flexiblefullpage -
billboard - default
interstitial1 - interstitial
catfish1 - bottom
Currently Reading

Marriott to acquire Starwood for $12.2 billion

Hotel Facilities

Marriott to acquire Starwood for $12.2 billion

The combination would form the world’s largest hotel company, and bring together two growth-minded businesses.


By John Caulfield, Senior Editor | November 17, 2015
Marriott to acquire Starwood for $12.2 billion

Marriott Hotel in Miami. Photo: Mark Altstiel/Creative Commons.

Two of the world’s expansion-minded hotel chains are joining forces, as Marriott International has agreed to acquire Starwood Hotels & Resorts Worldwide in a deal valued at $12.2 billion. Marriott will pay $11.9 billion in stock and $340 million in cash. Marriott will also assume Starwood’s recourse debt.

If this deal, which Marriott and Starwood signed on Nov. 17, closes as expected, it would create the world’s largest hotel company, with 5,500 properties and more than 1.1 million rooms, operating under 30 brands in more than 100 countries.

Marriott, based in Bethesda, Md., and Starwood, based in Stamford, Conn., are big franchisors, with most of Marriott’s properties and about half of Starwood’s 1,270 hotels operating as franchises owned by private investors.

There are 54 million members in the Marriott Rewards program, and 21 million in Starwood’s Preferred Guest loyalty program. These programs differ in complexity and how points are earned and rewarded, so they will need to be reconciled as a result of this deal, which is expected to close by next summer.

Marriott’s president and CEO, Arne Sorenson, projected that this combination to generate $200 million in annual savings by the second full year after this deal is closed, although he did not provide specifics. Industry observers expect there could be some brand shakeouts.

Starwood will spin off its timeshare business.

Starwood has been on the block since last sprint, and its management had been talking with several investors and competitors about merger possibilities. The Los Angeles Times and other news outlets report that as recently as last month, three Chinese companies had expressed interest in acquiring the hotelier.

 

Phoenix's Sheraton Hotel. Marriott will look to improve growth of Sheraton, a Starwood brand. Photo: Kevin Dooley/Creative Commons.

 

Sorenson told CNBC that his company and Starwood started negotiating about seven months ago, and signed nondisclosure agreements. “Initially, we were dissuaded. We thought the company was expensive and we backed away a bit,” he recalled. But Starwood became more attractive to Marriott as “the months went by and we saw a relative shift in the value of the company.” Starwood’s stock price lost about 15% of its value during the negotiating period.

“Our board concluded that a combination with Marriott provides the greatest long-term value for our shareholders and the strongest and most certain path forward for our company,” said Bruce Duncan, Starwood’s chairman. “Starwood shareholders will benefit from ownership in one of the world's most respected companies, with vast growth potential further enhanced by cost synergies.”

Marriott plans to accelerate the growth of Starwood’s brands, which include such well-known names as Sheraton and Westin, and boutique brands like W and Aloft. “The combined company will have a broader global footprint,” it stated.

In its most recent quarterly report to shareholders, released on October 28, Marriott anticipated that its room count in 2015 would increase by 7% to 8%, including 9,600 rooms from its earlier acquisition of Delta Hotels. Marriott expected its room count to increase by another 8% in 2016. “Nearly 40% of our more than 260,000-room pipeline is already under construction,” the company stated. 

The big question for AEC firms with hospitality practices is how the Marriott-Starwood combo might affect the two companies’ design and construction choices, and whether this deal triggers more mergers-and-acquisition activity in that sector, further reducing their client pool.

Related Stories

| Nov 8, 2011

Transforming a landmark coastal resort

Originally built in 1973, the building had received several alterations over the years but the progressive deterioration caused by the harsh salt water environment had never been addressed.

| Nov 3, 2011

GREC Architects announces opening of the Westin Abu Dhabi Golf Resort and Spa

The hotel was designed by GREC and an international team of consultants to enhance the offerings of the Abu Dhabi Golf Club without imposing upon the dramatic landscapes of the elite golf course.

| May 25, 2011

Hotel offers water beds on a grand scale

A semi-submerged resort hotel is the newest project from Giancarlo Zema, a Rome-based architect known for his organic maritime designs. The hotel spans one kilometer and has both land and sea portions.

| Mar 17, 2011

Hospitality industry turns to HTS Texas for ‘do not disturb’ air conditioned comfort

Large resort hotels and hospitality properties throughout the Southwest have been working with local contractors, engineers and HTS Texas for the latest innovations in quiet heating, ventilating and air conditioning (HVAC) equipment. The company has completed 12+ projects throughout Texas and the Southwestern U.S. over the past 18 to 24 months, and is currently working on six more hotel projects throughout the region.

| Mar 11, 2011

Holiday Inn reworked for Downtown Disney Resort

The Orlando, Fla., office of VOA Associates completed a comprehensive interior and exterior renovation of the 14-story Holiday Inn in the Downtown Disney Resort in Lake Buena Vista, Fla. The $25 million project involved rehabbing the hotel’s 332 guest rooms, atrium, swimming pool, restaurant, fitness center, and administrative spaces.

| Mar 11, 2011

Guests can check out hotel’s urban loft design, music selection

MODO, Advaya Hospitality’s affordable new lifestyle hotel brand, will have an urban Bauhaus loft design and target design-, music-, and tech-savvy guest who will have access to thousands of tracks in vinyl, CD, and MP3 formats through a partnership with Downtown Music. Guest can create their own playlists, and each guest room will feature iPod docks and large flat-screen TVs.

boombox1 - default
boombox2 -
native1 -

More In Category




halfpage1 -

Most Popular Content

  1. 2021 Giants 400 Report
  2. Top 150 Architecture Firms for 2019
  3. 13 projects that represent the future of affordable housing
  4. Sagrada Familia completion date pushed back due to coronavirus
  5. Top 160 Architecture Firms 2021