Financial Analysis Paper

Part 3: Financial Impact
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Part 3: Financial Impact
In today's dynamic business environment, almost all challenges faced by an organization have a financial impact. Marriott was a victim of two major attacks between 2018 and 2020, and their financial implications have been immense. Not only has the company faced direct financial impact in the form of fines, but the indirect costs also inform of customer mistrust, a decline in stock performance, and further investment in cybersecurity cannot be underestimated. As a company that holds valuable information that is attractive to malicious attackers, Marriott will always be at risk of attacks in the future. Although the company's financial position is healthy, the recent attacks and potential ones in the future risk are destroying future viability.
The financial implications of the cyberattacks that Marriot has experienced in the recent past are huge. While there are no relevant figures regarding the cost of the 2020 attack, the repercussions of the 2018 attack can yield an understanding of the financial implications associated with cyberattacks. In the aftermath of the 2018 cyberattack, Marriot was fined $123 million by the European Union (Ikeda, 2020). A report by the Phenomenon Institute indicates that the cost of the 2018 data breach in the company could be as high as $350 million (Hermeneut, 2018). In addition, according to Hermeneut (2018), immediately following the revelation of the data breach in the company, a class action filed against the company demanded $12.5 billion in cost and damages for the victims. Furthermore, after the revelation of the breach, the company's stock price dropped from $122.8 to $114, representing a decline of about 7% (Hermeneut, 2018). Therefore, it is evident that an incident of cyberattacks, particularly one that puts the records of millions of customers in jeopardy, can result in unprecedented costs to an organization. Moreover, the associated reputational damage is bound to reflect in the sales revenue. To counter this, the company may have to further invest resources in rebuilding its image in the customer's eyes. The two recent major attacks affected Marriott financially and will continue to affect it in the near future.
The biggest strength of Marriott is its financial position, which may be integral in helping it avert the effects of cyberattacks. As per the company's 2019 annual report, its annual revenues stood at $21 billion while the net income was $1.27 billion (Marriott, 2020-b). However, following the COVID-19 outbreak in 2020 that affected the hospitality industry significantly, Marriott experienced a loss of about $267 million (Statista, 2021). Before that, the company had been experiencing huge net profits, with the highest coming in 2018 when it recorded about $1.9 billion in net profits (Statista, 2021). While it experienced a loss in 2020, the company has numerous assets, with 7,349 properties and 1,380,921 rooms distributed worldwide (Marriott, 2020-a). Therefore, as the world addresse...