Marriott to Split Into 2 Firms, Shift Debt Load : Strategy: The hotel management and franchise business will be separated from hotel and retirement properties.

Marriott Corp. on Monday unveiled plans to split in two next year, separating its prosperous hotel management and franchise business from its wholly owned hotel and retirement properties.

The two companies, known as Marriott International Inc. and Host Marriott Corp., will be listed separately on the New York Stock Exchange and have their own management teams.

The move will shift nearly $3 billion in debt to Host Marriott. The new Marriott International should show strong earnings growth when it is freed of the heavy interest payments, analysts said.

Wall Street applauded the plan, sending Marriott shares up $2.125 to close at $19.25 on the New York Stock Exchange during a day when the market was lower.

“The division into two different companies will enable us to advance our longstanding strategy of separating ownership of properties from management of operations,” Marriott Chairman J.W. Marriott Jr. said in a statement.

Shareholders will get one share in Marriott International for each share they hold in Washington-based Marriott Corp., which will be renamed Host Marriott.

“I’m quite positive on it and I think the stock price reflects well on it,” said Paul Rissman, analyst with money management firm Alliance Capital.

He said the plan finally puts the debt into a separate company so investors can focus on the earnings potential of Marriott’s management business.

Marriott International will take over Marriott’s lodging, food and facilities management, which oversees 737 hotels, 16 retirement communities and 3,000 food operations.

Marriott International’s units last year had $7.4 billion in revenue and profit of $500 million before interest and taxes. It has 182,000 employees.

Host Marriott will take control of the 141 hotels and 16 retirement facilities the company owns--and the company’s $2.9 billion in debts.

Host will not pay cash dividends on common stock, and its cash will be used to pay off the $2.9 billion in debt acquired from Marriott Corp.

It will also run the food and goods concessions at 68 airports and more than 100 locations on the nation’s toll highways.

Host Marriott, with 23,000 employees, would have had revenue of $1.7 billion and comparable profit of $350 million last year if it was a separate company.

“The transaction will permit Marriott International to focus its efforts on expansion of management businesses where individual opportunities require relatively small amounts of capital,” Marriott said.

“Host Marriott will retain substantial fixed assets for longer-term opportunities in capital-intensive businesses--real estate, and airport and toll road concessions,” he said.