'When We Looked at the Industry Going Forward, We Think That Size Matters'

By Sourish Bhattacharyya WITH MARRIOTT International sealing a $12.2 billion merger deal with Starwood Hotels & Resorts, beating rumours of Hyatt Corporation being the front-runner in the race to pick up the owner of the St Regis and Sheraton brands, among others, that has been scouting the market for a suitor, it has made itself the world's largest hotel entity. Marriott will now have 5,500 hotels across categories in more than 100 countries, 1.1 million rooms and a combined loyalty club membership of 75 million (54 million from the Marriott Rewards and 21 million from Starwood Preferred Guest programmes), making it a force that has never been seen before in the industry. The announcement pushed the Starwood share value up by 4 per cent in pre-market action at the New York Stock Exchange. Arne Sorenson, according to a media release issued to announce the merger, will remain President and Chief Executive Officer of Marriott International following the merger and the corporation’s headquarters will remain in Bethesda, Maryland. Marriott’s board of directors following the closing of the deal will increase from 11 to 14 members with the expected addition of three members of the Starwood board. ’The transaction is subject to Marriott International and Starwood Hotels & Resorts Worldwide shareholder approvals, completion of Starwood’s planned disposition of its timeshare business, regulatory approvals and the satisfaction of other customary closing conditions,’ the media release added. ’Assuming receipt of the necessary approvals, the parties expect the transaction to close in mid-2016.’ "When we looked at the industry going forward, we think that size matters. And when we had the opportunity at Starwood to combine with Marriott ’ to be the biggest hotel company in the world by a wide margin, we knew that strategically this was a great fit. The industrial logic is superb," Adam Aron of Starwood said while appearing on CNBC's Mad Money show with Jim Cramer. "We think it's a tremendous deal because we can pull these two companies together. We can obviously get cross synergies; that will be the easy part," Sorenson said on the same show. How the merger pans out in India and the rest of the neighbourhood will be interesting to watch. Starwood’s Managing Director (India) and Regional Vice-President (South Asia), Dilip Puri, said in Dhaka on Sunday night that the group was on track with its plan to add 47 new hotels to its existing inventory of 54 in the next three years. Puri was speaking at the formal opening of Le Meridien Dhaka, the first five-star deluxe hotel to open in Bangladesh after a hiatus of eight years and a half. Marriott International, meanwhile, has announced that over the next three to five years, it will have 80 operating hotels in South Asia ’ 28 are already up and running; 52 are under construction. These 80 hotels will include 40 in the Courtyard by Marriott category. The author is Consulting Editor of BW Hotelier.-