Questions Arise Over Marriott-Starwood Megamerger

TSE STAFF

Bethesda, MD –Marriott completed its purchase of Stamford, Connecticut-based Starwood Hotels & Resorts Worldwide on Friday, September 23 in transactions involving cash and Marriott stock. Marriott’s stock was trading at $69.36 on Friday as questions began to surface about the merger’s impact on the industry.

In fact, many question whether the company will address worries from convention planners that were previously expressed when a merger with Anbang appeared imminent. In a January M&C Magazine survey, planners expressed worry that a merger might mirror what developed after some airline mergers: a lack of competitive pricing, less-personal negotiations for group business, and higher rates.

In all, the combined company will have 5,700 hotels and 1.1 million rooms in 110 countries, making it the largest hotel company worldwide, outpacing Hilton Worldwide with roughly 4,700 hotels. The move was a surprise to some who had expected a $14 billion offer from China-based Anbang to be the winner in the bid for Starwood Hotels.

According to the New York Times, a winning bid from Anbang might have engendered a requirement from U.S. officials for Anbang to sell off Starwood properties in ‘sensitive’ areas such as Washington, D.C. near the Capitol and White House. But a more likely scenario was that Anbang faced a financing challenge for its bid, according to the Times.

After the news was announced, Marriott President and CEO Arne Sorenson was quick to say that Marriott intends to keep all 30 brands represented in the $13 billion deal. Third-party property owners will be required to keep their brand agreements through the end of the current contract.

That’s good news for convention and trade show organizers who heavily rely on many of those brands for hotel rooms and/or meeting and convention space for their events.

By September 26, Marriott International already had its procedures for combining the Marriott Rewards and Starwood Preferred Guest programs prominently placed on its website so that users of both programs could quickly combine their memberships. New perks will include special premium deals like SPG luxury suites at Madison Square Garden in New York and Staples Center in Los Angeles—perks that planners may seek for executive attendees.

Upon closing the deal, Sorenson told Travel Weekly that “Marriott will deliver an unparalleled guest experience with more hotels in more global destinations, an unrivaled range of comprehensive accommodations to suit every traveler, and the industry’s best loyalty programs.”

The combined entity will have a broader array of upscale brands that include the Ritz Carlton, Bulgari, JW Marriott, St. Regis, and W, many of which have a presence in top trade show destinations.

Reach Arne Sorenson at (301) 380-3000 or arne.sorenson@marriott.com