WASHINGTON -- For the next several years, Marriott Corp. will focus on virtually one thing: generating much-needed cash to cover its mountainous $3.5 billion debt load.
Chairman and President J. W. Marriott Jr. told the more than 2,000 shareholders who crowded yesterday's annual meeting in Washington, "We are changing the financial focus of Marriott Corp. to put greater emphasis on cash flow and more productive use of capital."
For more than two hours, Mr. Marriott's focus shifted from issues of minority hiring and board representation, to the time and location of the annual meeting as he answered shareholder's queries.
Mr. Marriott related the company's financial troubles of the past year, when net income fell to $47 million, one-fourth that posted for 1989. "This past year has been the most challenging in Marriott's history," he said.
After the aggressive expansion of the '80s, during which Marriott built as many as 100 new hotels a year, the company's policy of building, selling and then managing the properties derailed when real estate financing began to dry up last year.
Hotels that the company has been unable to sell in the soft real estate market have created a 50- to 60-cent drain on annual earnings, Mr. Marriott said. "Our top priority is to get this debt down. It just hampers everything we do," Mr. Marriott told reporters after the meeting.
an effort to right its problems, the company began a major restructuring of operations in the fourth quarter of last year, trimming costs, laying off workers and selling assets.
The company will sell all its family and fast-food restaurants; to date, it has sold or signed agreements to sell more than half of them. By the end of 1990, Marriott had sold more than $1 billion in assets, Mr. Marriott said.
The company hopes to sell $1.5 billion in assets over the next few years, he added.
In spite of the restructuring, Marriott's turnaround will be slow, analysts say, because the company's fortunes are closely tied to the economy's strength.
To the benefit of its bottom line, Marriott "will have a significant drop in interest expense" over the next few years, said R. Bentley Offutt of Offutt Securities Inc. in Baltimore.
"I think we'll see a turnaround in earnings some time aroun1992."