Article Excerpt:
TWST: We would like to begin with a brief historical sketch of Marriott and a picture of the main things you are doing at the present time.Ms. Paugh: Marriott is a hotel management and franchise company. We are a leader in the hotel business; we've been in the hotel business since the early 1950s. I think we are unique in the US industry in that we have a very broad portfolio of brands and considerable unit expansion in the US, which allows us to leverage our lodging industry know-how, and our systems, including reservation systems, yield management systems, frequent traveler programs and the like, all of which yield some very quantifiable lead and preference. Our strong revenue per available room is significantly higher than our typical competitor. We are a manager and a franchiser, and I think that is important to Wall Street investors because it enables us to participate in a very capital-intensive industry in a way that doesn't require considerable capital, and it enables us to deliver very strong cash returns to investors. We are also an innovator; we have the oldest frequent traveler program in the world, award-winning yield management systems, and we regularly update room designs and amenity packages. I think all of those signal Marriott's leadership position within the industry. The industry is also a very attractive place to invest. Demand tends to grow with the economy and supply does the same over the long haul. But, over the last few years, supply has been growing much more slowly than demand, which has enabled the industry to increase revenue at a very rapid rate.
TWST: Could the cycle change? Could the supply/demand equation reverse
itself in the next few years?
Ms. Paugh: It is not likely in the next few years. It takes
approximately three years to build a full service hotel in the US. And
with very little in the way of new construction going on today, I think
it bodes very well for the supply picture for the foreseeable future.
Tickers included in this excerpt: MAR
TWST Newsletter
For more information call (212) 952 7433. The Wall Street Transcript does not endorse any of the comments made by interviewees, and does not make stock recommendations.