Marriott International announced today that it is acquiring Starwood Hotels & Resorts Worldwide for $12.2 billion, creating the world’s largest hotel company. Once the stock-and-cash deal is completed, it will add 50 percent more rooms to Marriott’s portfolio.
Marriott CEO Arne Sorenson said in a conference call this morning that there were two major business reasons Marriott decided to acquire Starwood, even after Marriott expressed no interest of a merger back in April. The first major reason was that Starwood lost 15 percent of shareholder value since that time. Sorenson also said that the room-count addition would be beneficial to Marriott short term, as big mergers are happening in the online travel booking space and Google is moving into travel distribution.
The new company would have 5,500 properties, including 1.1 million rooms, that would span the globe in more than 100 countries. The merger would create a more comprehensive portfolio for the company—one key advantage being Starwood’s lifestyle-focused brands helping attract a younger travel audience, while Marriott’s strong luxury and select-service brands as well as its expertise in the convention and resort segment will continue to attract other sectors. It would combine Starwood’s brands—Sheraton, Westin, W and St. Regis, to name a few—with Marriott’s two dozen brands to create 30 brands in the marketplace. Loyalty programs for both companies would also become stronger as the 54 million members of Marriott Rewards and 21 million members of Starwood Preferred Guest would join together.
The transaction is still subject to shareholder approvals from both companies as well as completion of Starwood’s planned supposition of its timeshare business, regulatory approvals and the satisfaction of other customary closing conditions. The transaction is expected to be finalized in mid-2016, so no major changes to the companies would be made until that time. The next-largest hotel company would be Hilton Worldwide, with 7,400 properties and about 720,000 rooms.