Marriott and Starwood, negotiating for months, reached a $12.2 billion deal, and earlier this week received approval for the merger from the Chinese Ministry of Commerce, the last regulatory consent required.
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The now puts it well ahead of competitors Hilton Worldwide (NYSE: HLT – news) and InterContinental Hotels Group. Buying Starwood increases Marriott’s market share outside the USA and gives it more luxury and lifestyle hotels, including the W chain.
Now the chain can offer even more choices for the traveler giving them more choices in location, in the type of hotel and a choice in what they want to spend, said Arne Sorenson the CEO at Marriott.
While consultancy company CWT Solutions Group said the merger could bring prices up in certain markets, calling it a “game changer” for the industry, Marriott does not see prices changing in the Asia-Pacific.
The arrangement will mean Starwood shareholders get $21 in cash and 0.8 of a Marriott share for each share they own.
U.S. based company, Starwood Hotels & Resorts Worldwide Inc.’s (HOT)’s latest closing price distance was 5.66% from the average-price of 200 days while it maintained a distance from the 50 Day Moving Average at 0.01% and 0.88% compared with the 20 Day Moving Average.
There are still many details to work out. Marriott uses an asset light franchising model to better leverage corporate staff to support franchisees. Starwood has been selling off properties, while singing long-term management agreements for those same hotels. The Company now owns 89 properties in the United States and 9 properties internationally totaling approximately 54,500 rooms.
“There is always a market for the St. Regis in NY”, he said, adding that other assets in the portfolio have comparable stature.
A logo sign outside of the headquarters of Marriott International, Inc, in Bethesda, Maryland on Oct 18, 2015. The hotelier’s 30 brands, spanning the moderate to luxury tier, operate in more than 110 countries.
The overall global travel market – for both domestic and worldwide travel – is increasing because of the growing middle class in many developing countries, Mr. Sorenson said.
“I think so. Every one of them has hotels in them”, he noted.
Marriott’s loyalty program stands to reap benefits from a larger footprint, he added. Marriott has partnerships with Chase and United Airlines, while Starwood has partnerships with American Express, Delta Air Lines and Uber.
Gary Leff, who writes about points and miles at ViewFromTheWing.com, called the three-to-one exchange rate of Starwood points to Marriott points “just right”.
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The combined program opens the door to a number of new properties.
