Marriott Completes Starwood Acquisition
Ten months after heated negotiations and prolonged approval seeking from regulators, Marriott International today closed on its $13.3 billion deal to acquire Starwood Hotels & Resorts Worldwide. Planners can now expect the competitive landscape in the hotel industry to change dramatically, as it will for consumers and hotel owners and developers generally.
The acquisition makes Marriott the world’s largest hotel company with 5,800 hotels in its portfolio, accounting for more than 1.1 million guest rooms in roughly 100 countries. The number of hotels in the respective companies’ pipelines is equally impressive. Those 1,900 hotels will add more than 330,000 guest rooms to the world’s hotel inventory.
The combined company—dubbed “Marwood” by industry onlookers—will offer planners and other customers 30 brands. Planners of high-end events will most likely focus on the respective companies’ luxury and upper upscale products. On the Marriott side, that means Ritz-Carlton, Bulgari, Edition, J.W. Marriott, Renaissance and Gaylord Hotels. Starwood, meanwhile, brings to the table St. Regis, W Hotels, Westin, Le Meridien and Sheraton Grand.
In addition, both Marriott and Starwood each also have a high-end soft brand in their portfolios: Autograph Collection (Marriott) and Luxury Collection (Starwood), soft brands being composed of independent hotels, many group friendly (Cosmopolitan in Las Vegas for Autograph is one example, The Phoenician in Scottsdale for Luxury Collection, another).
With shareholders of both Marriott and Starwood signing off on the deal months ago and U.S. and European regulatory agencies also giving the deal a green light, the last hurdle was China, namely the Chinese Ministry of Culture. A thumb’s up from China was important since both companies have been aggressively expanding there in recent years.
One possible reason for China’s reticence to sign off might be traced to the role of China’s Anbang Insurance Group, which made a last-minute bid for Starwood after Marriott already thought it had the deal sewn up. But Anbang’s bid soon fizzled and any sour grapes theory is speculation.
Marriott has said all along that the integration of the two companies will be complicated and will take time to complete. Yet Marriott originally thought the deal would be done mid-year this year, so the closing is two months later than expected, meaning that the Marriott team has had added time to develop more detailed integration plans and timelines.
Will all 30 brands survive intact or will some be combined or spun off? Will individual hotels be rebranded in light of specific market conditions? Will Marwood’s strategy vis-a-vis the group market change significantly, considering there’s one fewer competitor bidding on a given piece of business? The company’s already strong national accounts team will only get stronger. Will planners’ existing relationships with regional and property-based sales managers inevitably change as well?
One potentially even bigger question industry-wide: Will the merger of these two industry giants trigger a wave of even more consolidation as the remaining large players in the hotel space assess their standing in the new post-Marwood world order?
One area of contention facing Marriott as it begins the integration process has already surfaced: how to best combine each company’s already powerful frequent guest program? Elite-level members of Starwood Preferred Guest (SPG) haven’t been shy about expressing their concern that they’ll be given short shrift as SPG (with 22 million members) is integrated into the even larger Marriott Rewards (35 million members). Planners well know how much attendees and event participants like their points. Marriott today said it would match member status across the two programs, hopefully allaying the SPG folks’ concerns.