Anbang Archives - TravelSkills

Chinese hotel investors strike again – this time at Hilton

October 27, 2016

The new Hilton Cleveland Downtown overlooks Lake Erie. (Image: Hilton)

What is the fascination that Chinese companies have with U.S. hotel companies? Early this year, China’s Anbang Insurance made a $6.5 billion deal to acquire Strategic Hotels & Resorts, then followed up with a failed attempt to take over Starwood Hotels in a see-saw $14 billion bidding battle against Marriott.

Meanwhile, a unit of the Chinese conglomerate HNA Group last spring arranged with Minneapolis-based Carlson Companies to buy that privately-held firm’s Carlson Hotels business, including several Radisson brands as well as its 51 percent stake in Europe’s Rezidor Hotels Group. The price was not disclosed.

And now HNA Group has anted up $6.5 billion for a 25 percent stake in Hilton Worldwide; the deal is expected to close early next year.

The seller of the 25 percent Hilton stake — for which HNA paid a premium of almost 15 percent over the going price for Hilton shares – was the same firm that sold Strategic Hotels to Anbang: the giant U.S. investment house Blackstone Group, which took Hilton private in 2007 and then took it public with an IPO in 2013 that raised $2.3 billion. (By the way, Anbang also acquired the legendary Waldorf Astoria in New York in 2015 for almost $2 billion.)

The new deal will give HNA two seats on Hilton’s board. Blackstone will retain a 21 percent stake in Hilton Worldwide. HNA Group owns hotels, airlines (including China’s Hainan Airlines), airports, financial services firms and real estate companies.

San Diego’s Hotel del Coronado. (Image: Jim Glab)

Meanwhile, Anbang’s purchase of Strategic Hotels hit one little snag. Strategic has just 16 hotels, but they are prime properties like the InterContinental and Fairmont in Chicago, New York’s JW Marriott Essex House, and some Four Seasons and Ritz-Carlton hotels. The group also includes San Diego’s Hotel del Coronado, and Blackstone had to cut that one out of the sale after objections from a U.S. government inter-agency group called the Committee on Foreign Investment in the United States.

The reason? National security concerns, because the del Coronado is right next to a giant U.S. Navy base in San Diego.

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Stunning changes at iconic NYC hotel

June 27, 2016

A Chinese firm that bought the Waldorf-Astoria is reportedly planning to convert much of the hotel to condos. (Image: Waldorf-Astoria)

In 2005, New York’s legendary Plaza Hotel closed down for a three-year renovation that left it with just 130 hotel rooms, and the rest of its space converted into condo hotel units and luxury condo apartments. And now the same thing might be happening to another iconic Manhattan property, the Waldorf-Astoria.

According to the Wall Street Journal (paywall), the new Chinese owner of the once-tony-now-shabby midtown hotel – Anbang Insurance, which lost out to Marriott in an unsuccessful takeover effort for Starwood Hotels – plans to shut the property down next spring and convert most of its space into apartments.

In recent years, the grand dame has fallen from grace with many business travelers– on TripAdvisor it now ranks #281 out of #475 New York City hotels. Nonetheless, a cursory check of rates for summer and fall find it still fetching close to $500 per night.

Citing “people familiar with the matter,” the newspaper reported that Anbang will repurpose up to 1,100 of the Waldorf’s 1,413 rooms into luxury condominiums to be sold to private owners. That would leave the property with 300 to 500 hotel rooms that would be upgraded to luxury standards. Hilton would continue to manage the hotel portion after the conversion, the article said.

Room decor at the Waldorf is nice, but dated (Photo: Waldorf-Astoria)

There was no estimate as to how long the renovation project – expected to cost more than $1 billion — would keep the hotel, which spans a full city block in Manhattan, closed.

The Waldorf had long been used as a New York base for visiting U.S. presidents and for the country’s United Nations delegation, but the U.S. government had problems with continued use of the property after Anbang bought it, citing security concerns.

Have you ever stayed at the Waldorf? For me, the hotel conjures up memories of my very first trip to NYC with my parents at the tender age of 13. Even when I’m not staying there, I still like to duck into its popular, dark and clubby Sir Harry’s lobby bar for a manhattan and nibblies!

What do you think of when you hear about The Waldorf-Astoria?

–Chris McGinnis

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Finally: Battle for Starwood Hotels may be over

March 31, 2016

The battle between Marriott and China’s Anbang Insurance for Starwood Hotels may be over. (Image: Marriott)

According to news reports Thursday, there’s been another big twist in the see-saw bidding battle between Marriott International and a group led by China’s Anbang Insurance to see who will acquire Starwood Hotels – and this may be the final chapter.

The Wall Street Journal reported Thursday afternoon that the Anbang-led group has withdrawn its latest bid for Starwood, which was valued at $14 billion, or $82.75 a share. That clears the way for Starwood to move ahead with a shareholder vote on Marriott’s most recent offer, which valued Starwood at $79.53 a share.

News reports said Anbang didn’t give Starwood a reason why it was backing away from its last offer. There had been speculation in Chinese media earlier this week that Anbang could have run into trouble with China’s insurance regulators for seeking to invest more of its assets in foreign companies than is permitted by Chinese law.

The proposed Marriott-Starwood merger has already passed antitrust scrutiny by the U.S. and Canadian governments.

If it is finally accomplished, Marriott’s acquisition of Starwood would create the world’s largest hotel company. An Anbang acquisition of Starwood, if it happened, might have also created problems for business travelers working for the U.S. government or its contractors who wanted to stay at Starwood properties. After Anbang bought the Waldorf-Astoria in New York City in 2014, the State Department moved members of the U.S. delegation to the United Nations out of that hotel, allegedly due to concerns about Chinese electronic espionage at the hotel.

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Star(wood) Wars, Part IV: Anbang strikes back

March 28, 2016

Will Anbang Insurance thwart Marriott's latest bid to buy Starwood? (Image: Marriott)

Will Anbang Insurance thwart Marriott’s latest bid to buy Starwood? Will China’s government block Anbang? Stay tuned. (Image: Marriott)

Just when it looked like Marriott International had once again secured a deal to acquire Starwood Hotels & Resorts by sweetening Its original offer, a revised proposal has been submitted by Marriott’s counter-bidding nemesis, China’s Anbang Insurance and its co-investors.

Feeling a bit weary of all the back-and-forth? We are! Anyway, here’s the latest….

Starwood’s board said today that the latest offer from Anbang & company – an all-cash bid of $82.75 per share for all Starwood stock, and the fourth bid to be made in this see-saw battle – is “reasonably likely” to be superior to Marriott’s latest bid, which was estimated to be worth $79.53 per share. That last Marriott bid included $21 per share in cash and the rest on Marriott stock. (Starwood said Anbang’s newest bid, made on March 26, was $81 per share, but in discussions over the past two days, the bidders raised their price to $82.75.)

Once again, Starwood’s board said it would closely examine and discuss the new Anbang bid, and would continue to discuss “non-price terms related to the (Anbang) consortium’s revised proposal.” The board added: “there can be no assurance that discussions will result in a binding proposal from the consortium,” or that it will result in an agreement to sell Starwood to Anbang and friends.

Breakfast overlooking Hanalei Bay at Starwood’s St Regis Princeville (Photo: Chris McGinnis)

The Starwood board also reaffirmed that it “has not changed its recommendation in support of Starwood’s merger with Marriott.”

Meanwhile, there were reports that China’s government might also toss a monkey wrench into Anbang’s overseas buying spree. Caixin Online, a Chinese business news website, reported that the government’s China Insurance Regulatory Commission could be on the verge of blocking Anbang’s bid for Starwood and a separate Anbang offer for Strategic Hotels – a U.S.-based group that own several high-end hotels and resorts.

The problem, Caixin Online said, is that Chinese regulations bar the nation’s insurance companies from investing more than 15 percent of their assets abroad, a limit that would apparently be exceeded by either of the two proposed acquisitions.

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Marriott gets Starwood back…for now

March 21, 2016

Marriott’s popular Residence Inn Downtown Seaport in Boston (Chris McGinnis)

The acquisition of Starwood Hotels & Resorts by Marriott International appears to be back on again, after Marriott sweetened its bid to beat an unsolicited offer that had come from a consortium led by China’s Anbang Insurance.

Last week, Starwood had decided the all-cash bid from the Anbang-led group was superior to Marriott’s initial offer, so it canceled its merger agreement with Marriott. But today (Monday), Starwood said Marriott has come up with a new bid of cash and stock that would ultimately give Starwood shareholders about $1.50 per share more than the Anbang group’s offer.

As a result, Starwood said it has now signed an amended merger agreement with Marriott, and its board has unanimously voted to recommend approval of the Marriott deal to shareholders, who are expected to vote within a couple of weeks. Marriott’s new bid puts a value of $13.6 billion on Starwood, and would give Starwood shareholders a 34 percent stake in the combined company.

The revised agreement puts the much discussed Starwood-Marriott merger back on track to close by the middle of this year, the companies said. The deal has already passed antitrust muster with the governments of both the U.S. and Canada.

Starwood’s newish (and very popular) Aloft brand- at SFO (Photo: Chris McGinnis)

According to a TravelSkills poll, Marriott has its work cut out when it comes creating a combined company palatable to frequent travelers. In the poll, nearly half currently feel negatively about the proposed combo. Most Marriott Rewards members see the merger as an opportunity to earn more points and to have more options for redemptions. Most SPG members, especially those with elite status, fear losing key benefits such as upgrades, in a Marriott managed program.

Marriott CEO Arne Sorenson said that once the merger is finalized, “We expect to accelerate the growth of Starwood’s brands, leveraging Marriott’s worldwide hotel development organization and owner and franchisee relationships…The company will have a broader global footprint and the most powerful frequent traveler programs in the industry.” Marriott said it expects that synergies from the merger will lead to cost savings of $250 million annually within two years after closing.

This drama is still not final, so stay tuned as we monitor developments. Marriott and Starwood boards initially were to vote on the merger on March 28– those meetings are now on for April 8.

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Developing: Starwood + Marriott on the rocks?

March 18, 2016

Marriott's acquisition of Starwood is suddenly far from a done deal. Sheraton Chicago (Photo: Sheraton)

Marriott’s acquisition of Starwood is suddenly far from a done deal. Pictured: Sheraton Chicago (Photo: Sheraton)

Unless Marriott International can come up with a much better offer, its deal to acquire and merge with Starwood Hotels & Resorts is off.

Earlier this week, just as the Marriott-Starwood deal was sailing toward completion, an uninvited consortium of bidders led by Chinese insurance giant Anbang stepped in with a new offer for Starwood. At the time, both Starwood and Marriott expressed confidence that their merger would likely go through as planned. But now Starwood has changed its mind.

Starwood said its board of directors, after closely examining the offer from Anbang and its co-bidders – an offer which has been increased rom $76 to $78 in cash per share – has decided that the Anbang consortium’s offer is “superior,” so it “intends to terminate the Marriott merger agreement” and enter into one with the Anbang group. The board found that Marriott’s offer, which is mostly in the form of Marriott stock, is only worth $71 a share.

Marriott’s acquisition of Starwood is suddenly far from a done deal. (Image: American Express)

Marriott’s only hope of salvaging the merger is to come up with an offer better than the Anbang group’s bid by midnight March 28.

“Starwood will negotiate in good faith with Marriott during this period, and the Starwood board will consider in good faith any changes to the Marriott agreement that Marriott may propose during this period,” Starwood said.

In view of these new developments, Starwood has canceled a special stockholders’ meeting which had been scheduled for March 28 to vote on the Marriott bid. And here’s one odd note in Starwood’s announcement: It said that in spite of the superior offer from Anbang and company, “Starwood’s Board has not changed its recommendation in support of Starwood’s merger with Marriott.”

After Starwood’s announcement, Marriott said it “continues to believe that a combination of Marriott and Starwood is the best course for both companies and offers the best value to Starwood shareholders.” Marriott added that it is “in the process of reviewing the Anbang consortium’s proposal and is carefully considering its alternatives.”

Stay tuned. How do YOU think this will play out? Do you care? Please leave your comments below.

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Surprise: New bid for Starwood emerges

March 14, 2016

The new Westin at Denver's airport is a short walk from the terminal. (Image: Jim Glab)

Starwood’s brand new Westin at Denver’s airport is a short walk from the terminal. (Image: Jim Glab)

Just when it looked like Marriott International’s planned acquisition of Starwood Hotels & Resorts was sailing along toward completion – with board votes at both companies just weeks away and a recent green light from U.S. antitrust regulators – a new Starwood suitor has suddenly emerged with a higher bid.

The unsolicited bid for Starwood comes from an investor group led by Anbang Insurance Group, a Chinese company that made headlines last year when it bought the Waldorf-Astoria in New York for almost $2 billion. The Beijing-based company has also reportedly made a deal to buy Strategic Hotels & Resorts from the Blackstone Group for $6.5 billion. Strategic owns 16 U.S. luxury properties, including some Four Seasons and Ritz-Carlton resorts as well as the JW Marriott Essex House in New York and the Hotel del Coronado in San Diego.

Other investors participating in the Anbang-led bid include a private equity firm called J.C. Flowers & Co. and a Chinese investment company called Primavera Capital Group, according to Bloomberg News. The news comes as more Chinese investors are are dumping investments in the Chinese economy and moving money to safer markets like the U.S.

A Chinese firm that bought the Waldorf-Astoria is leading a new bid to acquire Starwood. (Image: Waldorf-Astoria)

The Chinese firm that bought the Waldorf-Astoria is leading a new bid to acquire Starwood. (Image: Waldorf-Astoria)

The new bidders are offering $76 per share in cash for all Starwood stock, according to Starwood. Bloomberg said that puts a $12.9 billion value on the bid; Starwood estimated the current value of Marriott’s bid at $63.74 a share, based on Starwood’s recent stock price. The Marriott bid includes $2 a share in cash and the rest in Marriott stock. Another factor that Starwood’s board will have to weigh is that its agreement with Marriott provides for Starwood to pay Marriott a $400 million termination fee if the deal falls through.

Starwood said its board of directors will consider the new offer from the Anbang-led group in order to “determine the course of action that is in the best interest of Starwood and its stockholders.” The Starwood board also said that at this point, it “has not changed its recommendation in support of Starwood’s merger with Marriott.” Starwood and Marriott have entered into a definitive merger agreement, but Marriott has given Starwood a waiver effective through March 17 to look into the Anbang-led bid. Both Marriott and Starwood stockholders are expected to vote on the merger proposal on March 28.

Marriott said on Monday it is “confident that the previously announced merger agreement is the best course for both companies.”

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