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By: Allie Leon

By: Allie Leon. Valuation using the REI valuation model. Operations. 3900 lodging properties in 72 countries Controls about 10 % of US hotel market and 1% worldwide Made up of 19 brands Ritz Carlton, JW Marriott, Fairfield Marriott, Courtyard Marriott, etc.

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By: Allie Leon

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  1. By: Allie Leon Valuation using the REI valuation model
  2. Operations 3900 lodging properties in 72 countries Controls about 10 % of US hotel market and 1% worldwide Made up of 19 brands Ritz Carlton, JW Marriott, Fairfield Marriott, Courtyard Marriott, etc. Most revenue from franchise arrangements Minimizes financial leverage and risk Marriott credit card revenue
  3. The REI model REI value is derived directly from forecasted accounting data, using NEA as an anchor Value is mathematically equivalent to the DCF method REI Model is better because more value is captured in a shorter horizon that you are more comfortable with With DCF, more reliance is placed on the terminal value
  4. Value using DCF -sales growth through 2018 = 6% -perpetual sales growth = 2.25% - WACC = 9.76%
  5. Valuation using REI Enterprise value = NEA + PV of REI + PV of terminal value *assume same growth rates -forecasted up to 2021 to get the growth rates to stabilize
  6. Comparisons DCFREI NEA: $1,434m $1,434m PV of CF (REI): $2,270m $1,991m PV of terminal value: $3,902m $2,747m Enterprise Value: $6,172m $6,172m -Total enterprise value is the same, although the component values differ -Total value for DCF is simply the sum of the two PVs calculation of FCF takes into consideration the initial NEA -Total value for REI is all three added together
  7. Questions??
  8. Sources Marriott International, Inc. 2012 Annual Report Yahoo Finance NASDQ
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