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Marriott International buys Starwood Hotels in £8b deal

16 November 2015 by
Marriott International buys Starwood Hotels in £8b deal

The new company will have 1.1 million rooms across more than 5,500 hotels, putting it ahead of its key global competitors, Hilton Worldwide and InterContinental Hotels Group (IHG), which have 4,500 hotels (745,000 rooms) and 4,750 hotels (674,000 rooms) respectively.

The merger of the two US companies involves an unprecedented 30 brands, bringing together the likes of Ritz-Carlton, Edition and Moxy from Marriott alongside St Regis, Sheraton and W from Starwood.

Starwood announced in April - two months after the sudden departure of chief executive Frits van Paasschen - that it was considering a possible sale. However, it has taken the industry by surprise that Marriott has pulled off the world's largest hotel acquisition since private equity group Blackstone purchased Hilton Hotels for $26b in 2007. Hyatt Hotels Corporation had been thought to be the front runner, with several Chinese groups also showing interest.

Hotel consultant Melvin Gold said that Marriott's purchase of Protea Hospitality Holdings, involving 16 hotels with 10,148 rooms in Africa, last year showed that it is a company focused on acquisitions as a means of growth as opposed to the likes of Hilton Worldwide, IHG and AccorHotels, which are expanding primarily by working with third parties to develop new hotels and signing franchise agreements.

"Going forward, there is likely to be a revaluation of the new portfolio, with owners considering a move to an alternative, better-performing brand," he explained.

A major benefit to guests - and of concern to Marriott's rivals - will be the combined might of the companies' two loyalty programmes: Starwood Preferred Guests and Marriott Rewards, with 21 million and 54 million members respectively.

Arne Sorenson, president and chief executive of Marriott International, confirmed that the driving force behind the acquisition is growth. "This is an opportunity to create value by combining the distribution and strengths of Marriott and Starwood, enhancing our competitiveness in a quickly evolving marketplace. This greater scale should offer a wider choice of brands to consumers, improve economics to owners and franchisees, increase unit growth and enhance long-term value to shareholders."

Meanwhile, Adam Aron, who is acting as chief executive on an interim basis at Starwood, added: "We are excited to play a vital role in the creation of the biggest and best hotel company in the world with tremendous upside potential. The combination of our two companies brings together the best in innovation, culture and execution."

In the UK, Starwood currently has 11 hotels including Aloft Liverpool; Aloft London Excel; Great Northern (Tribute Portfolio); Le Méridien Piccadilly; Sheraton Grand hotel & spa, Edinburgh; Sheraton Heathrow; Sheraton Skyline; Trump Turnberry, a Luxury Collection Resort; the Park Lane hotel; the Park Tower Knightsbridge, a Luxury Collection hotel; and W London - Leicester Square.

Meanwhile, Marriott operates 63 hotels under nine brands in the UK: Marriott Hotels, Renaissance Hotels, JW Marriott Hotels & Resorts, Courtyard by Marriott, Residence Inn, Autograph Collection Hotels, Bvlagri, Edition Hotels, and Marriott Executive Apartments. There are also three hotels in the pipeline under the budget Moxy brand.

Sorenson will remain president and chief executive of Marriott International following the merger and Marriott's headquarters will remain in Bethesda, Maryland, USA.

Marriott's Autograph Collection to double UK portfolio within two years >>

Strong Europe performance drives Marriott's global figures >>

TagsHotels
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