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Marriott Corporation - Lehman Brothers Collection

Marriott Corporation

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The Marriott Corporation's humble roots lie in an A&W root beer stand opened in Washington, D.C., in 1927 by J. Willard (Bill) and Alice S. Marriott. The couple added tacos and tamales to their menu to boost sales during colder months and called their restaurant the Hot Shoppe. By the next year they were operating three restaurants, and in 1929 they incorporated the business as Hot Shoppes, Inc.

As Hot Shoppes evolved into a chain of restaurants, the Marriotts maintained close family supervision over their business. The restaurants remained popular during the Depression, and in 1937 the company was able to branch out from the restaurant business by pioneering in-flight catering with boxed lunches for Eastern, American, and Capital Airlines flights. The company continued to prosper during this time. In 1939 Marriott won an account at the U.S. Treasury building, and in 1940 they opened five new restaurants. In 1955 the company entered the hospital food service market at the Children's Hospital in Washington. Marriott opened its first hotel, the Twin Bridges Marriott Motor Hotel, in Arlington, Virginia, in 1957. Over the next few years, the company continued to open hotels and Hot Shoppes restaurants.

By 1964 the company owned forty-five Hot Shoppes and four hotels, as well as other businesses. That same year, the company's name was changed to Marriott-Hot Shoppes, Inc. Over the next six years, Marriott almost quadrupled in size. The company grew both through acquisitions and by opening new businesses. Marriott went international when it acquired an airline-catering kitchen in Caracas, Venezuela, in 1966. In 1967 the 22-unit Big Boy restaurant chain was acquired, and in 1968 the company started a fast-food chain, Roy Rogers. That same year, the company changed its name to Marriott Corporation and the following year it listed its stock on the New York Stock Exchange.

By 1971 the company was divided into three basic groups: food operations, in-flight services to airlines, and hotels and specialty restaurants. During this decade the company spent more than $3 billion on hotels, increasing its hotel rooms by an average of 17 percent per year. Through the 1970s, Marriott built convention hotels in growing convention cities and began to locate more hotels near airports. By 1977 sales had surpassed $1 billion.

Marriott planned carefully and came out ahead in the shaky economic conditions of the late 1970s and early 1980s. The company bought back a third of its stock and in 1982 purchased the Gino's restaurant chain as well as Host International, an airport terminal food, beverage, and merchandising company, making Marriott the largest operator in the business.

In response to consumer dissatisfaction with mid-priced hotels, Marriott carefully planned its Courtyard hotels, the first of which opened in 1983. The company ventured into the timeshare business in the mid-1980s, purchasing American Resorts Group in 1984. By 1989 the company owned four timesharing resorts in Hilton Head, South Carolina, and Orlando, Florida. Around that time, management realized that the company could grow faster if Marriott did not own most of its hotels. The company built hotels for later sale, but retained control through management contracts. Marriott believed that this system provided more rapid profit growth and limited risk while allowing more uniform service through franchising.

The company made several changes during the 1980s. In 1985 it bought the Howard Johnson Company. At the time of the purchase, Marriott sold the Howard Johnson hotels to Prime Motor Inns but kept 350 restaurants and 68 turnpike units. The company's services group grew in 1985 with the acquisition of Gladieux Corporation, and then Service Systems. The following year, Marriott purchased Saga Corporation, a diversified food-service management company, which made Marriott the largest food-service management company in the country. In 1987 the company unsuccessfully bid for Denny's, a chain of 1,200 restaurants. Later that year Marriott sold franchise rights for the Big Boy system to Elias Brothers Restaurants. Also in 1987 Marriott opened its first luxury, all-suite unit, called Marriott Suites and purchased the Residence Inn Company, an all-suites hotel chain. At the other end of the spectrum, the first Fairfield Inn economy lodges were tested that year. In 1988 Marriott began to test market a new restaurant, called Allie's.

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