1
Hotel Industry Demand, Labor, and Capital Analysis
ECP 6705: Advanced Managerial Economics
2
Table of Contents
Executive Summary .........................................................................................................................4
Industry Demand Analysis ...............................................................................................................5
Price-to-Book Comparison .......................................................................................................... 6
Marriott International, Inc........................................................................................................ 7
Hilton Worldwide Holdings Inc............................................................................................... 8
Role of Intellectual Property........................................................................................................ 9
Brand Recognition ................................................................................................................... 9
Price Elasticity Study Design for Marriott International, Inc .................................................... 10
Labor Analysis ...............................................................................................................................14
Employee Classes Within the Industry ...................................................................................... 14
Building, Grounds, and Maintenance Operations .................................................................. 15
Office and Administrative Support Occupations ................................................................... 16
Food, Preparation, and Serving-Related Occupations ........................................................... 17
Other Occupations Within the Industry ................................................................................. 18
The Biggest Issue Facing the Hotel Industry Today ................................................................. 19
Capital Analysis .............................................................................................................................21
Mergers, Acquisitions, and the Asset-Light Model................................................................... 21
Debt and Equity Movement....................................................................................................... 22
Partnerships and Franchising ..................................................................................................... 22
Outsourcing ............................................................................................................................... 24
3
Uniqueness of Capital Activities in the Hotel Industry ..............................................................24
References ......................................................................................................................................28
Appendix A ....................................................................................................................................39
Appendix B ....................................................................................................................................40
Appendix C ....................................................................................................................................41
Appendix D ....................................................................................................................................42
Appendix E ....................................................................................................................................43
Appendix F.....................................................................................................................................44
Appendix G ....................................................................................................................................45
Appendix H ....................................................................................................................................46
Appendix I .....................................................................................................................................47
Appendix J .....................................................................................................................................48
4
Executive Summary
The hotel industry is part of the overarching travel and tourism industry, an industry that
made up 10.4% of global GDP and 10% of global employment in 2019 (World Travel &
Tourism Council, 2021). By 2025, the hotel, motel, and resort industry is estimated to increase in
value by 236% over 2020, up to $1.072.8 trillion annually. It is one of the most globally
significant industries in terms of worldwide employment and economic impact. It is, also, one of
the industries hardest hit by the COVID-19 pandemic. The purpose of this report is to analyze
economic conditions, demand elasticity, labor concern, and capital activities within the industry.
Throughout the hotel industry, price-to-book values are much higher than the market average.
As many companies have moved to asset-light capitalization strategies, the impact of the
valuation of intellectual property (such as branding) has greatly outweighed tangible assets. This
has led many in the industry to have negative tangible book values. Intellectual property is
difficult to properly quantify on a balance sheet, it can lead to a distortion in the price-to-book
value. A large percentage of hotel company value lies in intellectual property with brand
reputation and customer reach being a strong driver to increasing global franchising, the primary
driver of global hotel growth. Out of the two hotels analyzed, Marriott International had a very
high price-to-book value while Hilton Worldwide’s value was negative (in part due to utilizing
higher leverage to bolster stockholder value by buying back shares). In addition, demand was
found to be fairly inelastic on a macro level, while becoming more elastic as the focus became
more and more narrow. Different market segments and regions were found to have different
elasticities, and hotel demand is more elastic in the long run versus the short.
Labor force issues are some of the most pressing challenges facing the hotel industry in 2022.
In the United States alone, 6.2 million workers were laid off in 2020 (Ross, 2021) and while
5
demand has recovered, the industry’s workforce has not. A large percentage of hotel employees
are in traditionally low-wage positions such as housekeepers, servers, and customer service
representative and many positions in those classes remain unfilled. Wages were found to vary
significantly by region, but not necessary by market segment. Despite higher wages and hiring
incentives, many hotels have turned to alternative options such as increasing reliance on
technology such as robots. In addition, companies are reducing or eliminating amenities such as
room service or housekeeping. This strategy is not without consequences, however, as customer
satisfaction levels have fallen over the past few years, calling into question whether the strategies
are sustainable in the long-run due to competition and the elasticity of demand.
The capital activities of Marriott International were investigated and compared against its
competition in the industry. Marriott has pursued expansion strategies involving growth through
acquisition and franchising models, neither of which is uncommon in the industry. Marriott’s
business model is primarily concerned in brand growth versus tangible asset growth and sells
most of the tangible assets gained through acquisition. This strategy, known as asset-light, was
originated by Marriott in the early 1990s, but has become an industry standard. In addition, the
company has been aggressive in utilizing leverage to fund capital improvements and improve
shareholder value through stock repurchases, causing liability levels to rise while common equity
fell through the end of 2020. It has also pursued partnerships with luxury brands and the National
Park Service to boost revenue, while outsourcing major business operations to control costs.
Through analysis it was found that none of the capital strategies employed by Marriott were
unique to the company, which is what is expected in such a competitive industry.
Industry Demand Analysis
6
The hotel industry, delineated by NAICS code 721110, is defined as businesses that offer
short-term accommodations located within, “hotels, motor hotels, resort hotels, and motels.”
This classification excludes specific hotel types (such as bed and breakfast, or casino-based
hotels), but it does include all the ancillary services hotels provide. This includes food and
beverage services, laundry, convention space, parking, conference rooms, and other amenities
such as spas (United States Census Bureau, 2022).
Revenue streams within the industry are primarily generated through hotel room rentals and
the operation of in-hotel restaurants and bars (Ristoff, 2021). Due to the worldwide pandemic
that significantly curtailed travel and discretionary spending throughout the world, revenue
volatility for the industry remains high. While the industry has experienced a recovery over the
past year, there are concerning signs that fears of a recession, increased costs of living, and high
inflation will lead to an overall cooling of the industry (Owers, 2022).
Global hotel industry revenue is projected to be $312.30 billion in 2022 (Statista, 2022).
Industry revenue for NAICS code 72111 hit $133 billion, with the revenue generated by guest
room rentals accounting for 79.9% of revenue (Ristoff, 2021). The remaining revenue was due to
restaurants and bars (9.3%) and other services, such as spas, parking, convention space rental, or
others generating 10.8% (See Appendix A).
Price-to-Book Comparison
Price to book ratio (PB value) is a company’s stock price divided by its book value per share
(Maverick, 2022). The average hotel and resort PB value, according to equity-management
company Eqvista, is 11.7993, while the average across all industries is 6.977 (Sarath, 2022).
Aswath Damodaran (2022) from NYU’s Stern School of Business, estimates the hotel and
7
gaming sector’s PB value is 7.56, though that data set does include cruise ship companies, casino
hotels, and lodging alternatives like AirBnb, which makes accurate comparisons difficult.
PB values that exceed 1 can indicate overvalued stocks, but this ratio does have some
limitations that reduce its usefulness in the hotel industry (Maverick, 2022). While the industry
has historically been capital-intensive, many of the larger firms are moving to an asset-light
model – spinning their real estate ownership off into real estate investment trusts (REITs) (Seo,
2021). This removes high value assets from the books, creating companies that generally operate
with more intangible assets (such as intellectual property and goodwill) that price-to-book can
undervalue (Maverick, 2022). Price-to-book ratios fail to properly account for the true value of
intangibles such as brand names and human capital due the difficulty in accurate valuation. Not
only are they difficult to accurately value but intangible assets on the balance sheet must be
amortized, potentially creating scenarios where the fair market value far exceeds the balance
sheet value of a trademark. Companies can spend millions on advertising building their brand
names and images, but it does not fully translate into high goodwill, or other intangible asset,
values on the balance sheet (OSAM Research Team, 2018).
Marriott International, Inc.
Marriott’s end-of-year price-to-book value has varied from 16.21 to 99.35x within the past
four years, and is currently 26.0 based on July 14th stock price divided by the March 31, 2022
book value (Macrotrends, 2022). As referenced in Appendix B, Marriott’s PB value has
consistently exceeded their competitors and is strikingly high compared to the market average.
Looking at the balance sheet (See Appendix D) can assist in making sense of the issues with
Marriott’s PB valuation. First, Marriott’s equity had been steadily declining until 2020 due to a
8
commitment to share repurchase, reflected in the steady increase in treasury stock. Liabilities
during the same time rose by 13%. Falling equity combined with increasing liabilities creates a
diminishing book value. In addition, intangible assets comprise a significant portion of Marriott’s
balance sheet -- making up $19,265 million, or 76.33% of asset value (Marriott International,
Inc, 2022). While some analysists can view such high PB values as a sign that a stock is
overvalued, this appears to be a case where stockholders place a higher value on intangible assets
than are accurately reflected in the book value. Investors obviously place a higher value on the
firm’s intellectual property and branding than the GAAP balance sheets do.
Hilton Worldwide Holdings Inc.
In contrast to Marriott, Hilton’s PB value has been negative for several years (See Appendix
B). The negative PB value is due to negative shareholder equity, a result of being highly
leveraged (See Appendix C). Like Marriott, Hilton has shifted its capital management to an
asset-light approach, making it overemphasize intangible assets in the PB value (McClure,
2022). In addition, Hilton has historically committed to repurchasing outstanding shares through
their stock repurchase program (Hilton.com, 2020). While this was halted shortly after the
pandemic began, the impact of the treasury stocks on the balance sheet (Hilton Worldwide
Holdings Inc, 2022) remains a significant factor in the creation of negative equity for the
company.
While negative equity certainly plays a role, asset balance should not be discounted for
Hilton, either. Hilton’s intangible assets accounted for $11,649 million of the assets in March
2022, or approximately 75.35% of its assets. Like with Marriott, intangible assets are the main
driver of assets (and asset creation) within the company. Increasing franchise growth, a major
9
source of revenue growth in the industry, heavily relies on significant intellectual property assets
such as branding to attract potential franchisees to the company.
Role of Intellectual Property
Kickstarted by Marriott in 1992 (Hotel Management International, 2018), the hotel industry
has increasingly been selling off their hard assets (like buildings and land) to REITs – a strategy
that has come to be known as ‘asset-light.’ As such, intangible assets and, by extension,
intellectual property plays a significant role in asset creation and hotel management. Intellectual
property has historically comprised four main forms: copyright, trademark, patent, and trade
secrets (Kenton, 2021). However, there are a few additional emerging intellectual property
classifications are that becoming increasingly important to the hotel industry (World Intellectual
Property Organization and World Tourism Organization, 2021). These include certification and
collective marks and geographical indications. These new intellectual property classifications are
not typically owned by the hotel companies themselves, however involvement with the creating
organizations can generate increased revenue in the participating hotel locations. Loyalty
programs, computer systems, training programs, and technological innovation are all pieces of
intellectual property that create significant value to their hotel company owners, serving as vital
pieces of differentiation in a competitive industry.
Brand Recognition
Overall brand recognition and identification is the most vital component of intellectual
property rights within the hotel industry (Kenton, 2021). The trademarking of names, slogans,
logos, color schemes, particular décor features, and even unique menu names all play a role with
brand recognition. Strong branding allows firms to reach consumers through messaging –
10
enhancing the feeling of connection and personality congruence that is so important in creating
brand loyalty (Nam, Ekinci, & Whyatt, 2011). Consumers who are brand loyal are less price
sensitive than those who are not. The same study found that consumers tend to be more loyal to
companies that match their perceived social and emotional lifestyle. Hotels that are properly
branded for their desired customer segment will have an easier time attracting and retaining
customers throughout market segments. By creating unique brands targeted to different
segments, it can ease the entry into emerging markets and create a competitive advantage in the
industry.
Strong brand recognition and reputation within the industry assist in franchise expansion – a
business scenario where one company sells the rights to use its intellectual property to another in
return for fees and royalties (Hayes, 2021). Robust brand reputation allows for company
expansion with virtually no capital investment, which has led firms like Hilton to launch large
global franchising initiatives (Hilton.com, 2021). Smaller companies are attracted to the existing
brand reputation and level of recognition, as it provides an immediate customer base of brandloyal consumers, and the parent companies generate increased revenue and recognition as more
locations open globally.
Price Elasticity Study Design for Marriott International, Inc.
Price sensitivity of the customer base is a main concern for hotel management throughout the
globe (Blengini & Heo, 2020). As the travel and tourism industry is affected by changes in the
overall economy (both leisure and business travel markets), understanding how price changes
will affect demand in their hotels is crucial to implementing proper pricing strategies. A further
complicating factor is that price sensitivity (and, thus, price elasticity) is also influenced by
11
geography, seasonality, and market segment along with customer loyalty, brand recognition, and
other social factors.
A study done in 2012 by Corgel, Lane, and Woodworth found that price elasticity is
inelastic when looked at on a national scale, and it increases in elasticity as the perspective
decreases in size. For example, cities exhibit more price elasticity than states, or the country. In
addition, price elasticity increases as one examines the luxury hotel market segment versus the
economy segment. The authors also found that demand closely aligned with economic
conditions, particularly income elasticity, which produced significant shifts in the demand curve.
Finally, they found that short-run price elasticity tends to be largely inelastic, gradually gaining
elasticity as one looks further to the future. It also makes sense to theorize that length to booking
affects price elasticity, as further away from the travel date a consumer is, the more time and
ability they have to price compare through the various booking venues.
Marriott International operates 30 hotel brands that target every market segment throughout
139 countries (Marriott.com (a), n.d.). Their loyalty program is ranked third for “Hotel Rewards
Programs” by U.S. News and World Report (U.S. News and World Report, n.d.). Business
travelers tend to highly weight brand inclusion in their preferred loyalty program (McGuire,
n.d.). However, leisure travelers have shown that brand loyalty (even when enrolled in a
particular loyalty program) is not a major factor in booking their next hotel stay (RevenueHub,
2022). This is a complicating factor, as business travel has been much reduced by the pandemic
and it is not recovering nearly as fast as the leisure travel market (iSeatz, 2022). While loyalty
programs are used for data mining and marketing purposes (Lentz, Berezan, & Raab, 2021),
managers have traditionally ignored their application when it comes to dynamic pricing
strategies. Many studies have shown that true brand loyalty creates less price sensitive customers
12
(and, thus, price inelasticity), but few have examined the price elasticity of the loyalty program
membership across the market segments. As the loyalty program generates a significant amount
of data on its members, all hotels (including the Marriott) should be concerned with how the
loyalty program ties into price sensitivity and overall revenue management, especially
considering how frequently program cost is criticized.
This type of fundamental economic understanding is especially vital in the current economic
situation. A survey of consumers in the first quarter of 2021 by GlobalData showed increased
price sensitivity compared to pre-pandemic times and found that “price is the most important
factor to 47% of consumers when selecting accommodation” (Tore, 2021). In their survey,
‘loyalty and prestige’ ranked last in importance. The fear of recession combined with high
inflation is creating situations where travelers who might normally choose mid-scale or above,
will start to look more at budget or economy segment options.
The first step in the study would be to create individual market segments to analyze. The
primary market segmentation would be along hotel star categories. “Budget or economy” would
be considered 1-to-2-star brands, “mid-scale” would be 3-star, “upper-scale” 4-star, and “luxury”
5-star brands. A generic location, appealing to both leisure and business travelers would be
chosen, as the study would seek to identify price sensitivities among the market segments, not
geographic location. Study participants would be initially targeted by participation in the
Marriott Bonvoy loyalty program combined with plans for upcoming travel (within the next year
or two), with a random sampling of consumers within each loyalty program tier. These reward
tier consumer samples would be kept separate, to further identify the price sensitivity between
travelers of varying frequency. Once participation was confirmed, the study would examine the
data collected from their previous stays to conduct a retrospective and compare it to the averages
13
in the different market segments. As hotel categories increase, demand should become more
elastic and show greater price sensitivity, which could indicate that the specific consumer might
be looking to downgrade categories during the current trips.
The second step of the study would be to create and implement a survey on upcoming travel.
The survey would show participants pictures of random hotels in each category, along with a
description (including the star rating) of the location and the amenities offered. The first several
questions would utilize price laddering, where the customers are shown a series of prices and
they indicate whether they are willing to purchase the hotel room for that rate or not. The next
several questions would follow the Van Westendorp’s Price Sensitivity Meter (Van
Westendorp’s Price Sensitivity Meter, 2021), with the customer able to fill in the blanks for the
four questions. This would allow the researchers to have cumulative distributions to estimate
price levels for each hotel category, while also measuring the tolerance for price alterations.
Previous research has indicated price elasticity decreases for loyal customers and budget hotel
shoppers (Nam, Ekinci, & Whyatt, 2011), it would be expected that both the highest tier of
loyalty program members and the budget hotel segment would show the most inelastic demand.
As the luxury hotel category would be expected to have the most elastic demand, it can also give
the upper and mid-scale hotel managers an idea of where their prices can be set to lure the pricesensitive travelers away from the premium segment.
The final step of the study would be to recruit consumers to participate who are not Marriott
Bonvoy loyalty members. By having them adhere to the same requirements (upcoming travel)
and by answering the same questions, a comparison could be made between the loyalty program
members and non-participants as to their overall price sensitivity. As the lowest tier of the
loyalty program only requires a simple signup, it would be expected that the price elasticity
14
would align with non-participants and would be the highest of all loyalty reward tiers. As the
loyalty tier increases, it would be expected that price elasticity would decrease, as the reward
benefits offered through the program would mitigate the effect of minor price changes.
Labor Analysis
The hotel and motel industry within the NAICS code 72111 generated over $133 billion in
revenue across 92,746 hotel locations and employed over 1.36 million workers within the United
States in 2021 (See Appendix E and F). While the employment level does mark a significant
increase from the low of 2020, it reflects a 19.9% decrease from 2019 levels. The labor shortage
is continuing into 2022, with the U.S. Travel Association estimating that the leisure and
hospitality industry employment is still down 8.5% as of June 2022 (U.S. Travel Association,
2022).
Employee Classes Within the Industry
The U.S. Bureau of Labor Statistics (BLS) publishes an employment matrix that breaks down
employee classes within industries, and this analysis targets 721100 – the traveler
accommodation services industry group (United States Census Bureau, 2022). While this does
include many accommodation options not considered in other parts of this analysis, for purposes
of this paper it is not unreasonable to extrapolate that employment and wage information would
not vary very much when looking at the individual NAICS industries. The top three occupation
classes within the industry made up almost 68% of the total industry employment (See Appendix
G for the full breakdown) in 2021.
15
Building, Grounds, and Maintenance Operations
The largest class of workers within the industry falls into major occupation code 37-0000 –
‘building and grounds cleaning and maintenance operations’ (U.S. Bureau of Labor Statistics,
2022). This code includes pest control, landscaping and groundskeeping, janitors, and
maid/housekeeping occupations. This employee class comprised 27.9% of the industry, with the
maids and housekeeping code (37-2012) comprising 24%. This employee class is expected to
grow within the industry – adding approximately 79,900 jobs by 2030, 71.3% of which will be
maids and housekeepers. However, data indicates that the percentage of employees falling within
this classification declined from 2020, when the total proportion was 28.5% of the workforce.
According to the Bureau of Labor Statistics, maids and housekeepers earned a median
salary of $13.39 and a mean of $13.58 per hour in 2021. This occupation code earns around 28%
less than the average hourly earnings of nonsupervisory employees within the industry (See
Appendix H). The average hourly wage is approximately 4.7% below the national average of
$14.22 an hour, indicating the industry could potentially be having an issue attracting this
occupation class away from other industries. In addition, while wages have increased by 6.4%
over 2019, that is still below the increase in the national hourly wage for the occupation class of
10.3% (Bureau of Labor Statistics, 2022). The May 2021 occupation and wage statistics (See
Appendix I) show significant regional variations, from a low of $12.47 an hour in Ohio up to
$19.37 an hour in New York.
Recent listings on Glassdoor.com confirm the regional variation exists within this class.
Marriott International is advertising $26 an hour for a housekeeper in Koloa, Hawaii, while
Hilton’s listing for a housekeeper in Aberdeen, Maryland lists $13 – 16 per hour (Glassdoor,
16
2022). The listings vary even within region, however, with some companies’ offerings as low as
$11 an hour, while others offer $18, primarily centering around a specific geographic location (in
city centers). In certain regions, hotels are even offering hiring bonuses. Walt Disney World in
Orlando is hosting a job fair on July 19, 2022, offering a starting pay of $17 an hour plus a
$1,000 signing bonus for housekeeping roles (Walt Disney World, 2022). While regional
variation exists, there does not appear to be any significant difference in pay throughout the
market segments.
Office and Administrative Support Occupations
Occupation code 43-0000, and its subclasses of hotel, motel, and resort desk clerks (43-4081),
various other clerks, and their supervisors comprise the second largest employee class with
20.78% of the industry workforce (an increase over 2020, when it was the third largest employee
class at 19.2%). The largest subclass, with 14.61% of the workforce is “Hotel, Motel, and Resort
Desk Clerks.” Alternatively known as front desk agents, desk clerks, and guest service agent,
these employee subclass had an average hourly wage of $13.45 (median $13.38) in 2021
according to the Bureau of Labor Statistics (2022). The overall class of 43-0000 is expected to
grow by 17.3% by 2030, comprised mostly by the growth in demand for front desk clerks. This
is one of the few classes, however, that has employee subclasses projected to decrease over the
next eight years. These subclasses include nearly obsolete professions such as switchboard and
telephone operators (a decline of 8.9%), executive secretaries and administrative assistants
(3.1%), and data entry workers (9.7%).
Wages for this employee class also tend to vary among regional lines and not by market
segment, though they show far weaker regional variation than the previous two subclasses have
17
shown (Glassdoor, 2022). The May 2021 report from the Bureau of Labor Statistics found that
mean hourly wages for code 43-4081 varied from a low of $11.80 in Texas to a high of $16.49 in
California (See Appendix I and J). While a few job listings on Glassdoor were stated to offer $20
(or more) an hour for a front desk associate position, most of the listings clustered in the $15 –
$18 per hour range. In addition, the industry wage tracks the national wage closely, potentially
because this class is narrowly defined and has very few extra-industry competitors for this job
class.
Food, Preparation, and Serving-Related Occupations
The third-largest occupation class within the 7211 industry group is code 35-0000 – or “food,
preparation, and serving related occupations.” This code includes chefs, cooks, servers,
bartenders, dishwashers, restaurant hosts, and their front-line supervisors. This employee class
makes up around 19.01% of the industry’s employees, with servers (35-3000) as the most
prevalent subsection at 8.75% of industry employment. This class, like most within the traveler
accommodation industry, is estimated to increase by 109,600 jobs by 2030, an increase of
30.4%. This class of employees, however, has suffered the largest decline in year-over-year
employment within the industry group, going from 23.7% of the workforce in 2020 down to
19.01% in 2021.
This occupation class has a wide range of salaries. At the top end, chefs and head cooks (351011) earned an average hourly rate of $32.34 ($29.69 median) in 2021 according to the Bureau
of Labor and Statistics (2022). Waiters and waitresses (35-3030) earned a mean hourly wage of
$14.16 but a median of $12.73 (See Appendix H). One potential reason for the gap between the
mean and median hourly wages for the waiter and waitress subclass is the nature of tipped
18
positions. Employees who wait tables in restaurants with high menu prices will earn higher
amounts in tips – making it feasible that the highest tip earners are increasing the mean wage. In
this case, it is reasonable to believe that the median wage is a more accurate indicator of the
occupation’s wages within the industry.
Like the occupation class 37-2012, there appears to be regional variations for salaries,
extending from a low in Ohio of $11.45 an hour up to a high of $19.09 an hour in New York
(See Appendix J). Industry wages remain above the national average even though the industry’s
average wage fell between 2020 and 2021 (See Appendix H). Research into job postings on
Glassdoor.com confirms the high regional variation for salaries, but not necessarily large-scale
market segment variations (though it could be a hidden factor in the difference between the mean
and median server wages). As an example, the Ritz Carlton in Kapalua, Hawaii (5-star) and
Sheraton Maui Resort and Spa in Lahaina (4-star) both have listings for line cooks at a pay rate
of $30 an hour, while hotels across all classes in Orlando, Florida are offering around $15 – 18
an hour. A potential reason for limited market segment wage differentiation is because budget
and economy hotels rarely have restaurants, so a large percentage of the cook and server
positions will be held in mid-scale and above segments.
Other Occupations Within the Industry
While the top three employee classes make up over 2/3 of the total industry workforce
(67.69%), there are many other occupations within the traveler accommodation sector. The mean
hourly wage for all employees within this industry during May of 2022 was around $22.21
according to the Bureau of Labor and Statistics, while nonsupervisory employees had a mean
wage of $19.41 per hour. When compared to the mean wages of the largest employee classes,
19
these wage statistics show that most employees within the hotel industry earn less than the mean
wage (See Appendix H). Occupation categories 11 (Management Occupations) and 13 (Business
and Financial Operations Occupations) are among the highest paid within the industry while
consisting of only 8.54% of the workforce. Both classes are expected to grow by 30% by 2030.
According to the Bureau of Labor and Statistics, the mean annual wage for lodging managers
was $31.82 last year, while the median was $28.53. Wages within these categories vary
drastically depending on the management specialty, experience, and location.
The Biggest Issue Facing the Hotel Industry Today
BWH Hotel Group President and CEO, Larry Cuculic, did not refrain from giving his honest
opinion to a question regarding the most pressing issue faced by the hotel industry in 2022,
“Overwhelmingly the answer to that question is labor” (McCracken, 2022). As travel restrictions
have eased, demand bounced back tremendously, catching the hotel industry (which laid off 6.2
million employees in response to the pandemic) flat-footed in response (Ross, 2021). While
wages have risen 13.6% since February of 2020, the leisure and hospitality industry is still the
lowest-paid industry according to the Bureau of Labor Statistics (Kaplan and Hoff, 2022). In
addition, it’s the industry that is taking the longest to recover, with estimates the industry is
currently still 1.4 million jobs short (U.S. Travel Association, 2022).
The industry has implemented several changes in response to the labor shortage. As
mentioned before, wages are rising, signing bonuses offered, and benefits are being increased,
but the industry is still struggling to hire and retain workers. Many hotels have implemented optin housekeeping, where maid service must be requested by the customer to be given (Levere,
2021). Other amenities and services typically offered at 3 and 4-star hotels are being eliminated
or reduced (such as doormen, porters, and room service), while available hours for restaurants,
20
spas, health clubs, bars, and shuttle services are being reduced (or the offerings are closed
entirely) (Henderson, 2022). Loyalty program benefits are diminishing, and free breakfast
options are becoming rare – even the club-level lounges are being closed or severely limited.
In addition to the increased wages and the reduction of amenities, hotels are also increasingly
turning to alternate forms of customer service through technology. Robotic technology is being
developed and implemented in hotels worldwide (Diller, 2022). The robots can be used to
accomplish a number of minor tasks once completed by human counterparts – they can deliver
room service, run food in restaurants, vacuum common areas, and clean flooring. Another
technological innovation is the use of mobile apps to check-in and even act as room keys,
reduced the amount of traffic at the front desk stations and, thus, the required number of
employees (Hertzfeld, 2018). This type of technological innovation also has the potential to
increase customer satisfaction through eliminating front desk wait times.
Another serious labor issue facing the hotel industry is declining customer satisfaction scores
(The American Customer Satisfaction Index, 2022). The ACSI index for hotels fell 2.7% to 71,
lower than the satisfaction levels for airlines, online travel agencies, and car rental companies.
Areas such as the quality of the loyalty program, quality of amenities, and quality of food
services were all at or below the threshold for customer dissatisfaction, according to the study.
Unfortunately, mitigating this issue is problematic, as it stems mostly from the labor shortage.
There is no one easy solution to a labor shortage in an industry as competitive as traveler
accommodation. Hilton’s CEO has implied the changes will be permanent, but industry
observers are not convinced it will be feasible for the hotel chains to completely maintain in the
long term (Schlappig, 2021) without sacrificing revenue and guests to short-term lodging
alternatives. Creating a scenario where customer satisfaction scores fall below reasonable
21
thresholds due to the continuance of unpopular strategies could end up creating longer-term
problems for brands conscious of their reputation and image.
Capital Analysis
Financial capital activities are related to the use of equity or debt to finance asset acquisition,
increase working capital, or generate stockholder benefits. It can include selling assets to
generate cash, issuing stocks or taking on debt to finance business activities, and issuing
dividends for shareholders. Asset sales, mergers and acquisitions, franchise acquisitions, and
even outsourcing and partnerships are viewed as capital activities common within the hotel
industry.
Mergers, Acquisitions, and the Asset-Light Model
Since the mid-90s, one of Marriott’s growth strategies is through acquiring brands and then
leveraging the brand’s identity and reputation within the desired market segment to provide
opportunities for revenue throughout the industry (Rockett, 2022). In 2015, Marriott
International announced their purchase of fellow hotel group, Starwood Hotels & Resorts
Worldwide (Marriott.com (b), n.d.). It filed the 8-K with the SEC on March 25, 2016 and the
voters approved the merger on April 8th. This merger created the largest hotel chain in the world,
adding Starwood’s 11 brands to Marriott’s portfolio. To partially finance this acquisition,
Marriott International issued $1.5 billion in Series Q and R notes. Keeping with Marriott’s
traditional asset-light strategy, it planned to sell all of Starwood’s owned properties, which was
estimated to bring in an additional $1.5 to $2 billion in capital (Fox, 2016). In addition to the
capital gains from selling the properties, Marriott estimates that the combination of the two
groups will eventually save $250 million annually due to the cost synergies created.
22
Debt and Equity Movement
Prior to 2020, Marriott had been pursuing an aggressive stock buyback effort – adding
$4,967 million to treasure stock between the ends of fiscal year 2017 through 2019 (See
Appendix D), decreasing the number of shares outstanding by over 35 million. While revenue
was steadily increasing (until 2020) and net income remained high after peaking in 2018, the
stock buyback program and the payment of dividends throughout the past five years have caused
common equity to decline to a low of $430 million at the end of 2020. Marriott has opted to
utilize its access to credit to increase its liquidity and ensure solid financial footing while
increasing shareholder value (Marriott International, Inc, 2022). The decision to rely on debt to
finance operations and improve shareholder value has added almost 40% to the stock price since
August of 2017 (NASDAQ: MAR, 2022).
Long-term debt has risen along a similar trajectory, increasing $2,143 million from 2017 –
2019. Total liabilities increased $4,174 million over the same period, with interest expense rising
by over 36.8% (Marriott International, Inc., 2022). Looking past the pre-pandemic times, interest
expense and liability levels peaked in 2020 as Marriott struggled to survive the worldwide
shutdown before tapering off in 2021 and the first quarter of 2022.
Partnerships and Franchising
The large hotel companies are in the midst of an extensive global expansion (Burgos, 2022).
As the threat of the pandemic recedes, there are expectations that global, cross-border, travel will
resume at a strong pace. The entire Asia-Pacific region is one of the hotspots for emerging
market development in the industry. One of the primary methods of expansion for the large hotel
chains is through franchising. Marriott International is targeting 1,000 properties in the region by
23
2022 (Marriott.com, 2022).
Franchising agreements allow companies to best leverage their intellectual property
(specifically their brand, procedures, and cost-saving synergies) to grow revenue and reach
without investing capital. These types of agreements create an immediate customer base and
demand for the franchisee, while providing long-term revenue through initial franchise fees and
ongoing royalty fees. In addition to the revenue brought in, hotel companies recoup some of the
costs related to company-wide advertising, loyalty programs, and the comprehensive reservation
system through additional fees (Libava, 2017).
Partnerships are another avenue the hotel industry is utilizing to enhance the guest experience,
further define their brand, and increase revenue. Upscale brands, in particular, turn to
partnerships to reinforce their position within the luxury market (Medina, 2017). By forming
collaborative agreements with celebrity chefs, trainers, fashion icons, hair stylists, and brands
hotels can utilize marketing synergy to diversity their brand against the competition and increase
revenue through packaging and increased service sales. Marriott International announced
multiple luxury partnerships in 2011 between their JW Marriott hotel brand and upscale brands,
including Tumi, Treasury Wine Estates, and a celebrity nutritionist (Levere, 2011). Destination
partnerships with locations or airlines, especially regarding emerging markets, can add to the
brand experience and message, while contributing to revenue growth with ancillary services such
as tourism packages. Marriott International turned to a partnership with the National Park
Foundation in the United States to offset the impact of the pandemic in 2020 by creating
opportunities for discounted outdoor vacations near national parks (Marriott.com, 2020).
One final major form of partnership in the hotel industry is with online travel agents, or
OTAs, like Hotels.com or Expedia. While most partnerships are looked upon as mutually
24
beneficial, the relationship between OTAs and hotel chains is more complicated (Chang, Hsu, &
Lan, 2019). While OTAs broaden the market for many hotel firms, they charge high fees which
increase costs and withhold vital customer data, which hampers hotel’s ability for comprehensive
customer data analysis. Cooperation exists within the partnership, but the power imbalance (with
the OTA dictating costs and hotel operators forced to either accept them or lose the potential
revenue from the platform) has also created a form of competition in hotels’ increasing emphasis
on direct booking. Marriott is a prime example of this tension – in 2019, the company originally
threatened to cut ties with the Expedia Group before announcing a signed contract in the same
year (Funnell, 2019).
Outsourcing
Outsourcing within the hotel industry is used as a cost-reduction method, allowing larger
companies to outsource entire departments to specialized companies, reducing the demands on
the corporate infrastructure. In 2013, Marriott International chose to capitalize on the cost
savings generated by outsourcing when it signed an agreement with Accenture to take over the
entire company’s finance and accounting operations (Clabaugh, 2013). In addition, individual
locations in Marriott’s portfolio have chosen to outsource portions of their operations. One recent
example is the Marriott Marquis in New York city. Due to rising costs and labor difficulties, the
Marquis is set to finalize the outsourcing of their restaurant operations in May 2022. (Reill,
2021). Marriott hotels throughout the company are utilizing this kind of outsourcing with their
catering and banquet services to offset the rising costs.
Uniqueness of Capital Activities in the Hotel Industry
Every company operates differently, but there are few (if any) unique activities within the
25
hotel industry. Due to high rivalry, there are limited public actions that can be undertaken by one
business that will not be replicated by others once proven to be successful.
Marriott might have completed one of the largest buyouts in the hotel industry, but the action
of growth through acquisition is a common trend in today’s industry (Industry Profile: Global
Hotels & Motels, 2021). Hotel chains are looking to grow their brand portfolio while utilizing
cost synergies of mergers, and independent operators are increasingly looking for larger
audiences and the overall protection of global brand reputation to drive and sustain revenues.
There is concern that the industry is becoming too concentrated, with independent hotels
merging with the larger chains more frequently, condensing profits within a few large companies
that might start to control the industry.
The asset-light model, while origination in the 90s with the actions of Marriott, has become
the strategy of virtually every large hotel chain. Hilton and Accor have recently pursued assetlight strategies, with Hilton completing the process in 2017 (Bhattarai, 2017) and Accor
following in 2019 (Accor.com, 2019). Accor combined the asset-light move with a €1 billion
stock buyback program designed to shift capital and increase shareholder value (Doggrell, 2020).
IHG and Wyndham are also among the leading hotel chains that employ the model, while Hyatt
has begun to use an “asset-lighter” approach over the past several years (Ting, 2019).
The asset-light strategy has been employed by many hotel chains in efforts to focus on hotel
management and franchising fees as revenue. One of the most popular revenue and global
growth strategies within the industry is the utilization of franchising models. This allows
companies to be more flexible and reactive to the market by keeping the high-cost and difficultto-move hard capital off the balance sheet, while also creating a more specialized company that
26
can focus on the brand instead of capital concerns such as maintenance or profitability from real
estate. This type of strategy also reduces overall risk to the company (Rockett, 2022) and has
facilitated a change in the major hotel brands from traditional hotel companies to “branding and
technology companies.” Every major hotel chain holds franchise agreements with smaller
operators and analysis of the industry indicates that the franchise outreach continues to grow.
Partnerships and outsourcing are other areas where Marriott is not alone. While the overall
OTA relationship with the hotel industry can be fraught, every major hotel chain partners with
them to a certain level. Firms are continually attempting to diversity their brands from the
competition, enhancing its position within the market segment. Due to these actions, companies
will continue to seek out profitable partnerships with regional entities, luxury brands, OTAs,
travel agencies, or any potential partnership that can create differentiation, improve revenue, and
generate increased brand equity. Hilton recently formed a partnership with the Society of
Incentive Travel Excellence (SITE) that includes “integrated marketing efforts” as a benefit of
the alliance (SITE Staff, 2021).
Finally, with the hotel industry’s profitability being so dependent upon economic conditions
and discretionary spending, achieving strong shareholder value by utilizing leverage can help
keep the market price stable even in difficult economic times. Hilton authorized $2 billion for
stock repurchase in 2020 (a move curtailed by the pandemic, though it has recently restarted the
initiative), strengthening the existing commitment to its stockholders (Hilton.com, 2020).
Analysis of the balance sheet (See Appendix C) shows a pattern similar to that of Marriott’s,
where treasure stocks increase, causing common equity to fall as liabilities rise.
While there are unique opportunities to be had within the hotel industry (through trade secrets
and trademarking), very few public business decisions will fail to be copied by the competition.
27
Innovative usage of technology, strategic business decisions, asset management strategies,
partnership pursuits – all will be copied throughout the market segments.
28
References
Bhattarai, A. (2017, January 6). Hilton completes split into three independent companies. The
Washington Post. https://www.washingtonpost.com/business/hilton-completes-split-intothree-independent-companies/2017/01/06/04414772-d287-11e6-a783cd3fa950f2fd_story.html
Accor. (2019, December 16). Successful completion of the asset-light roadmap [Press Release].
https://press.accor.com/successful-completion-of-the-asset-light-roadmap/?lang=en
Blengini, I. & Heo, C. (2020, July). How do hotels adapt their pricing strategies to
macroeconomic factors? International Journal of Hospitality Management, 88.
https://doi.org/10.1016/j.ijhm.2020.102522
Burgos, J. (2022, April 18). Hotel Chains from Hilton to Shangri-La Are Expanding
Across Asia On Post-Pandemic Recovery Hopes. Forbes. https://www.forbes.com/sites/
jonathanburgos/2022/04/18/hotel-chains-from-hilton-to-shangri-la-are-expanding-across-asiaon-post-pandemic-recovery-hopes/?sh=13d066e36c40
Chang, Y., Hsu, P., & Lan, Y. (2019, April). Cooperation and competition between online travel
agencies and hotels. Tourism Management, 71, 187-196.
https://doi.org/10.1016/j.tourman.2018.08.026
Clabaugh, J. (2013, June 19). Marriott to outsource accounting to Accenture. The Business
29
Journals. https://www.bizjournals.com/washington/news/2013/06/19/marriott-to-outsourceaccounting-to.html
Corgel, J., Lane, J., & Woodworth, M. (2012). Hotel Industry Demand Curves. Journal of
Hospitality Financial Management, 20(1). https://scholarworks.umass.edu/jhfm/vol20/iss1/6
Damodaran, Aswath. (2022, January). Price and Value to Book Ratio by Sector (US). NYU
Stern School of Business. https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/
pbvdata.html
Diller, N. (2022, June 7). Hotels have gone to the robots. The Washington Post.
https://www.washingtonpost.com/travel/2022/06/07/robots-hotel-jobs-labor-shortage/
Doggrell, K. (2020, January 21). Accor launches €300 buyback. Hotel Management.
https://www.hotelmanagement.net/financing/accor-launches-eu300m-buyback
Florida Atlantic University. (2022, June 23). Travel Trouble: Florida Tourism Slowing Amid
Recession Fears, Robust Competition. Hotel Online. https://www.hotel-online.com/
press_releases/release/travel-trouble-florida-tourism-slowing-amid-recession
fears-robust-competition/
Fox, J. (2016, September 23). Marriott completes Starwood merger. Hotel Management.
https://www.hotelmanagement.net/transactions/marriott-completes-starwood-merger
Funnell, R. (2019, June 13). Has the relationship changed between hotels and OTAs? Trip
30
Tease. https://www.triptease.com/blog/has-the-relationship-changed-between-hotels-and-otas/
Glassdoor. (n.d.). Housekeeping Job Search. Retrieved July 14, 2022 from
https://www.glassdoor.com/Job/housekeeper-jobs-SRCH_KO0,11.htm
Hayes, A. (2021, September 4). Franchise. Retrieved from Investopedia.
https://www.investopedia.com/terms/f/franchise.asp
Henderson, C. (2022, February 17). 2 years into COVID-19 pandemic: If it’s still gone from
hotels, is it ever coming back? https://thepointsguy.com/news/missing-hotel-amenities/
Hertzfeld, E. (2018, December 13). Why mobile key is taking over in hotels. Hotel Management.
https://www.hotelmanagement.net/tech/why-mobile-key-taking-over-hotels
Hilton.com. (2020, March 3). Hilton Increases Stock Repurchase Authorization by $2 Billion
[Press Release]. https://stories.hilton.com/releases/stock-repurchase-authorization-up-2billion
Hilton.com. (2021, September 28). Hilton Launches Large-Scale Franchise Model in Asia
Pacific [Press Release]. https://stories.hilton.com/apac/releases/hilton-begins-large-asiapacific-franchise-model
Hotel Management International. (2018, July 11). Balancing act in the hotel industry: ‘assetlight’ to ‘asset-right’. https://www.hmi-online.com/features/featurebalancing-act-1-6267047/
iSeatz. (2022, May 31). New Report: How Hotels Can Evolve Their Loyalty Programs to Engage
the New Leisure Traveler. Skift. https://skift.com/2022/05/31/new-report-how-hotels-can-
31
evolve- their-loyalty-programs-to-engage-the-new-leisure-traveler/
Kaplan, J. & Hoff, M. (2022, January 4). A record-high 1 million restaurant and hotel workers
quit in November - and it shows the labor shortage might really be a wage shortage. Business
Insider. https://www.businessinsider.com/record-high-restaurant-hotel-workers-quit-innovember-labor-shortage-2022-1
Kenton, W. (2021, December 19). Intellectual Property. Investopedia.
https://www.investopedia.com/terms/i/intellectualproperty.asp
Lentz, M., Berezan, O., & Raab, C. (2021, June 21). Uncovering the relationship between
revenue management and hotel loyalty programs. Journal of Revenue and Pricing
Management, 21, 306-320. https://doi.org/10.1057/s41272-021-00331-0
Levere, J. (2011, June 7). 2 Hoteliers Form Partnerships to Enhance Luxury Image. The New
York Times. https://www.nytimes.com/2011/06/08/business/media/08adco.html
Levere, J. (2021, October 19). Hotels Ponder a Puzzling Future. The New York Times.
https://www.nytimes.com/2021/10/19/business/hotels-pandemic-options.html
Macrotrends. (n.d.(a)). Choice Hotels Price to Book Ratio 2010 – 2022: CHH. Retrieved July 15,
2022 from https://www.macrotrends.net/stocks/charts/CHH/choice-hotels/price-book
Macrotrends. (n.d.(b)). Hilton Price to Book Ratio 2011 – 2022: HLT. Retrieved July 15, 2022
from https://www.macrotrends.net/stocks/charts/HLT/hilton-worldwide-holdings/price-
32
book
Macrotrends. (n.d.(c)). Hyatt Price to Book Ratio 2010 – 2022: H. Retrieved July 15, 2022
from https://www.macrotrends.net/stocks/charts/H/hyatt-hotels/price-book
Macrotrends. (n.d.(d)). Marriott Price to Book Ratio 2010 – 2022: MAR. Retrieved July 15, 2022
from http://www.macrotrends.net/stocks/charts/MAR/marriott/price-book
Macrotrends. (n.d.(e)). Wyndham Hotels & Resorts Price to Book Ratio 2016 – 2022: WH.
Retrieved July 15, 2022 from https://www.macrotrends.net/stocks/charts/WH/wyndhamhotels-resorts/price-book
Libava, J. (2017, April 18). Franchise Fees: Why Do You Pay Them and How Much Are They?
SBA.gov. https://www.sba.gov/blog/franchise-fees-why-do-you-pay-them-how-much-arethey#:~:text=Franchise%20marketing%20fees%20are%20usually,That's%20a%20lot%
20of%20money.
MarketLine. (2021, October). Global Hotels & Motels. [Industry profile]. Retrieved from
MarketLine Advantage Database.
Marriott.com. (n.d.(a)). We Are Marriott International. Retrieved from
https://www.marriott.com/marriott/aboutmarriott.mi
Marriott.com. (n.d.(b)). Starwood Acquisition & Historical Information. Retrieved from
https://marriott.gcs-web.com/starwood#:~:text=On%20April%208%2C%202016%20
33
stockholders,Commission%20prior%20to%20market%20opening.
Marriott.com. (2020, September 17). Marriott Bonvoy Launches Marketing Partnership with the
National Park Foundation [Press Release]. https://news.marriott.com/news/2020/09/17/
marriott-bonvoy-launches-marketing-partnership-with-the-national-park-foundation
Marriott.com. (2022, February 9). Marriott International Plans Further Asia Pacific Expansion
With 1000th Property Anticipated to Open in 2022 [Press Release]. https://news.marriott.com/
news/2022/02/09/marriott-international-plans-further-asia-pacific-expansion-with-1000thproperty-anticipated-to-open-in-2022
Maverick, J.B. (2021, June 25). Does a High Price-to-Book Ratio Correlate to ROE?
Investopedia. https://www.investopedia.com/ask/answers/010915/does-high-price-book-ratiocorrespond-high-roe.asp#:~:text=Price%2Dto%2Dbook%20value%20(,and%20ROE%
20move%20in%20tandem.
Maverick, J.B. (2022, March 8). What Is Considered a Good Price-to-Book Ratio? Investopedia.
https://www.investopedia.com/ask/answers/010915/what-considered-good-price-bookratio.asp
McClure, Ben. (2022, May 22). Using the Price-to-Book (P/B) Ratio to Evaluate Companies.
Investopedia. https://www.investopedia.com/investing/using-price-to-book-ratio-evaluatecompanies/
34
McCracken, Sean. (2022, March 15). Availability, Cost of Labor Continues to Dominate
Discussions About Hotel Operations. CoStar. https://www.costar.com/article/832623126
/availability-cost-of-labor-continues-to-dominate-discussions-about-hotel-operations
McGuire, Kelly. (n.d.). Price, Reviews, and the Business Traveler. HSMAI.
https://connect.hsmai.org/asiapacific/resources/articles-and-whitepapers/hotel-pricinginfluencers
Medina, K. (2017, July 18). Hotels seek out brand partnerships to enrich guest experience and
ROI. Hotel Management. https://www.hotelmanagement.net/sales-marketing/bringing-nonhospitality-brands-into-fold-can-help-hotels-enrich-roi
Nam, J., Ekinci, Y., & Whyatt, G. (2011, July). Brand equity, brand loyalty and consumer
satisfaction. Annals of Tourism Research, 38(3), 1009-1030.
https://doi.org/10.1016/j.annals.2011.01.015
NASDAQ:MAR. (2022, July 13). Marriott International, Inc. (MAR) [Stock Quote]. Retrieved
July 13, 2022 from https://www.google.com/finance/quote/MAR:NASDAQ?sa=
X&ved=2ahUKEwjrxc7OwPb4AhWEZjABHRJnCwgQ3ecFegQIGRAa
OSAM Research Team. (2018, April). Negative Equity, Veiled Value, and the Erosion of Priceto-Book. OSAM. https://www.osam.com/Commentary/negative-equity-veiled-value-and-theerosion-of-price-to-book
35
Reill, H. (2021, July 27). How hotel foodservice execs are managing the labor crisis. Restaurant
Hospitality. https://www.restaurant-hospitality.com/hotel-dining/how-hotel-foodserviceexecs-are-managing-labor-crisis
RevenueHub.com. (2022). Loyalty Programs Little Impact on Booking Next Leisure Travel
Booking. https://revenue-hub.com/loyalty-programs-little-impact-leisure-travel-booking/
Ristoff, J. (2021, September). Hotels & Motels in the US (IBISWorld Industry Report 72111).
Retrieved from IBISWorld database.
Rockett, G. (2022, April 27). How Three Global Hospitality Companies Led with a Clear
Vision. Boston Hospitality Review. https://www.bu.edu/bhr/2022/04/27/the-importance-ofleading-with-clear-vision-a-case-study-of-three-global-hospitality-companies/
Ross, D. (2021, May 28). Why hotels should stop oversimplifying the labor shortage. Hotel
Management. https://www.hotelmanagement.net/operate/why-hotels-should-stopoversimplifying-labor-shortage
Sarath. (2022, April 8). Price-to-Book Ratio By Industry. Eqvista. https://eqvista.com/price-tobook-ratio-by-industry/
Schlappig, Ben. (2022, February 13). Hilton CEO Warns Hotel Service Cuts Are Permanent.
One Mile at a Time. https://onemileatatime.com/hilton-hotel-service-cuts-permanent/
Seo, K. (2021, June). Asset-light Business Model: Strategies for Hotels During the
36
Pandemic. Boston Hospitality Review. https://www.bu.edu/bhr/2021/05/31/asset-lightbusiness-model-strategies-for-hotels-during-the-pandemic/
SITE Staff. (2021, May 12). Hilton SITE [Press Release]. https://siteglobal.com/news/site-hiltonenter-new-strategic-partnership
Standard & Poor’s. (2022a), Hilton Worldwide Holdings Inc. Standard & Poor’s Financials:
Balance Sheet. Retrieved from Standard and Poor’s NetAdvantage database.
Standard & Poor’s. (2022b). Marriott International, Inc. Financials: Balance Sheet. Retrieved
from Standard and Poor’s NetAdvantage database.
Statista. (2022, March). Travel & Tourism: Hotels Worldwide [Market Outlook].
https://www.statista.com/outlook/mmo/travel-tourism/hotels/worldwide
The American Customer Satisfaction Index. (2022, April 27). Customer Satisfaction with Hotels
Continues Free Fall, While Online Travel Agencies Bounce Back Slightly, ACSI Data Show.
HospitalityNet. https://www.hospitalitynet.org/news/4110167.html
Ting, D. (2019, March 6). Hyatt Doubles Down on Its Asset Lighter Approach. Skift.
https://skift.com/2019/03/06/hyatt-doubles-down-on-its-asset-lighter-approach/
Tore, O. (2021, June 24). Hotel Loyalty Not Important for Travelers. FTNNews.
https://ftnnews.com/accommodation/42032-hotel-loyalty-not-important-for-travelers
U.S. Bureau of Labor Statistics. (2022a). May 2021 National Occupational Employment and
37
Wage Estimates United States [Data Set]. Department of Labor. Retrieved July 14, 2022
from https://www.bls.gov/oes/current/oes_nat.htm
U.S. Bureau of Labor Statistics. (2022b). National Employment Matrix: Employment Projects for
721100 Traveler Accommodation [Data Set]. Department of Labor. Retrieved July 14, 2022
from https://data.bls.gov/projections/nationalMatrix?queryParams=
721100&ioType=i&_csrf=projections
U.S. Bureau of Labor Statistics. (2022c). Occupational Employment and Wages, May 2021 [434081: Hotel, Motel, and Resort Desk Clerks]. Department of Labor. Retrieved July 14, 2022
from https://www.bls.gov/oes/current/oes434081.htm
U.S. Bureau of Labor Statistics. (2022d). Occupational Employment and Wages, May 2021 [372012: Maids and Housekeeping Cleaners]. Department of Labor. Retrieved July 14, 2022
from https://www.bls.gov/oes/current/oes372012.htm
U.S. Bureau of Labor Statistics. (2022e). Occupational Employment and Wages, May 2021 [353031: Waiters and Waitresses]. Department of Labor. Retrieved July 14, 2022 from
https://www.bls.gov/oes/current/oes353031.htm
United States Census Bureau. (2022). 2022 NAICS definitions: 721110 Hotels (except Casino
Hotels) and Motels. https://www.census.gov/naics/?input=7211&year=2022&details=721110
U.S. News and World Report. (n.d.). Best Travel Rewards: Hotel Rankings. U.S. News and
38
World Report. https://travel.usnews.com/rankings/travel-rewards/hotel-rewards/marriottbonvoy/
U.S. Travel Association. (2022, June 10). Leisure and Hospitality Employment. U.S. Travel
Association. https://www.ustravel.org/research/leisure-and-hospitality-employment
Van Westendorp’s Price Sensitivity Meter. (2021, April 30). In Wikipedia.
https://en.wikipedia.org/wiki/Van_Westendorp%27s_Price_Sensitivity_Meter
Walt Disney World. (2022, July 6). Housekeeping Job Fair, July 19, 2022 - $1,000 Hiring
Bonus. Disney Careers. https://jobs.disneycareers.com/job/orlando/housekeeping-job-fairjuly-19-2022-1-000-hiring-bonus/391/32057812336
World Intellectual Property Organization and the World Tourism Organization. (2021). Boosting
Tourism Development through Intellectual Property. Retrieved from WIPO.
https://www.wipo.int/publications/en/details.jsp?id=4543&plang=EN
World Travel & Tourism Council. (2021, June). Travel & Tourism Economic Impact 2021.
Retrieved from WTTC.org. https://wttc.org/Portals/0/Documents/Reports/2021/Global%
20Economic%20Impact%20and%20Trends%202021.pdf?ver=2021-07-01-114957-177
39
Appendix A
United States Hotel Industry Revenue by Type
Guest room rentals
from properties with
under 75 rooms
20.2%
Other services
10.8%
Restaurants and bars
9.3%
Guest room rentals
from properties with
over 500 rooms
8.4%
Guest room rentals
from properties
between 300 and 500
rooms
6.9%
Guest room rentals
from properties
between 75 and 299
rooms
44.4%
Adapted from IBISWorld Industry Report: 72111. (Ristoff, 2021).
40
Appendix B
History of Price-to-Book Value for Major Companies within the Hotel Industry
Company Name (Stock Symbol)
12/31/2018 12/31/2019 12/31/2020 12/31/2021
3/31/2022
7/14/2022
Marriott International, Inc. (MAR)
16.21
69.47
99.35
38.06
32.4
26.01
Hilton Worldwide Holdings Inc. (HLT)
37.59
NM
NM
NM
NM
NM
Hyatt Hotels Corporation (H)
1.94
2.29
2.34
2.96
2.99
2.31
Wyndham Hotels & Resorts, Inc. (WH)
2.97
4.7
5.63
7.54
6.69
5.13
Choice Hotels International, Inc. (CHH)
NM
NM
NM
32.45
25.07
19.65
Adapted from MacroTrends data. (MacroTrends, 2022a, 2022b, 2022c, 2022d, 2022e)
41
Appendix C
Restated Balance Sheet: Hilton Worldwide Holdings Inc (HLT)
Balance Sheet
Balance Sheet as of:
Restated
Dec-31-2017
Dec-31-2018
Dec-31-2019
Dec-31-2020
Dec-31-2021
Mar-31-2022
570.0
570.0
403.0
403.0
538.0
538.0
3,218.0
3,218.0
1,427.0
1,427.0
1,432.0
1,432.0
Accounts Receivable
Other Receivables
Total Receivables
1,005.0
36.0
1,041.0
1,150.0
1,150.0
1,261.0
1,261.0
771.0
771.0
1,068.0
1,068.0
1,054.0
1,054.0
Prepaid Exp.
Restricted Cash
Other Current Assets
Total Current Assets
127.0
100.0
169.0
2,007.0
160.0
81.0
189.0
1,983.0
130.0
92.0
72.0
2,093.0
70.0
45.0
98.0
4,202.0
89.0
85.0
202.0
2,871.0
165.0
78.0
132.0
2,861.0
Gross Property, Plant & Equipment
Accumulated Depreciation
Net Property, Plant & Equipment
803.0
(450.0)
353.0
848.0
(481.0)
367.0
1,756.0
(509.0)
1,247.0
1,604.0
(486.0)
1,118.0
1,504.0
(505.0)
999.0
949.0
11.0
5,190.0
6,276.0
111.0
280.0
14,228.0
16.0
5,160.0
6,156.0
90.0
223.0
13,995.0
5,159.0
6,078.0
100.0
280.0
14,957.0
5,095.0
5,823.0
194.0
323.0
16,755.0
5,071.0
5,835.0
213.0
452.0
15,441.0
41.0
5,061.0
5,831.0
213.0
503.0
15,459.0
282.0
1,756.0
46.0
12.0
366.0
2,462.0
283.0
1,431.0
16.0
350.0
535.0
2,615.0
303.0
1,448.0
170.0
332.0
618.0
2,871.0
224.0
1,175.0
226.0
370.0
436.0
2,431.0
274.0
1,645.0
194.0
350.0
556.0
3,019.0
1,604.0
1,165.0
45.0
271.0
3,085.0
Long-Term Debt
Long-Term Leases
Unearned Revenue, Non-Current
Pension & Other Post-Retire. Benefits
Def. Tax Liability, Non-Curr.
Other Non-Current Liabilities
Total Liabilities
6,323.0
233.0
829.0
165.0
931.0
1,594.0
12,537.0
7,041.0
225.0
826.0
145.0
898.0
1,687.0
13,437.0
7,785.0
1,245.0
827.0
134.0
795.0
1,772.0
15,429.0
10,317.0
1,167.0
1,004.0
143.0
649.0
2,530.0
18,241.0
8,599.0
1,024.0
896.0
25.0
700.0
1,997.0
16,260.0
8,577.0
966.0
846.0
719.0
1,963.0
16,156.0
Common Stock
Additional Paid In Capital
Retained Earnings
Treasury Stock
Comprehensive Inc. and Other
Total Common Equity
3.0
10,298.0
(6,981.0)
(891.0)
(741.0)
1,688.0
3.0
10,372.0
(6,417.0)
(2,625.0)
(782.0)
551.0
3.0
10,489.0
(5,965.0)
(4,169.0)
(840.0)
(482.0)
3.0
10,552.0
(6,732.0)
(4,453.0)
(860.0)
(1,490.0)
3.0
10,720.0
(6,322.0)
(4,443.0)
(779.0)
(821.0)
3.0
10,702.0
(6,110.0)
(4,573.0)
(720.0)
(698.0)
Total Equity
1,691.0
558.0
(472.0)
(1,486.0)
(819.0)
(697.0)
Total Liabilities And Equity
14,228.0
13,995.0
14,957.0
15,441.0
15,459.0
ASSETS
Cash And Equivalents
Total Cash & ST Investments
Long-term Investments
Goodwill
Other Intangibles
Deferred Tax Assets, LT
Other Long-Term Assets
Total Assets
LIABILITIES
Accounts Payable
Accrued Exp.
Curr. Port. of LT Debt
Curr. Port. of Leases
Curr. Income Taxes Payable
Unearned Revenue, Current
Other Current Liabilities
Total Current Liabilities
16,755.0
Adapted from Standard and Poor’s NetAdvantage. (Standard & Poor’s, 2022a)
42
Appendix D
Restated Balance Sheet: Marriott International, Inc. (MAR)
** All currency figures in the millions of USD
Balance Sheet
Balance Sheet as of:
Restated
Dec-31-2017
ASSETS
Cash And Equivalents
383.0
Total Cash & ST Investments
383.0
Dec-31-2018
Dec-31-2019
Dec-31-2020
Dec-31-2021
Mar-31-2022
316.0
316.0
225.0
225.0
877.0
877.0
1,393.0
1,393.0
1,042.0
1,042.0
Accounts Receivable
Total Receivables
1,973.0
1,973.0
2,133.0
2,133.0
2,395.0
2,395.0
1,768.0
1,768.0
1,982.0
1,982.0
2,112.0
2,112.0
Prepaid Exp.
Other Current Assets
Total Current Assets
235.0
149.0
2,740.0
249.0
8.0
2,706.0
252.0
255.0
3,127.0
180.0
2,825.0
251.0
3,626.0
264.0
3,418.0
Gross Property, Plant & Equipment
Accumulated Depreciation
Net Property, Plant & Equipment
2,890.0
(1,097.0)
1,793.0
3,473.0
(1,517.0)
1,956.0
4,093.0
(1,301.0)
2,792.0
3,154.0
(888.0)
2,266.0
3,415.0
(850.0)
2,565.0
2,555.0
Long-term Investments
Goodwill
Other Intangibles
Loans Receivable Long-Term
Deferred Tax Assets, LT
Deferred Charges, LT
Other Long-Term Assets
Total Assets
734.0
9,207.0
8,544.0
142.0
93.0
295.0
298.0
23,846.0
732.0
9,039.0
8,380.0
125.0
171.0
324.0
263.0
23,696.0
577.0
9,048.0
8,641.0
117.0
154.0
595.0
25,051.0
422.0
9,175.0
8,989.0
159.0
249.0
616.0
24,701.0
387.0
9,073.0
8,926.0
144.0
228.0
604.0
25,553.0
361.0
9,069.0
5,974.0
141.0
228.0
2,917.0
575.0
25,238.0
783.0
2,488.0
398.0
2,138.0
5,807.0
767.0
2,292.0
833.0
2,545.0
6,437.0
720.0
2,592.0
971.0
136.0
2,258.0
6,677.0
527.0
1,668.0
1,166.0
154.0
325.0
1,912.0
5,752.0
726.0
1,826.0
798.0
157.0
346.0
2,554.0
6,407.0
737.0
1,995.0
731.0
333.0
2,626.0
6,422.0
Long-Term Debt
Long-Term Leases
Unearned Revenue, Non-Current
Pension & Other Post-Retire. Benefits
Def. Tax Liability, Non-Curr.
Other Non-Current Liabilities
Total Liabilities
7,669.0
171.0
583.0
40.0
605.0
5,389.0
20,264.0
8,351.0
163.0
731.0
485.0
5,304.0
21,471.0
9,812.0
1,033.0
840.0
290.0
5,696.0
24,348.0
9,057.0
969.0
1,542.0
83.0
6,868.0
24,271.0
9,194.0
1,237.0
1,181.0
169.0
5,951.0
24,139.0
8,594.0
1,210.0
1,121.0
179.0
5,940.0
23,466.0
Common Stock
Additional Paid In Capital
Retained Earnings
Treasury Stock
Comprehensive Inc. and Other
Total Common Equity
5.0
5,770.0
7,242.0
(9,418.0)
(17.0)
3,582.0
5.0
5,814.0
8,982.0
(12,185.0)
(391.0)
2,225.0
5.0
5,800.0
9,644.0
(14,385.0)
(361.0)
703.0
5.0
5,851.0
9,206.0
(14,497.0)
(135.0)
430.0
5.0
5,892.0
10,305.0
(14,446.0)
(342.0)
1,414.0
5.0
5,831.0
10,682.0
(14,418.0)
(328.0)
1,772.0
Total Equity
3,582.0
2,225.0
703.0
430.0
1,414.0
1,772.0
Total Liabilities And Equity
23,846.0
23,696.0
25,051.0
24,701.0
25,553.0
25,238.0
LIABILITIES
Accounts Payable
Accrued Exp.
Curr. Port. of LT Debt
Curr. Port. of Leases
Unearned Revenue, Current
Other Current Liabilities
Total Current Liabilities
Adapted from Standard & Poor’s NetAdvantage. (Standard & Poor’s, 2022b)
43
Appendix E
United States Hotel Industry (72111) Revenue and Employment Statistics
Revenue ($ millions) Hotel Establishments
Employment
Average Employment per location
2015
186,858
89,725
1,578,039
17.58750627
2016
197,351
94,667
1,611,277
17.02047176
2017
200,237
99,779
1,655,893
16.59560629
2018
205,402
102,391
1,664,778
16.25902667
2019
210,745
106,356
1,699,510
15.97944639
2020
93,066
84,954
1,113,314
13.10490383
2021
133,001
92,746
1,361,490
14.67977056
Adapted from IBISWorld Industry Report: 72111. (Ristoff, 2021).
44
Appendix F
Adapted from IBISWorld Industry Report: 72111. (Ristoff, 2021).
45
Appendix G
2021 Employment Levels Within the Hotel Industry by
Occupation Code
11 Management Occupations
2.19%
2.41%
6.34%
6.56%
2.20%
2.88%
19.01%
20.78%
13 Business and Financial Operations
Occupations
33 Protective Service Occupations
35 Food Preparation and Serving Related
Occupations
37 Building and Grounds Cleaning and
Maintenance Occupations
39 Personal Care and Service Occupations
41 Sales and Related Occupations
2.94%
6.79%
27.90%
43 Office and Administrative Support
Occupations
49 Installation, Maintenance, and Repair
Occupations
51 Production Occupations
** All other occupations within codes: 15,
17, 19, 21, 23, 25, 27, 29, 31, 45, 47, & 53
Adapted from U.S. Bureau of Labor Statistics data. (U.S. Bureau of Labor Statistics, 2022b).
46
Appendix H
Adapted from U.S. Bureau of Labor Statistics data. (U.S. Bureau of Labor Statistics, 2022a)
47
Appendix I
2021 Geographic Mean Hourly Wage By Occupation Code
37-2012 (Maids and
35-3031 (Waiters
43-4081 (Hotel, Motel,
Housekeeping
State
and Waitresses)
and Resort Desk Clerks)
Cleaners)
California
$17.35
$17.83
$16.49
Texas
$11.97
$12.54
$11.80
Florida
$13.94
$12.90
$13.77
New York
$19.09
$19.37
$11.95
Ohio
$11.45
$12.47
$13.20
Adapted from U.S. Bureau of Labor Statistics data. (U.S. Bureau of Labor Statistics, 2022c, 2022d, 2022e)
48
Appendix J
Adapted from U.S. Bureau of Labor Statistics data. (U.S. Bureau of Labor Statistics, 2022a).