Marriott Beats Back Starwood Suitor

With the fate of such popular high-end meeting and incentive venues as St. Regis, Luxury Collection, W, Westin  and Le Meridien hanging in the balance, planners have been avidly following Marriott International’s quest to acquire Starwood Hotels & Resorts Worldwide since a deal was first unveiled last November.

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Starwood properties are poised to join Marriott’s, like the Kauai Marriott Resort, where the beachfront pool takes center stage.

The stock-plus-cash acquisition, originally valued at $12.2 billion, would create the world’s largest hotel company consisting of more than 5,700 hotels, 1.1 million guest rooms, 30 brands operating in 100 countries with 35 percent of guest rooms outside the U.S. Of particular interest to planners: untold thousands of square feet of meetings and events space.

St. Regis, Luxury Collection, W, Westin  and Le Meridien (all currently part of Starwood) would combine forces in pursuit of planners’ business with Marriott’s equally high-end competitors Ritz-Carlton, J.W. Marriott, Bulgari, Edition, Renaissance and Gaylord.

The takeover had already passed U.S. regulatory scrutiny based on anti-trust concerns. It seemed a done deal, when out-of-the-blue a competing bid surfaced three weeks ago from a much lesser known entity, a consortium led by China’s Anbang Insurance Group. Not only was Anbang’s offer higher, but it was all cash. Starwood’s board quickly accepted, only for Marriott to quickly sweeten its offer.

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The Gwen, A Luxury Collection Hotel, Chicago.

Intense nail biting ensued on Wall Street as well as in Bethesda, Md., and Stamford, Conn. (Marriott and Starwood headquarters, respectively) as Anbang came back with an even higher offer. The ball was back in Marriott’s court yesterday (March 31), when Anbang mysteriously withdrew its bid. Analysts suspect Anbang’s hadn’t locked in its financing package.

Marriott is now moving forward, though the deal ended up costing an extra billion dollars plus. The parties expect to complete the transaction by mid-year.

Astute planners have understood all along that a combined Marriott-Starwood was a mixed blessing. On the one hand, fewer suppliers mean less competition at the negotiating table, particularly regarding rates.

Other concerns:

  • Favorite brands being sold off because of redundancy (Ritz-Carlton prevailing over St. Regis, W rather than Renaissance, Edition absorbing select Le Meridien properties)
  • Long-standing relationships with Starwood sales and convention services managers going by-the-by as Marriott cuts overhead
  • Upheaval in the frequency programs (Long-time members of Starwood’s SPG being given short shrift vis-à-vis Marriott’s own powerful Marriott Rewards)
  • The deal could trigger yet an additional wave of industry consolidation, meaning even fewer competitors for planners to negotiate with. Just since the Marriott-Starwood marriage was proposed in November, AccorHotels has acquired FHRI (the Fairmont, Raffles and Swissotel brands). Hilton Worldwide, Hyatt Hotels Corp. and IHG are cited most often as likely players.

On the plus side, Marriott acquiring Starwood holds out the promise of great consistency for planners down the road when it comes to on-site meetings management, service delivery and advances in technology concerning everything from mobile check-in to quality bandwidth.

Beijing-based Anbang, meanwhile, remains a hospitality industry presence to be reckoned with. The company first surfaced in late-2014 when it made headlines for acquiring the iconic Waldorf-Astoria in New York for nearly $2 billion.

Then last month (March), it acquired a number of trophy U.S. lodging assets as part of a $6.5 billion deal for Strategic Hotels & Resorts. Among the names well-known to planners: Hotel del Coronado in San Diego, Essex House in New York and the St. Francis in San Francisco.

 

Photo credit: 360b / Shutterstock.com; Marriott Resorts International; The Gwen, A Luxury Collection Hotel, Chicago.

 

Bruce Serlen

Bruce Serlen

Bruce Serlen is a veteran travel writer, based in New Jersey, who has written extensively on meetings management and hotel operations. Most recently, he was executive editor at Hotel Business.

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