Marriott acquires Starwood to create world's largest hotel group

Marriott acquires Starwood to create world's largest hotel group

Marriott International today confirmed the $12.2 billion takeover of Starwood Hotels & Resorts Worldwide.

The deal will create the world’s largest hotel company with more than 5,500 hotels and 1.1 million rooms worldwide across 30 brands, creating annual revenue of $2.7 billion, eclipsing the likes of InterContinental Hotels Group.

Marriott said: “The transaction combines Starwood's leading lifestyle brands and international footprint with Marriott's strong presence in the luxury and select-service tiers, as well as the convention and resort segment, creating a more comprehensive portfolio.

“The merged company will offer broader choice for guests, greater opportunities for associates and should unlock additional value for Marriott and Starwood shareholders.”

Marriott expects to make annual cost savings of $200 million through operating efficiencies in the second year of the deal being completed.

Marriott president and chief executive, Arne Sorenson, said: "The driving force behind this transaction 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.

“Today is the start of an incredible journey for our two companies. We expect to benefit from the best talent from both companies as we position ourselves for the future. I know we'll do great things together as the world's favourite travel company."

Starwood chairman, Bruce Duncan, said: "During our comprehensive review of strategic and financial alternatives, it was clear that our talented people, world-class brands, global leadership and spirit of innovation were much admired and key drivers of our value.

“Our board concluded that a combination with Marriott provides the greatest long-term value for our shareholders and the strongest and most certain path forward for our company.

“Starwood shareholders will benefit from ownership in one of the world's most respected companies, with vast growth potential further enhanced by cost synergies.

“Starwood's shareholders will also receive the value of the previously announced sale of our vacation ownership business to Interval Leisure Group, which is not part of this transaction."

Starwood interim chief executive, Adam Aron, 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.

“Our guests and customers will benefit from so many more options across 30 hotel brands, while our hotel owners and franchisees will derive value from our combined global platform and efficiencies.”

Wouter Geerts, travel analyst at Euromonitor International, admitted the news that Marriott will be acquiring Starwood came as a surprise.

This was particularly because there were strong indications that Hyatt was in advanced talks with Starwood.

“Unlike Hyatt – which value sales were dwarfed by Starwood – Marriott’s value sales almost double those of Starwood,” said Geerts.

“The planned acquisition will make the combined company the uncontested top hotel player.

“We’ve seen a lot of merger and acquisition activity in the intermediary segment, with Expedia and The Priceline Group very active in the past years.

“In the hotel industry, however, we have seen few large-scale acquisitions.”

Geerts added: “Marriott and Starwood have one major thing in common - in the past year, both companies have had a strong focus on using technology to improve its brand offering and respond to changing consumer demands.

“Marriott has introduced a content studio which is churning out content-driven marketing materials on social media platforms like Twitter and YouTube.

“The content is proving very popular with millennial audiences, and is helping the company to stop brand commoditisation through the increasing power of online travel agencies.

“Starwood, on the other hand, is focusing on the implementation of technological innovations in its hotels, with high-profile introductions of its keyless entry app, smartwatch app, and the robot butler Botlr.”


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