Everyone’s talking about the big news from the hotel world: a $12.2 billion deal between Marriott and Starwood
. While there is plenty of work to do to finalize the details of Marriott’s acquisition of Starwood, here are three key pieces of information we already know.
1) Marriott is very serious about its global growth strategy.
There’s no question that more guests are going to more places. As business and leisure travelers explore new regions of the world, Marriott has been making significant strides toward establishing a presence wherever they turn. At the end of 2013, Marriott made news with its plans to acquire South African-based Protea Hotels
. Earlier this year, the brand’s offer to acquire Toronto-based Delta Hotels and Resorts made more headlines. Now, with the Starwood acquisition, Marriott is taking in a brand that has already been more focused on developing properties in emerging markets. With recent efforts to increase supply in India, China and the Middle East, Starwood will greatly expand Marriott’s international infrastructure. In fact, Arne Sorenson, President and CEO of Marriott International, said that roughly 37 percent of the combined rooms with be located outside the United States. He’s particularly excited about the potential at properties like Starwood’s St. Regis brand.
“From a global perspective, we think the future for luxury is very strong,” Sorenson said on a call with the investment community.
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2) This deal is designed to appeal to young guests.
Every hotelier seems to be chasing the magical word: Millennials. As traditional properties compete with Airbnb
, Starwood’s existing portfolio includes a number of lifestyle brands that will increase Marriott’s ability to attract the next generation of travelers. Aloft, W Hotels and Design Hotels will all be under the Marriott umbrella once the acquisition is completed. Sorenson also highlighted that Starwood’s SPG rewards program tends to skew toward younger travelers.
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3) More rooms and more brands equal more money to invest.
Marriott’s name wasn’t initially part of the Starwood acquisition rumors that have been swirling throughout the past year. So what changed? Sorenson and Marriott became believers in the adage that bigger is indeed better. Sorenson highlighted that Marriott knows it will need to continue to make big investments in new technology in the future. After seeing some consolidation in the OTA space, the Marriott team began to think that this kind of expansion was essential to compete.
“By being bigger, we have more resources to [invest in new technology] cost-effectively,” Sorenson said.
As the details of the deal become public, the PCMA.org editorial team will be monitoring the news. Stay tuned to PCMA.org for updates on what it will mean for your rewards points and your meeting.