One of Marriott’s newest, largest hotels: The Marriott Marquis Washington DC (Image: Marriott)
We’ve seen plenty of rumor and speculation in recent months about what would happen to Starwood Hotels & Resorts since its board of directors decided to look for ways to maximize shareholder value. First there was talk of a merger with InterContinental Hotels Group. Then just last month, Hyatt was said to have its eye on the company.
But now there’s a new suitor, and this time it’s no rumor: Marriott International announced it will pay $12.2 billion — most of it in Marriott stock — to buy Starwood.
The combined entity will be the world’s largest lodging group, with 1.1 million rooms in 5,500 properties worldwide — not to mention the world’s largest hotel loyalty program; Marriott Rewards currently has 54 million members, while Starwood Preferred Guest claims 21 million.
San Francisco’s famous Palace hotel to become a Marriott (Image: Starwood)
The deal is subject to approval by shareholders at both companies as well as regulatory approvals. And that raises a question: If the U.S. Justice Department’s Antitrust Division has been getting a little tougher on airline mergers — e.g., it wouldn’t approve the American-US Airways deal until the airlines agreed to give up gates and slots at key airports — will it do the same with huge hotel mergers where the combined companies would control a substantial share of rooms in specific markets?
Marriott CEO Arne Sorenson told the Wall Street Journal that Marriott controls about 10 percent of U.S. hotel rooms and Starwood has 3 to 4 percent, and said that in general, the U.S. hotel industry is “highly competitive and dispersed.”
If all the necessary approvals are forthcoming, the companies said they expect to close the transaction in the middle of next year.
“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 companies said in a statement.
Marriott said it expects to “accelerate the growth of Starwood’s brands” after the transaction goes through, giving the combined company “a broader global footprint.”
Speaking of brands, it remains to be seen what will happen on that score, since the two companies currently have about 30 brands — nice for segmenting your market, but it might be daunting for customers to remember what each brand represents. Could a consolidation of brands be in the works if the merger goes through?
At first glance, we could see W Hotels becoming Renaissance hotels. St Regis and Luxury Collection would become Ritz-Carlton or maybe Bulgari. Most Sheratons or Westins or Le Meridiens could be Marriotts or maybe JW Marriotts. Most Four Points hotels could be Marriott Fairfield Inns. Aloft hotels…hmm maybe Courtyards?
For reference: All Marriott brands | All Starwood brands
Stay tuned!
What’s your first reaction to this blockbuster news? Please leave your comments below.
NOTE: Be sure to click here to see all recent TravelSkills posts about: Trip Report: Singapore Airlines + 5 ways to save using Uber/Lyft + New overseas plan from Verizon + Trans-Pac fare war?
JD says
November 22, 2015 at 7:46 pmI don’t see brands w/ iconic names like the W or Westin going away. Westin is known for its “active lifestyle” appeal (running shoe rentals, etc.) I could see Sheraton or Renaissance going away, as there is already much diversity between the quality of properties in their portfolios.
JD says
November 22, 2015 at 7:44 pmMarriott CEO Arne Sorenson told the Wall Street Journal that Marriott controls about 10 percent of U.S.hotel rooms and Starwood has 3 to 4 percent, and said that in general, the U.S. hotel industry is “highly competitive and dispersed.”
This seems like a disingenuous comment from the Marriott CEO. The “percentage of hotel rooms” is not the relevant market to examine. The percentage of business-class type hotels is what to look at, and I would imagine that with this merger it is at or over 50%. Many of the hotels that drag the Marriott CEO’s numbers down are the “mom and pop” motels, the Super 8’s, etc. Not in the same category for a business traveler.
Kotohiki says
November 19, 2015 at 7:21 pmIt’s probably going to devalue elite status with so many elites getting combined into one program.
John Harding says
November 18, 2015 at 9:48 amAnd the 5000 air mile mile transfer reward, that was a Great benefit, will likely go away. Ughh! That suck. Won’t need those 3 AMEX cards anymore.
Chris McGinnis says
November 18, 2015 at 9:45 amToo early to tell, but my bet would be on SPG AMEX being folded into Marriott Rewards card from Chase.
John Harding says
November 18, 2015 at 9:42 amWhat happens to the SPG AMEX and the 5,000 mile transfer reward?
Salvatore Johnson says
November 16, 2015 at 8:52 pmI hate these deals, that is why costs have sky-rocketed. Again is this is allowed to happen we will have less choice and higher prices. There is a reason that Marriot is spending $12 billion on buying sheraton, putting those rooms out of circulation and raising there rates.
Again this is a very, very, bad deal for the consumer, no matter what propaganda Sheraton and Marriot put out.
Christian says
November 16, 2015 at 12:18 pmToo many brands? Yes, but I think Sheraton, for instance, has too valuable a name to just fold into some other chain, rather than utilizing that name.
Susan says
November 16, 2015 at 11:19 amGood news…I’m an SPG groupie, and the husband loves Marriott. Match made in heaven! LOL!