In early morning breaking news Marriott announced that they will be acquiring 100% of Starwood’s shares to build the world’s largest hotel company. Pending shareholder approvals and the usual regulatory hurdles, by mid-2016 the combined Marriott and Starwood company will become one. It’s too early to know how they’ll continue the segmentation of brands or if they’ll merge their hotel loyalty programs, but one thing is clear, there’s a new dominant player on the global hotel scene and there will be big changes ahead for travelers.
The combined company will operate 1.1 million rooms in more than 5,500 hotels under 30 different brands across over 100 countries. Make no mistake this is a mega transaction and a bit of a surprise. As recently as last week rumors were swirling that Hyatt and Starwood were close to a deal after IHG and Starwood failed to come to terms earlier in the year. With Marriott emerging as the victor, we can assume there will be lots of celebrations and worries in Marriott’s Bethesda, MD and Starwood’s Stamford, CT, head offices as they cheer the successful transaction but get ready for the integration challenges ahead.
Under the terms of the agreement, at closing, Starwood shareholders will receive 0.92 shares of Marriott International, Inc. Class A common stock and $2.00 in cash for each share of Starwood common stock. On a pro forma basis, Starwood shareholders would own approximately 37 percent of the combined company’s common stock when all is said and done. Both Starwood’s and Marriott’s boards have unanimously approved the deal so it looks like it is going to happen.
J.W. Marriott, Jr., Executive Chairman and Chairman of the Board of Marriott International, said: “We have competed with Starwood for decades and we have also admired them. I’m excited we will add great new hotels to our system and for the incredible opportunities for Starwood and Marriott associates. I’m delighted to welcome Starwood to the Marriott family.”
Loyalty Program Concerns
Currently Marriott Rewards has over 54 million members while Starwood Preferred Guest has 21 million members. Many frequent travelers think SPG is the most valuable and generous loyalty program, while Marriott Rewards has higher elite qualification levels and a reputation for being stingier. How the two programs will be emerged, and even if they will, is anyone’s guest. Our advice for now is to keep earning and redeeming as you normally would if you’re a member of either programs and stay tuned as we’ll bring you all you need to know as the merger rolls out.