Interviews

Marriott creates world's largest hotel firm with $12.2bn Starwood acquisition

4 min read

17 November 2015

Former deputy editor

The world's largest hotel firm, which boasts more than 5,500 venues and 1.1m rooms worldwide, has been created as Marriott has acquired Starwood Hotels & Resorts for $12.2bn.

Never one to stand still, it was only in September that Marriott made a somewhat unexpected step into the virtual reality market with VRoom Service.

The tech-savvy hospitality firm has experimented with mobile over the past couple of years to provide customers with simplified room service and so on, but the VR initiative saw headsets delivered to rooms to digitally provide guests with access to pastures new.

During an interview with Real Business, Karen Olivares, Marriott’s senior director of brand marketing, said: “VR is here to stay. We don’t know what it will look like at the end, but it’s definitely here and I think it’s going to keep reshaping and reinventing itself until it finds a place to settle.

“As far as VR, I feel it’s available to everybody. That’s why it was so important to have the first mover advantage.”

Seemingly that type of innovative thinking can be demonstrated among the M&A department, with Marriott bidding $12.2bn – $11.9bn stock and $340m cash – to acquire Starwood, which has a portfolio including luxury hotel brands such as W and Sheraton.

J.W. Marriott, Jr, executive chairman of the Marriott board, said: “We have competed with Starwood for decades and we have also admired them. I’m excited we will add great new hotels to our system and for the incredible opportunities for Starwood and Marriott associates.”

The takeover has forged the world’s largest hotel company, spanning 5,500 hotels globally and 1.1m rooms, while combined pro forma revenue for the year ended 30 September hit $2.7bn.

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Marriott plans to accelerate the growth of Starwood brands by leveraging its own global development and franchisee relationship strategies. Drawing upon the corporate creativity once more, the teams will be blended together to “combine innovative ideas”.

Currently, the respective loyalty schemes of Marriott and Starwood boast 54m and 21m members and drive repeat business for the firms – a trend expected to grow further still through the merger.

Arne Sorenson, president and CEO of Marriott International, said: “The driving force behind this transaction is growth. This is an opportunity to create value by combining the distribution and strengths of Marriott and Starwood, enhancing our competitiveness in a quickly evolving marketplace.

“This greater scale should offer a wider choice of brands to consumers, improve economics to owners and franchisees, increase unit growth and enhance long-term value to shareholders. Today is the start of an incredible journey for our two companies.

“We expect to benefit from the best talent from both companies as we position ourselves for the future. I know we’ll do great things together.”

The merger will increase the number of Marriott board directors from 11 to 14, as new additions from Starwood join. The deal is set to close in mid 2016.