Marriott International has expanded its footprint through several lucrative mergers and acquisitions over the past few years. But it hasn’t done anything like the deal it announced today (Nov. 16).
The planned acquisition of Starwood Hotels & Resorts for $12.2 billion would boost Marriott’s room count by more than 50% and create the world’s largest hotel company by locations and global reach.
Starwood, which owns brands including the St. Regis and W hotels, had been fishing for a buyer since April. Marriott CEO Arne Sorenson indicated he wasn’t interested at the time, but as Starwood sharpened its focus on appealing to younger travelers—around the same time that it put itself on the block, Starwood also launched the Tribute Portfolio, a collection of independently run hotels catering to affluent millennials—Marriott apparently grew more intrigued.
“Even before our discussions with Starwood, we were focused on increasing our appeal to younger travelers, expanding our lifestyle brand offerings and introducing new designs to appeal to change in customer expectations and tastes,” Sorenson said on a conference call with investors. “Given Starwood’s leaderships in this area, we expect the combined companies will be even stronger with the best talent of both companies.”
A combined Marriott and Starwood company would have:
1.1 million rooms
$31.4 billion in combined stock market value
100-plus countries of operation
It would be a big step up from the next-largest hotel chain, Hilton Worldwide, which has runs more than 4,500 properties with 745,000 rooms across 95 countries and territories.
The Marriott-Starwood deal also marries two enormous loyalty programs, although gauging the combined size is difficult, since the 54 million combined membership in Marriott’s Marriott Rewards and The Ritz-Carlton Rewards overlap with Starwood’s 21 million Starwood Preferred Guest members.
Marriott agreed to pay Starwood investors roughly $72 a share—made up of 0.92 shares of Marriott Class A common stock and $2 in cash for each share of Starwood common stock—plus $7.80 per Starwood share from the planned spinoff of the company’s timeshare business.