More consolidation expected in hotel market following Marriott Starwood merger
Yesterday's widely-reported deal, which saw Marriott acquire Starwood for $12.2bn, created the world's biggest hotel company and has led to speculation that other companies will follow suit to better compete with the new behemoth which now oversees 5,500 hotels under 28 hotel brands.
“This merger has created the world’s biggest player in the hotel sector, opening a big gulf between the next largest players, Intercontinental Hotels Group and Hilton," said Mark Wynne Smith, global CEO of JLL’s Hotels & Hospitality Group.
“We will now start to see further merger activity as other hotel groups seek to match the titanic organisation that Marriott and Starwood have created. Consolidation among the major brand companies has been talked about for a number of years and boards are biting the bullet on the need to merge to achieve further growth in a cost efficient manner.
"At the moment there are several corporate hotel transactions at various stages. The merger can also be seen in the context of the growth of companies such as Airbnb."
Financial trading company Spreadex said the deal meant the hotel world ‘had got a lot smaller'.
“The takeover does intensify the pressure on the UK’s hotel companies as they try and fight off the increasing power of this new Marriott/Starwood mash-up,” it said.
Merger impact
The Marriott and Starwood merger will see Starwood's 12 hotel brands, which include Aloft, Le Meridien and Sheraton, join Marriott International's 16.
However, Wouter Geerts, travel analyst at Euromonitor International, said there was a 'possibility' that Marriott may sell off some of Starwood's brands going forward.
"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.
Geerts said the merger would have the biggest impact on the US market, but because brand loyalty was so important within the sector, the company was unlikely to change offerings and price levels for individual brands.
"The major impact of this acquisition for travellers will therefore be around the loyalty schemes of both companies. It has to be seen whether Starwood Preferred Guests will be swallowed up by Marriott Rewards/Hyatt Gold Passport," he added.
