Marriott to buy Starwood Hotels
- Filed under News
- Posted on Tuesday, 17 November 2015 22:35
- By Zac Erawan
No word yet on the fate of your Starpoints or their value
Last week, hot on the hotel gossip vine was the report of the Hyatt Hotel Corporation being in talks to acquire the Starwood Hotel and Resort Worldwide chain. Apparently those talks were either in the myth area, the shopping wish list of Hyatt or talks stalled, as it is now reported that the Marriott Hotel Group has bought Starwood.
Starwood put out the welcome mat for offers in July of this year. It wasn’t only the Hyatt Group that was in the reported running, but the rumor mill had the Chinese interested in acquiring the Sheraton as well. At that point, Marriott was nowhere in the picture according to the media. Purchase details are on the sketchy side, but the rumored date for completion of the deal is in mid 2016.
With the Marriott gobbling up Sheraton for $12.2 billion, the merge will create the world’s largest hotel group. The new giant of the hotel industry will have more than 1.1 million rooms on offer around the globe. Starwood’s brands include: Sheraton, Westin, W and St. Regis. Marriott has at least 24 brands under its umbrella including Marriott’s Courtyard, Ritz-Carlton and Fairfield Inn. Coming in second place in the worldwide hotel stakes, will be the Hilton Group with a total of 720,000 rooms.
With the payment terms being a stock and cash deal, Marriot will come out in a better position than it currently is, with a bigger appeal to the young travelers. The deal is expected to deliver massive savings on overlapping costs to the tune of approximately $200 million in the second year after the closing of the deal. Despite being approved by the Marriott’s Board of Directors, it is yet to be given the nod by the investors of each hotel chain.
The Board of Directors of the Marriott Group is expected to increase from 11 to 14 members by the addition of 3 Directors from the Sheraton board. It is further stated by Marriott that there are no plans in the pipeline to divest itself of any of the Sheraton’s individual brands for the time being.
The history of this event is a contradiction to the outcome, as the Marriott recently stated that it was not interested at all in merging with another hotel group. Apparently Marriott had a change of heart based on the fact that the Starwood financials showed a 15% loss of shareholder value since April. The fact that Google is moving into the travel distribution area was another incentive. This marriage will give Marriott strong leverage in relation to online bookings and hotel loyalty rewards.
How the merger will affect any of the hotel brands under the joint umbrella is yet to be seen. Starwood appears to be carrying on business as usual as it has just announced the recent addition of Design Hotels, a sublime boutique collection of nearly 300 properties internationally. Many of the properties are in destination markets where Starwood has no face to-date.
The CEO of Marriott believes that the individual brands such as the Ritz-Carlton and St. Regis are unique enough to flourish side by side due to the demand in the luxury hotel sector. Starwood’s “Tribute” brand is expected to fit in with Marriott’s Autograph Collection, whilst Starwood’s Luxury Collection will stay the same for the time being. The two brands that do clash are the Marriott’s Renaissance Hotels and Starwood’s Le Meridien Hotels.
Zac Erawan
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