Marriott to buy hotel rival Starwood for $12.2 billion

Marriott International is buying rival hotel chain Starwood for $12.2 billion in a deal that will secure its position as the world's largest hotel chain. The new company would have 5,500 properties with more than 1.1 million rooms around the world.

Gene J. Puskar/AP/File
A Marriott hotel in Cranberry Township, Pa. Marriott International announced Monday, Nov. 16, 2015, it is buying rival hotel chain Starwood for $12.2 billion in a deal that will secure its position as the world's largest hotelier.

 Marriott International is buying rival hotel chain Starwood for $12.2 billion in a deal that will secure its position as the world's largest hotelier.

The stock-and-cash deal, if completed, will add 50 percent more rooms to Marriott's portfolio and give it more unique, design-focused hotels that appeal to younger travelers.

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 next-largest hotel company is Hilton Worldwide with 4,400 properties and about 720,000 rooms.

Back in April, Starwood announced its board was exploring strategic options for the hotel company. The Stamford, Connecticut, company has struggled to grow as fast as its rivals, particularly in "limited service hotels," smaller properties which don't have restaurants or banquet halls. They are often located on the side of the highway, near airports or in suburban office parks.

There was speculation in the markets about a potential deal with Holiday Inn owner Intercontinental Hotels Group and more recently Hyatt Hotels Corp. But in the end, it was Marriott who prevailed.

The deal comes at a time of record hotel occupancy and rates.

During the first nine months of this year, guests filled 67.3 percent of the available rooms in the U.S., according to research firm STR. That's the highest level since STR started collecting data in 1987. Guests paid an average of $120.35 a night so far this year. The prior record, adjusted for inflation, was $119.70 in 2008.

Marriott, based in Bethesda, Maryland, has been aggressively growing. In April, it acquired Canadian chain Delta Hotels and Resorts, helping it become the largest hotel company in Canada.

The boards of both companies approved the acquisition unanimously, which now must be approved by investors in both hotel chains.

Arne Sorenson will be president and CEO of the combined company and the headquarters will be in Bethesda. Marriott's board of directors following the closing will increase from 11 to 14 members, with the expected addition of three membersStarwood's board.

Marriott said it expects to deliver at least $200 million in annual savings in the second full year after closing.

You've read  of  free articles. Subscribe to continue.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.