Leading Meeting Professionals

Professional Convention Management Association

March 21 2016

The Marriott-Starwood Merger Is Back On

David McMillin

The merger to create the world’s largest hotel chain is back in business. On Monday, Marriott and Starwood signed an amendment to their merger agreement. After accepting what it deemed a “superior proposal” from an Anbang-backed group of investors last week, Starwood gave Marriott until March 28 to submit a new offer. The Bethesda, Maryland-based company didn’t waste any time. The new transaction is worth approximately $13.6 billion with 20 percent of the offer in cash and the rest in Marriott stock.

“Marriott’s revised offer provides the highest value to our shareholders through long‐term upside potential from shared synergies and ownership in one of the world’s most respected companies, as well as significant upfront cash consideration,” Bruce Duncan, Chairman of the Board of Directors of Starwood Hotels & Resorts Worldwide, said in a statement.

Arne Sorenson, Marriott’s President and CEO, reiterated his excitement for the merger and highlighted the benefits this massive chain will have for guests. “The company will have a broader global footprint and the most powerful frequent traveler programs in the industry, strengthening Marriott’s ability to serve guests wherever they travel,” he said.

MORE: 3 Things You Should Know About The Marriott And Starwood Deal

More Cost Savings

In addition to paying more for Starwood, Marriott’s new proposal displays more confidence in the ability to reduce operational expenses. Marriott says it can achieve $250 million in annual cost synergies within two years of closing the transaction — a $50 million increase from the initial announcement in November 2015.

What’s Next

The past week has seemed like a live auction with two bidders, but it doesn’t look like that process will continue. Under the amended agreement, Starwood is no longer allowed to engage in discussions or negotiations with the Anbang-led group of investors. Now, the companies have passed along the agreement for review by their respective stockholders. If all goes as planned, the transaction should be officially complete by the middle of 2016.

So what will a new hotel company with more than 1.1 million rooms around the world mean? Bjorn Hanson, Professor of Hospitality and Tourism at New York University, told Reuters that the two sides will have an unprecedented amount of guest data. “The power of the information and guest relationships to me is the greatest value that would come out of this for Marriott,” Hanson said. “Control of so much information enables for there to be better targeted marketing and pricing.”

What will a merger like this mean for meetings? Click here to learn what Dave Lutz, CMP, predicts for group business.

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