Sheraton Hotel Analysis Harvard Case Solution & Analysis

Sheraton Hotel Analysis Case Study Solution

Sheraton Hotel is an international restaurant having 400+ locations. The Sheraton Hotel was founded in 1937, in Springfield, Massachusetts, United states. It was acquired by Starwood Hotels and Restaurant in 1998. In 2008, Sheraton introduced “Hotel Gym Experience” and adopted fully equipped environment and different fitness planning. In 2015, it crossed the portfolio of its existence in 435 hotels and 88 resorts in more than 70 countries. (Sheraton, 2017)

Hospitality industry possesses three market segments such as foodand beverages, travel and tourism and accommodation. (Peter Novak, 2017)Food and beverages are the most important and largest segment of the industry. In addition, it has been known that the industry represents $627 billion of revenue in 2013. On the other hand, accommodation includes different types of lodging and resorts,along with luxuries. It has grown from $133 billion in 2009 to $176 billion in 2014. Lastly, the travel and tourism segment includes transportation such as trains, airline or cruise ships. The other two segments are working well by focusing on expanding the industry which is possible with the use of more knowledge and technology. (Calcbench, 2013)

In order to meet driving forces, the Sheraton Hotel started to diversify itself internationally and in different locations. It acquired different restaurants such as Starwood Hotels and Restaurant. In addition, it also made partnership with various firms in order to take full advantage of technological era such as its partnership with Microsoft in 2006. It also further expanded itself in China which would be the largest global hotel brand in china. It has been planned by Starwood to improve itself by adding up to50 hotels in Sheraton by 2020.(NikkiEkstein, 2016)

On the other hand, Marriott Hotel has been focusing on making larger acquisitions of restaurants.(Marriott, 2017)Along with acquiring different international restaurants, Marriott Hotel is planning to make a joint venture with alibaba.com, which is a giant Chinese E-commerce business. (Caplinger, 2017)

Financial analysis

To make financial analysis of the company, following ratio metrics have been used:

Net Profit Margin:

Net profit margin is calculated by dividing net income from sales earned by the company. Sheraton company is earning net profit margin of 0.05%, which is very low. On the other hand, it has been analyzed that its competitor, Marriott International is earning the net profit margin of 5.93%. Lower net profit margin of Sheraton shows that expenses of company are experiencing lower revenue and higher costs and operating expenses when compared to its competitor.

Sheraton Hotel Analysis Harvard Case Solution & Analysis

Debt to Equity:

Debt to equity ratio mainly measures the leverage of a company. It also indicates the amount of debt a company is using to finance its assets compared to equity. As a result, it has been calculated that Sheraton International Hotel is using 5.36 times of its debt compared to its competitor which is only using 0.90 times of its debt compared to equity. Consequently, Sheraton is much higher leveraged than its competitor Marriott.

Return on Equity:

Return on equity is one of the profitability ratios which measures the firm’s ability to generate profits from its share holder's investment in the company. Therefore, it has been calculated that Sheraton is earning 0.22% from its share holder's investment. On the other hand, Marriott International is earning 23.93% of profits. It shows that Sheraton is much less efficient in utilizing investment than its competitor................

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