You may not have to worry about how your Starwood and Marriott rewards points will work together after all. On Friday, Starwood notified Marriott of its intention to terminate the merger agreement in favor of a new proposal from a consortium of investors led by China-based Anbang Insurance. After reviewing the new $13 billion bid, Starwood’s Board of Directors called the Anbang-backed offer a “superior proposal.”
So this means “the biggest hotel chain in the world” is no longer going to be Marriott, right? Well, not quite. Now, Marriott has until March 28 to submit a revised proposal, and the Bethesda, Maryland-based company is still aiming to make the deal happen. “Marriott continues to believe that a combination of Marriott and Starwood is the best course for both companies and offers the best value to Starwood shareholders,” the company said in a statement.
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Capitalizing On Chinese Travel
There are a number of reasons why US hotel brands are so appealing to a Chinese-backed group of investors. First, the Chinese stock market has been worrisome in recent months, and real estate is a safe place for savings. However, there may be another big factor fueling the proposal. As the middle class continues to grow in China, more members will be traveling internationally, and the number of Chinese travelers visiting the US is expected to surge. In fact, the US Commerce Department projects that there will be 2.8 million Chinese visitors to the US by 2020. That’s a 129-percent increase versus 2015 levels, and it will put China behind only Mexico for the largest number of visitors to the US. Others expect even bigger growth. Avery Booker at China Luxury Advisors predicts seven million Chinese tourist arrivals in the US by 2021. They’ll be coming with a lot of money to spend on hotel stays, too. Booker estimates they will contribute more than $85 billion per year to the economy.
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Will Marriott be able to match the offer? And will Anbang continue to drive the price even higher in a back-and-forth battle? While there are plenty of unknowns to be decided in the coming weeks, one fact seems clear: Starwood’s shareholders will certainly benefit. The stock surged nearly five percent before markets opened on Friday. Stay tuned to PCMA.org for more updates.
This isn’t the only deal creating change for convention professionals. Click here to check out “How Mergers And Acquisitions Are Shaking Up The Industry.”