A second look at the Marriott-Starwood merger
At the end of last year, Marriott International, a global mega-hotel chain, agreed to a $12.2 billion deal to buyout its competitor, Starwood Hotels and Resorts Worldwide. Through this merger, Investopedia's Lisa Goetz explained that Marriott will now claim over 1.1 million rooms and 5,500 properties under its expansive international reach. The combined organization will now be the largest hotel chain in the world.
In the past, Goetz reported that Marriott gained around 80 percent of its profits from the United States alone, which made it particularly susceptible to any dips in the economy. However, to achieve its current success and "to achieve profitability beyond the 50 states and compete with alternative lodging solutions companies such as Airbnb, Marriott adopted a growth strategy to expand its reach abroad."
Though both organizations are similar in their approach to loyal customer rewards programs, this area was a cause for great concern among the 21 million Starwood Preferred Guest members, who were worried about how the merger would affect their accrued points. Marriott company officials assured these customers that they will merge with Marriott's reward program, which currently boasts 54 million members.
Both companies' luxury hotel chains are also called into question. Marriott currently operates 20 distinct brands, and Starwood possesses 10. James Latham at International Meetings Review wrote that many questions regarding this monumental merger center on what will happen to each of these hotel chain's unique brands, ranging from Marriott's Ritz-Carlton, the Autograph Collection and Bulgari, along with Starwood's The Luxury Collection and W.
"I think generally we intend to keep them all," Arne Sorenson, president and CEO of Marriott, told Latham. "We think the demographics around luxury travel are positive for the long-term. We'd like to have as many strong brands to plan in this space as possible and make sure we're delivering experiences, which are distinct. We'll work on making sure those brands are defined in a way that one can be sensed to be different than another but still be true to a luxury experience."
Now, in light of the new year and the process of finalizing the deal, Marriott recently announced that last year the chain saw significant growth. Through opening up new resorts across the globe, such as the JW Marriott Venice Resort & Spa and Mandapa in Bali, Indonesia, and seeing substantial expansion through the Starwood merger, Marriott is optimistic that this growth will continue throughout the coming years.
"The contracts we signed in 2015 encompass more than $15 billion of investment by our owners, and represent a tremendous vote of confidence in Marriott's brands," Sorenson explained to Hotel Business. "Marriott's new signings reflect broadly distributed growth across the company's global hotel portfolio, and demonstrate the extraordinary appeal of Marriott's brands to customers, industry-leading innovation, significant scale, highly effective systems, and the best associates in the business all of which attract hotel owners and lenders to our portfolio."
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