Financial Analysis of Hotel Businesses

Running Head: Financial Analysis of Hotel Businesses
Ratio Analysis

Financial Analysis of Hotel Businesses 1
Executive Summary:
This report is about the financial analysis of leading firms of hospitality business industry.
The companies that have been selected for this purpose are: Hilton Worldwide Holdings Inc.
and Marriott International Inc. For the purpose of analysing the financial performance of the
said companies, their annual reports for the years 2016, 2015 and 2014 have been assessed.
The ratio analysis of the financial results of Marriot International has revealed that Marriot
Inc. is facing higher financial risk than its competitor i.e. Hilton Worldwide because of its
poor capital structure. Also the liquidity position of Marriot Inc. is too lower than that of
Hilton Inc. because it is unable to manage considerable balance of its current assets.

Financial Analysis of Hotel Businesses 2
Table of Contents
Executive Summary:..............................................................................................................................1
Introduction...........................................................................................................................................3
Company’s Background:........................................................................................................................3
Ratio analysis:........................................................................................................................................3
Analysis of efficiency ratios:...............................................................................................................4
Average debtor collection period:.................................................................................................4
Average creditors payment period:...............................................................................................4
Analysis of liquidity ratios:.................................................................................................................5
Current Ratio.................................................................................................................................5
Quick Ratio:...................................................................................................................................6
Analysis of financial risks on the companies:.....................................................................................6
Gearing Ratio:................................................................................................................................6
Debt Equity Ratio:..........................................................................................................................7
Conclusion:............................................................................................................................................8
References:............................................................................................................................................9

Financial Analysis of Hotel Businesses 3
Introduction
In this report, the financial performances of two leading corporations that belong to hospitality
industry have been analysed. These corporations are Hilton worldwide Inc. and Marriot International.
Both the companies are domiciled in America but operate as the multinational companies worldwide.
These companies are operating through diversified hospitality business and as a part of this hospitality
industry; both the corporations are managing and franchising a wide portfolio of hotels, resorts and
related lodging facilities. Financial accounting suggests the key technique i.e. ratio analysis, to assess
the financial performance of company in various aspects. Ratio analysis is used to measure various
ratios on the basis of which company’s position of profitability, liquidity, solvency etc. is assessed.
Company’s Background:
The head-quarter of Marriot International is in Bethesda, Washington. The company has more than
6500 properties and operates through almost 127 countries across the world. The company’s current
financial position is observed to be sound looking at its effective stock price in the stock market. The
head- quarter of Hilton Worldwide Holdings Inc. is based at Mclean (Virginia) U.S. The company
functions in two segments, i.e. management & franchisee and ownership. The stock price of Hilton
Ltd. is also running good in the stock market which indicates the wellness of its current financial
situation. The company indulges in the business of managing and licensing its brand to the
franchisees.
Ratio analysis:
The ratio analysis of Marriot International and Hilton Worldwide is undertaken for the last three years
i.e. 2014, 2015 and 2016 to identify the trend of its financial outcomes in terms of profitability,