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Evaluating the financial situation of the organization and its capabilities is an important task to establish an understanding of its development. Several economic and financial success indicators can provide a comprehensive overview of the companys past and current activities, examining the overall progress achieved over the years. This paper focuses on the core financial indicators of the hotel chain Marriott, presenting the variations among these aspects over the last ten years and comparing them with the alterations observed in the companies Intercontinental and Hilton.
Marriott International Incorporated is a well-recognized organization of the hotel industry, which established its presence in numerous countries worldwide. In terms of global income and property ownership, Marriott remains in the top position among other international hotel organizations (Harrington, 2017). However, to properly understand the financial characteristics of this firm and examine its historical development, it is essential to consider such financial indicators of its success as cash flow, liquidity, and efficiency.
A primary factor of a companys yearly growth is the cash flow statement released by the enterprise. First of all, a critical aspect is the cash flow from the operating activities. According to the statistics, between 2011 and 2018, the company manifested a positive trend of consistent cash flow growth, accumulating a slightly higher profit each year (Harrington, 2017). Nevertheless, from 2019, the cash flow from operating activities began to decline rapidly, resulting in a 0.67 billion difference between 2018 and 2019 (Netcials, 2021). In 2020, this trend continued, accounting for a -2.73% decrease in the operating cash flow growth (The Wall Street Journal, 2021a). Therefore, it could be concluded that the companys performance is progressively declining, even though it remained positive until 2019.
Considering the investing activities, another vital attribute of the cash flow evaluation, a less consistent tendency can be observed. A predominantly negative investing cash flow is evident in 2011 and 2014, where the invested finances decreased substantially. The most significant reduction occurred in 2016, where the investment losses contributed to 2.35 billion dollars (Netcials, 2021). After that, the negative trend continued, with the company suffering drops to -104.29% and -446.15% in the investing cash flow growth in 2018 and 2019, respectively (The Wall Street Journal, 2021a). Currently, a more positive movement is present, with the parameter steadily increasing, proposing that Marriott is slowly improving its performance.
Finally, cash flows from financing activities, namely debt, and equities should be evaluated. These aspects demonstrate a similar negative tendency towards loss, with the financing cash flow reducing steadily between 2012 and 2015. This year, Marriotts financing cash flow growth decreased -345.19%, and the enterprise has yet to overcome this depletion of resources (The Wall Street Journal, 2021a). As the net financing cash flow to sales ratio remained predominantly negative throughout 2011 to 2020, it appears that the firm performs poorly in this sector, necessitating an improvement.
Table 1. Changes in Marriotts cash flow between 2011 and 2020
Other essential financial indicators include liquidity and efficiency ratios. Concerning liquidity, specifically the current ratio, the firm has performed rather negatively between 2011 and 2020. During 2011, the current ratio significantly dropped from 1.24 to 0.52, remaining below 0.7 until 2020, demonstrating the companys continuous inability to pay its obligations within one year (Macrotrends, 2021a). Given this evidence, the enterprise may have a relatively low liquidity performance which tends to decrease each year.
Table 2. Changes in Marriotts efficiency ratio between 2011 and 2020
The financial indicator of efficiency depicts another trend of decreasing performance. Marriotts asset turnover was exceptionally high at the beginning of the decade, from 2011 to 2015. However, after encountering a tremendous drop from 2.38 to 0.63 in 2016, the asset turnover stayed considerably low, never overcoming the 1.0 threshold (Macrotrends, 2021a). This data exemplifies that the enterprise slowly became less efficient in deploying its assets to generate sales and revenue.
Table 3. Changes in Marriotts liquidity ratio between 2011 and 2020
The major hotel industry companies, Intercontinental and Hilton, present several similar trends considering the cash flow financial indicator. Intercontinental and Hilton were developing rather steadily between 2011 and 2017 (Hua, DeFranco, and Abbott, 2020). However, in contrast with Marriott, these firms suffered a cash flow reduction in 2017 instead of 2015 (Luo, 2011). In general, while staying positive until 2016, net operating cash flow growth remains negative for all three hotel chains, suggesting poor performance. Nevertheless, Marriott executed its investments more successfully during the decade than Intercontinental and Hilton, maintaining a partially positive net investing cash flow to sales ratio.
As for the financing activities, Hilton suffered the most significant growth reduction in 2017. In addition, Intercontinentals investing cash flow to sales ratio was steadily negative in the period between 2016 and 2020 (The Wall Street Journal, 2021b). Although all corporations performed correspondingly between 2011 and 2016, Marriotts performance advancements can still be considered exceptional (Wang and Chung, 2015). As for liquidity, Intercontinental and Hiltons current ratios did not change significantly during the decade, maintaining a 0.7-0.9 ratio (Macrotrends, 2021b; Macrotrends, 2021c). Alternatively, Marriotts liquidity achievements are substantially low (Seo and Soh, 2019). Finally, international and Hilton also performed better regarding their asset efficiency parameter, meaning that Marriotts current financial accomplishments are significantly nonproductive in comparison.
Table 4. Changes in Intercontinentals cash flow between 2011 and 2020
Table 5. Changes in Intercontinentals liquidity ratio between 2011 and 2020
Table 6. Changes in Intercontinentals efficiency ratio between 2011 and 2020
Table 7. Changes in Hiltons cash flow between 2011 and 2020
Table 8. Changes in Hiltons liquidity ratio between 2011 and 2020
Table 9. Changes in Hiltons efficiency ratio between 2011 and 2020
To conclude, it is evident that Marriotts development between 2011 and 2020 encountered various changes in cash flow, liquidity, and efficiency parameters, temporarily increasing or decreasing the companys speed of growth. Even though the periods between 2011 and 2015 were similarly beneficial for all three hotel chains, after 2015, dramatic contrasts can be observed. While operating cash flow demonstrates more corresponding positive patterns for the enterprises, Marriotts investment and financial gains were more advantageous. In the current environment, between 2017 and 2020, each corporation experienced substantial obstacles in performance improvement, necessitating future advancements in the liquidity and efficiency aspects.
Reference List
Harrington, D. (2017) Marriott Corporation, Darden Business Publishing Cases, pp. 129.
Hua, N., DeFranco, A. and Abbott, J. (2020) Management fees and hotel performance in the U.S., Tourism Management, 79.
Luo, Y. (2011) Designs of Companys Cash Flow Indicators amp; Case Analysis, in 2011 International Conference on Management and Service Science. 2011 International Conference on Management and Service Science, pp. 14.
Macrotrends. (2021a) Marriott Financial Ratios for Analysis 2005-2021. Web.
Macrotrends. (2021b) Intercontinental Hotels Group Financial Ratios for Analysis 2005-2021. Web.
Macrotrends. (2021c) Hilton Worldwide Holdings Financial Ratios for Analysis 2005-2021. Web.
Netcials. (2021) Marriott International Inc. (MAR) Cash Flow By Year. Web.
Seo, K. and Soh, J. (2019) Asset-light business model: An examination of investment-cash flow sensitivities and return on invested capital, International Journal of Hospitality Management, 78, pp. 169178. .
The World Street Journal. (2021a) Marriott International Inc. Annual Cash Flow. Web.
The World Street Journal. (2021b) Intercontinental Hotels Group PLC ADR Annual Cash Flow. Web.
The World Street Journal. (2021c) Hilton Worldwide Holdings Inc. Annual Cash Flow. Web.
Wang, Y.-C. and Chung, Y. (2015) Hotel brand portfolio strategy, International Journal of Contemporary Hospitality Management, 27(4), pp. 561584.
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