Marrying up, Part 2

Marriott about to be world’s largest hotel chain,

NEW YORK— Hotel behemoth Marriott International is becoming even larger, taking over rival chain Starwood in a $12.2 billion (U.S.) deal that will catapult it to become the world’s largest hotelier by a wide margin.

The stock-and-cash deal, if completed, will add 50 per cent more rooms to Marriott’s portfolio and give it more unique, design-focused hotels that appeal to younger travellers. The new company would have 5,500 properties with more than 1.1 million rooms around the world, uniting Starwood’s brands, which include Sheraton, Westin, W and St. Regis, with Marriott’s two dozen brands including Marriott’s Courtyard, Ritz-Carlton and Fairfield Inn.

The deal is expected to close in the middle of 2016.

The next-largest hotel company is Hilton Worldwide with 4,500 properties and about 735,000 rooms.

“To be successful in today’s marketplace, a wide distribution of brands and hotels across price points is critical,” Starwood CEO Adam Aron said on a call with Wall Street analysts. “It appeals to travellers wherever they may go, leverages marketing and technology spend (ing) and strengthens frequent traveller loyalty. Today, size matters.”

Marriott and Starwood — like other hotel chains — own very few individual hotels. Instead they manage or franchise their brands to hundreds of individual owners, often real estate development companies. Those individual hotel owners are responsible for setting nightly room rates. It isn’t uncommon for a developer to own a Marriott, Hilton, Hyatt and Sheraton in the same city.

The merger will give Marriott 30 brands and more leverage with corporate travel departments who often look for one giant chain to house all of their employees.