Marriott International buys Starwood creating world's biggest hotel company

The merger, which will see the company operate more than 5,500 hotels across the world, was unanimously approved by the boards of both companies earlier today (16 November). 

Arne Sorensen, who will remain in his position as president and chief executive of Marriott International following the merger, said buying up a competitor in the hotel space would enhance Marriott's 'competitiveness in a quickly evolving marketplace'. 

"This greater scale should offer a wider choice of brands to consumers, improve economics to owners and franchisees, increase unit growth and enhance long-term value to shareholders," he said. "Today is the start of an incredible journey for our two companies. We expect to benefit from the best talent from both companies as we position ourselves for the future." 

The move, which is subject to approval by shareholders, will see three members of Starwood's board of directors joining the main board. Marriott's headquarters will remain in Bethesda, Maryland. 

Adam Aron, interim CEO at Starwood Hotels & Resorts Worldwide, said: “The combination of our two companies brings together the best in innovation, culture and execution.  Our guests and customers will benefit from so many more options across 30 hotel brands, while our hotel owners and franchisees will derive value from our combined global platform and efficiencies.  We are also delighted that our associates will have expanded opportunities as part of a larger organization that is consistently recognized as one of the best companies to work for in the world.”

Surprise​

Wouter Geerts, travel analyst at Euromonitor International said the news had come as a surprise because of previously advanced talks between Starwood and Hyatt.

"Marriott, however, seems in a better position to acquire Starwood," he said. "Unlike Hyatt – which value sales were dwarfed by Starwood – Marriott’s value sales almost double those of Starwood. The planned acquisition will make the combined company the uncontested top hotel player."

Marriott has expanded rapidly over the last few years, acquiring the Canadian operator Delta Hotels in January, launching its new Moxy brand in 2014, and rapidly expanding its Autograph collection.

Geerts said both brands had also focused heavily on using technology to improve their offerings over the last year and were adept at changing to consumer demands.

"The announcement of this acquisition continues the consolidation trend in the travel industry. It is unlikely that it stops here, and there is a possibility that Marriott will be looking to sell off some of Starwood’s brands. Sheraton, Starwood’s flagship brand has been performing poorly in recent years, but whether Marriott will put Sheraton up for sale, or rather use its expertise and capital to make it profitable again, is to be seen," he said.