Marriott's bid for Starwood will add the St. Regis hotel to its brand portfolio which currently... [+]
The big news in the hotel industry today is Marriott's bid to buy rival Starwood for a whopping $12B.
It’s the biggest deal the industry has seen since Blackstone's $26 billion leveraged buyout of Hilton in 2007.
While Starwood’s executives assured shareholders the deal is best possible outcome for the company members of the hotel’s preferred guest program, SPG, are wondering what happens to their coveted points.
Starwood, which operates brands including W, Westin, Sheraton and the St. Regis, is considered among travelers as having a more elite hotel rewards program. Late check-outs and readily available suite upgrades have helped Starwood maintain a loyal SPG membership base—one that Sorenson says attracted Marriott to Starwood in the first place.
It seems neither SPG nor Marriot Rewards members have anything to worry about as far as the programs go. “They are both extraordinarily powerful programs and we will make them more powerful and relavant,” Sorenson says, noting that SPG members will not lose their points.
Marriott first looked at a potential deal with Starwood back in April. Sorenson says his company swept in quickly after its rival said it was considering a sale but decided it was an unattractive deal. That changed in following months.
“We watched what was happening in market and saw a shift in the equity values of both companies. The economics improved substantially,” Sorenson tells FORBES. Since April, shares of Starwood have dropped 15% while Marriott shares have fallen 9%
The move to buy Starwood is also a defensive one for Marriott. With online travel providers getting bigger,
Combined, the companies operate or franchise more than 5,500 hotels with 1.1 million rooms worldwide. The combined company’s pro forma fee revenue for the 12 months ended September 30, 2015 totals over $2.7 billion.
One area Marriott expects to see big growth is in its luxury segment. Brands like Bulgari and Ritz Carlton belonged to Marriott. Come mid-2016, it can also claim the St. Regis. Time will tell how many points you'll earn by staying there.
