Marriott entities move to separate

Two top executives to give up seats on one another's board

April 05, 2002|By Meredith Cohn | Meredith Cohn,SUN STAFF

In a sign that Host Marriott Corp. is distancing itself from its parent company, Marriott International Inc., executives from each will give up seats on the other's board, according to a filing with the Securities and Exchange Commission.

Marriott International spun off Host Marriott in 1993, largely to own Marriott's real estate. Marriott International wanted to focus on hotel management and franchising its brands. Host Marriott, acting as an independent public company, later also began buying non-Marriott hotel brands such as Hilton and Hyatt.

Host Marriott likely wants to send a message to the market that it is a wholly separate company and interested in other brands - which will allow the real estate investment trust to grow, an analyst said.

"It's not insignificant," said Rod Petrik, a managing director at Legg Mason Wood Walker Inc. who follows the hotel industry. "I don't think they want to be thought of as captive. ... They're going to have to look at ways to generate growth going forward and more likely than not that means acquisitions, Marriott brands and others."

Petrik said he expects Host Marriott at some point to change its name to further emphasize its independence.

Host Marriott said in its SEC filings that Marriott International Inc. Chairman J.W. Marriott Jr. will resign from its board and Host Marriott's Chairman Richard E. Marriott, his brother, will resign from Marriott International's board.

Host Marriott plans to move out of the Marriott building in Bethesda - where both maintained headquarters - to offices across the street.

It will also gain greater control of some of the contracts it has with Marriott International to manage its hotels.

Marriott International manages 110 of Host Marriott's 122 hotels, according to the SEC filing.

"Our relationship with Marriott International may result in conflicts of interest," Host Marriott said in the SEC filing.

"Marriott International manages and in some cases may own or be invested in hotels that compete with our hotels. As a result, Marriott International may make decisions regarding competing lodging facilities that it manages that would not necessarily be in our best interests."

A spokesman for Host Marriott did not return phone calls.

Host Marriott shares closed yesterday at $11.70, unchanged. Marriott International's stock closed at $43.68, up 20 cents.

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