Marriott Takes Over The Star Studded Starwood Caravan For $12.2Bn
Earlier this week, headlines announced that Marriott International would be taking over competitor Starwood, the parent company for Sheraton, W and Westin. The news comes as a massive merger in the hotel industry, one that bumps up Marriott to the top of the hotelier list as the world’s largest hotelier.
The union will end up the new company with over 5,500 properties with over 1.1 million rooms, spread across big names like Fairfield Inn, Ritz-Carlton, Courtyard, Le Meridian, Westin and St. Regis.
Starwood had given onlookers an idea in April that its board was exploring strategic options. “The company has struggled to grow as quickly as its rivals, particularly in “limited service hotels” – smaller properties without restaurants or banquet halls. They are often located near highways and airports or in suburban office parks, The Guardian observes.”
Between the two groups, the merged company will only own a 14% of all the hotel rooms in United States, although its proportion of higher-end rooms would be greater.
But Starwood customers are rather jittery about it.
Like every big hotel chain Starwood has a loyalty program, but the Starwood Preferred Guest is a class apart for the way it pampers the company’s most frequent customers. Even staying 25 nights a year will get you guaranteed 4 p.m. checkouts at most hotels, a benefit that is only offered subject to availability at Marriott. In addition, those staying at least 100 nights a year are assigned a personal travel ambassador to handle their bookings and get advantages like upgrades and arranged customized perks.
Members worry it will become harder to get these bonuses, once the Marriot-Starwood deal is sealed.
Pool of Good News
Marriott announced the Starwood deal just when the hotel was celebrating highest occupancy rates. “During the first nine months of the year, guests filled 67.3% of the available rooms in the US, according to STR – the highest level since the research firm started collecting data in 1987. Guests have been paying an average of $120.35 a night; the previous record, adjusted for inflation, was $119.70 in 2008”, quotes the Guardian.
Adding to the kitty, Marriot says it expects a whopping amount of $200M in annual savings in the second year following the merge.
Although while things have been looking up for Marriott International ever since, Starwood’s shares fell by 5.45% due to the recent terror attack in Paris.
Marriott, based in Bethesda, Maryland, has been active at the merging game since April when it acquired Delta Hotels and Resorts, making it the largest hotelier in Canada.
The Marriott and Starwood boards approved the acquisition unanimously following which; the chains’ investors must now approve it in order to get the deal in action.
Arne Sorenson, Marriott’s president and chief executive, will hold her previous position in combined company as well, whose headquarters will be in Bethesda.
Marriott’s board of directors is to increase from 11 to 14, with the expected addition of three members of Starwood’s board.