Case Notes/Answers
Marriott Corp. (A) by Lynn Sharp Paine, Charles A.
Nichols
Discussion Questions:
1. Why is Marriott management proposing Project Chariot? What is it trying to accomplish?
2. What is the likely impact of Project Chariot on the wealth position of the shareholders?
3. Should management be concerned by the loss of the market value of the bonds if Project
Chariot is implemented?
4. Is Project Chariot a matter of survival for Marriott in the fall of 1992? The Excel work book
allows you to estimate whether Marriott will be able to service its debt, given your assumptions
about future profitability, revenue growth, and property sales. Please see case Exhibit 6 for
summary statistics on Marriott’s past performance.
5. Would you recommend the implementation of Project Chariot?
, 5-307-015
OCTOBER 19, 2006
TEACHING NOTE
Marriott Corporation (A) and (B) (LCA)
Synopsis
In the fall of 1992, the chairman and president of Marriott Corporation (MC), a premier hotel
developer, owner, and manager, was considering a proposal to split the corporation into two
separate companies by a stock dividend to shareholders. One of the new companies would contain
most of MC’s profitable management operations, while the other would retain ownership of its hotel
properties as well as almost all of its long-term debt. The Marriott cases focus on whether the
chairman should recommend to the board the proposed split, called “Project Chariot.”
The series includes two cases. Marriott Corporation (A) describes the history of MC and its
position at the time of the decision. The case allows students to evaluate the arguments for and
against the transaction from a variety of perspectives. Marriott Corporation (B) tells of the company’s
decision and the reactions when it was announced. In addition, the cases may be used with the case
supplement, Marriott Corporation Financial Projections (HBS Courseware No. 307-703), which allows
students to project Marriott’s future financial condition under various scenarios if it does not go
forward with the spin-off.
These cases raise an important issue of management ethics in the context of a complex financial
decision: to whom and for whom is management responsible? The proposed spin-off will enhance
shareholder wealth at the expense of the company’s bondholders. A central question concerns the
nature and extent of management’s responsibilities to bondholders and other stakeholders. To make
a decision it is necessary for students to understand and evaluate MC’s financial situation, the
purpose and likely effects of the spin-off, and the principles governing management’s responsibilities
to various affected parties.
Position in Course
The Marriott Corporation cases are used in Leadership and Corporate Accountability (LCA), a
required course for first year MBA students. Entitled “The Corporation and its Responsibilities,”
Part 1 addresses responsibilities to investors, customers, employees and suppliers, and the public.
The Marriott Corporation cases conclude Module 1, on responsibilities to investors. For an overview
, 307-015 Teaching Note—Marriott Corporation (A) and (B) (LCA)
of the LCA course, see Instructor’s Guide to Leadership and Corporate Accountability (LCA) (HBS
Note No. 307-032).
Educational Objectives
• Enhance understanding of managers’ fiduciary duties
• Compare the responsibilities of fiduciaries with the responsibilities of ordinary contracting
parties
• Develop skill in making decisions that involve legal, ethical, and economic factors
Assignment
Case: Marriott Corporation (A) (HBS Case No. 394-085)
Supplement: Marriott Corporation Excel Work Book (HBS Courseware No. 307-703) (See TN
Exhibit 1)
Study Questions:
1. Why is Marriott management proposing Project Chariot? What is it trying to accomplish?
2. What is the likely impact of Project Chariot on the wealth position of the shareholders?
3. Should management be concerned by the loss of the market value of the bonds if Project
Chariot is implemented?
4. Is Project Chariot a matter of survival for Marriott in the fall of 1992? The Excel work book
allows you to estimate whether Marriott will be able to service its debt, given your
assumptions about future profitability, revenue growth, and property sales. Please see case
Exhibit 6 for summary statistics on Marriott’s past performance.
5. Would you recommend the implementation of Project Chariot?
2
Marriott Corp. (A) by Lynn Sharp Paine, Charles A.
Nichols
Discussion Questions:
1. Why is Marriott management proposing Project Chariot? What is it trying to accomplish?
2. What is the likely impact of Project Chariot on the wealth position of the shareholders?
3. Should management be concerned by the loss of the market value of the bonds if Project
Chariot is implemented?
4. Is Project Chariot a matter of survival for Marriott in the fall of 1992? The Excel work book
allows you to estimate whether Marriott will be able to service its debt, given your assumptions
about future profitability, revenue growth, and property sales. Please see case Exhibit 6 for
summary statistics on Marriott’s past performance.
5. Would you recommend the implementation of Project Chariot?
, 5-307-015
OCTOBER 19, 2006
TEACHING NOTE
Marriott Corporation (A) and (B) (LCA)
Synopsis
In the fall of 1992, the chairman and president of Marriott Corporation (MC), a premier hotel
developer, owner, and manager, was considering a proposal to split the corporation into two
separate companies by a stock dividend to shareholders. One of the new companies would contain
most of MC’s profitable management operations, while the other would retain ownership of its hotel
properties as well as almost all of its long-term debt. The Marriott cases focus on whether the
chairman should recommend to the board the proposed split, called “Project Chariot.”
The series includes two cases. Marriott Corporation (A) describes the history of MC and its
position at the time of the decision. The case allows students to evaluate the arguments for and
against the transaction from a variety of perspectives. Marriott Corporation (B) tells of the company’s
decision and the reactions when it was announced. In addition, the cases may be used with the case
supplement, Marriott Corporation Financial Projections (HBS Courseware No. 307-703), which allows
students to project Marriott’s future financial condition under various scenarios if it does not go
forward with the spin-off.
These cases raise an important issue of management ethics in the context of a complex financial
decision: to whom and for whom is management responsible? The proposed spin-off will enhance
shareholder wealth at the expense of the company’s bondholders. A central question concerns the
nature and extent of management’s responsibilities to bondholders and other stakeholders. To make
a decision it is necessary for students to understand and evaluate MC’s financial situation, the
purpose and likely effects of the spin-off, and the principles governing management’s responsibilities
to various affected parties.
Position in Course
The Marriott Corporation cases are used in Leadership and Corporate Accountability (LCA), a
required course for first year MBA students. Entitled “The Corporation and its Responsibilities,”
Part 1 addresses responsibilities to investors, customers, employees and suppliers, and the public.
The Marriott Corporation cases conclude Module 1, on responsibilities to investors. For an overview
, 307-015 Teaching Note—Marriott Corporation (A) and (B) (LCA)
of the LCA course, see Instructor’s Guide to Leadership and Corporate Accountability (LCA) (HBS
Note No. 307-032).
Educational Objectives
• Enhance understanding of managers’ fiduciary duties
• Compare the responsibilities of fiduciaries with the responsibilities of ordinary contracting
parties
• Develop skill in making decisions that involve legal, ethical, and economic factors
Assignment
Case: Marriott Corporation (A) (HBS Case No. 394-085)
Supplement: Marriott Corporation Excel Work Book (HBS Courseware No. 307-703) (See TN
Exhibit 1)
Study Questions:
1. Why is Marriott management proposing Project Chariot? What is it trying to accomplish?
2. What is the likely impact of Project Chariot on the wealth position of the shareholders?
3. Should management be concerned by the loss of the market value of the bonds if Project
Chariot is implemented?
4. Is Project Chariot a matter of survival for Marriott in the fall of 1992? The Excel work book
allows you to estimate whether Marriott will be able to service its debt, given your
assumptions about future profitability, revenue growth, and property sales. Please see case
Exhibit 6 for summary statistics on Marriott’s past performance.
5. Would you recommend the implementation of Project Chariot?
2
