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Mariam Tariq Marriott Cost of Capital September 22, 2004 1) Marriott's financial strategy had 4 components each of which addresses its objective of aggressive growth. Manage rather than own hotel assets Marriott is not in the real estate business. It is not looking to increase value by buying and selling real estate. Therefore, it develops its hotels and then sells them recognizing a profit on that sale. But it still generates revenues by retaining operating control and retaining fees of 20% of profits before depreciation and debt service. By selling the assets and tying up the capital in structures, Marriott can use its cash to develop new properties and further generate revenue from operating activities. Invest in projects that increase shareholder value Marriott goes through an extensive analysis to find valuable projects. They determine a hurdle rate based on "market interest rates, project risk, and estimates of risk premiums". It tried to achieve consistency across projects...

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