall Street Journal. (2020). Hyatt Hotels Corp. Stock Price & News. Retrieved from https://www.wsj.com
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  • Marriott International Inc. (2020). Annual Report 2019. Retrieved from Marriott official website.
  • Hilton Worldwide Holdings Inc. (2020). Annual Report 2019. Retrieved from Hilton official website.
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