FINANCIAL ANALYSIS (HOTEL INDUSTRY)
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By Donnabelle Pineda and Marge Javillonar
ADB-MBA Program, Batch 10
Prof. Ricardo Palo
4 August 2010
The hospitality industry is a trillion dollar service sector within the global economy. The industry covers a broad variety of service industries including, but not limited to, hotels, food service, casinos, and tourism.
This paper will concentrate on the hotel industry and will analyze 3 international hotel groups. Specifically, this paper will look at each of the hotel group’s financial statements, compare and analyze them using the different measures of liquidity, profitability and efficiency, and draw conclusions from these analyses regarding the financial performances of each hotel group.
Mandarin Oriental Hotel Group
Mandarin Oriental Hotel Group (Mandarin) is an international hotel investment and management group with deluxe and first class hotels, resorts and residences in sought-after destinations around the world. The Group now operates 42 hotels, including some under development, representing over 10,000 rooms in 27 countries (17 hotels in Asia, 13 in The Americas, and 12 in Europe, Middle East and North Africa). In addition, Mandarin operates 14 Residences at Mandarin Oriental, connected to its properties. The Group has equity interests in many of its properties and net assets of approximately USD2.1 billion as at 31st December 2009.
Mandarin’s aim is to be recognized widely as the best global luxury hotel group, providing 21st century luxury with oriental charm in each of its hotels. They plan to achieve this by investing in their exceptional facilities and its people, while maximizing profitability and long-term shareholder value. Their strategy is to open the hotels currently under development, while continuing to seek further selective opportunities for expansion around the world.
InterContinental Hotel Group (IHG)
IHG is an international hotel company whose goal is to create Great Hotels Guests Love. They have more guest rooms than any other hotel company in the world – that's more than 650,000 rooms in over 4,400 hotels in 100 countries. Their guests make over 130 million stays in IHG hotels every year. They operate seven hotel brands – InterContinental, Crowne Plaza, Hotel Indigo, Holiday Inn, Holiday Inn Express, Staybridge Suites and Candlewood Suites.
IHG operate hotels in three different ways – as a franchisor, a manager and on an owned and leased basis. Franchising is the largest part of its business with over 3,800 hotels operating under franchise agreements. They also manage 624 hotels worldwide and own 16 hotels worldwide.
Marriot International Inc.
Marriott International, Inc. (Marriott) is a leading lodging company with more than 3,400 lodging properties in 70 countries and territories. The company is headquartered in Bethesda, Maryland, USA, and had approximately 137,000 employees at 2009 year-end. It is recognized by Fortune as one of the best companies to work for, and by Newsweek as one of the greenest big companies in America. In fiscal year 2009, Marriott International reported sales from continuing operations of nearly $11 billion.
Marriott's goal is to create significant value by aggressively building its brands and growing its businesses. The company is dedicated to providing exceptional service to customers, growth opportunities for associates, and attractive returns to shareholders and owners.
To effectively compare and evaluate each hotel group, this paper will provide the common-sized statements (see Annex 1), comparative analysis statements (see Annex 2), the significant ratios (Annex 3) and cash flows (Annex 4) that will help in the analysis of each hotel group’s financial performance.
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