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The bull case is that it has the potential to become as valuable as Marriott which is about $43 Billion in market cap. Marriott for the most part has transitio

The bull case is that it has the potential to become as valuable as Marriott which is about $43 Billion in market cap. Marriott for the most part has transitioned mostly to an all digital company over the past two decades. The Marriott of today is primarily about hotel operations (i.e. branding, bookings/pricing/revpar/SEO, front desk, housekeeping, wifi, remodeling) and its loyalty rewards program and mobile phone app (BonVoy). Much of its assets have been moved to a standalone REIT that trades under a different ticker. In a way similar to WeWork, Marriott effectively leases hotels from the REIT. So in that sense, if WeWork can be considered analogous to Marriott, then in a hand wavy way the $47 Billion market cap valuation could somewhat make sense. The bear case is that its not a well implemented corporate structure full of accounting traps and is actually a fraction of Marriott's valuation...

DebtDeflation 7y ago
>The bull case is that it is as valuable as Marriott which is about $43 Billion in market cap. Apart from the fact that Marriott has 11.5X as much annual revenue?
- somethoughts 7y ago
  Thanks - very good point - Added more description to the bear case. It is unclear to me why WeWork is being valued the same as Marriott today when its business/financial model is clearly unproven.
heymijo 7y ago
Does the Marriott REIT actually own its properties or lease on long-time lines like WeWork?
- somethoughts 7y ago
  The Marriott REIT is Host Hotels which is the owner of the physical properties. It does own all its hotels and Marriott leases them. Its a symbiotic relationship. The analogy would be: Marriott is to Host Hotels as WeWork is to multiple office property owners
  - heymijo 7y ago
    So that's a stark contrast. Host Hotels (Marriott) is sitting on an appreciable asset while WeWork has off-balance sheet operating leases. https://www.investopedia.com/terms/o/operatinglease.asp https://www.investopedia.com/terms/o/operatinglease.asp
edanm 7y ago
> The bull case is that it has the potential to become as valuable as Marriott which is about $43 Billion in market cap. Um.. that's one bull case, but the article presents a much stronger case (namely, the one that WeWork itself is making). That is, that WeWork will do to offices what AWS did to servers - make it so the average company never buys physical servers, but rather outsources all of those operations to Amazon. Analogously, WeWork is imagining a world in which companies never build offices - it's not their core competency, after all. Rather, most companies just get an office at a WeWork instead. So their potential market is huge - they've only tapped a tiny tiny percentage of "all people who work at a desk".

DebtDeflation 7y ago

>The bull case is that it is as valuable as Marriott which is about $43 Billion in market cap. Apart from the fact that Marriott has 11.5X as much annual revenue?

somethoughts 7y ago
Thanks - very good point - Added more description to the bear case. It is unclear to me why WeWork is being valued the same as Marriott today when its business/financial model is clearly unproven.

heymijo 7y ago

Does the Marriott REIT actually own its properties or lease on long-time lines like WeWork?

somethoughts 7y ago
The Marriott REIT is Host Hotels which is the owner of the physical properties. It does own all its hotels and Marriott leases them. Its a symbiotic relationship. The analogy would be: Marriott is to Host Hotels as WeWork is to multiple office property owners
- heymijo 7y ago
  So that's a stark contrast. Host Hotels (Marriott) is sitting on an appreciable asset while WeWork has off-balance sheet operating leases. https://www.investopedia.com/terms/o/operatinglease.asp https://www.investopedia.com/terms/o/operatinglease.asp

edanm 7y ago

> The bull case is that it has the potential to become as valuable as Marriott which is about $43 Billion in market cap. Um.. that's one bull case, but the article presents a much stronger case (namely, the one that WeWork itself is making). That is, that WeWork will do to offices what AWS did to servers - make it so the average company never buys physical servers, but rather outsources all of those operations to Amazon. Analogously, WeWork is imagining a world in which companies never build offices - it's not their core competency, after all. Rather, most companies just get an office at a WeWork instead. So their potential market is huge - they've only tapped a tiny tiny percentage of "all people who work at a desk".