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Inside the Marriott-Starwood merger

Posted on December 9, 2015 by

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This past November, Marriott International Inc. acquired Starwood Hotels & Resorts Worldwide Inc. for $12.2 billion. Both hospitality giants combined will create the world’s largest hotel company, joining together 30 brands with more than one million rooms globally. This is the biggest deal the industry has witnessed since Blackstone bought out Hilton for $26 billion in 2007.

The news that Marriott was the buyer came to the surprise of analysts and businesses alike. Rumored suitors prior to Marriott’s acquisition included Hyatt, Hotel Corporation, InterContinental Hotels Group and a few large Chinese companies. Eventually, it came down to Marriott and Hyatt, with Marriott becoming the winner. Although Hyatt posed a similar offer to Marriott, the Starwood board concluded that Marriott’s stock had greater potential.

Both chains have said the new  will not only lead to an increase in global growth, but it will also support the new company in areas like reservations and procurement, profitability, and franchise attractiveness.

This acquisition also means that the Marriott Rewards Program and the highly lauded Starwood Preferred Guest (SPG) program will be blended. There was widespread concern with SPG program members and whether or not their program perks would be done away with. According to Arne Sorenson, Marriott CEO, neither SPG or Marriott Rewards members should worry about losing their coveted points. “They are both extraordinarily powerful programs and we will make them more powerful and relevant,” noted Sorenson.

Marriott International Spokesman Tom Marder added, “Our programs and portfolios complement each other well, and we intend to draw upon the best of both programs to provide more value for our guests and hotels.”

What does this mean for travelers? This will most likely lead to more attractive prices for high quality experiences. The merger will bring economies of scale into play that will help these properties offer better deals in the form of direct room rates or value-added services. Once both loyalty programs combine, members will have a wider choice of rewards to redeem across a larger family of brands. Changes to both programs won’t be seen until 2017. The merger will also be an advantage to Marriott customers, as their loyalty points will grant them access to more luxury brands, such as St. Regis and The Luxury Collection.

There is still uncertainty as to how this merger will impact hotel owners, franchisees, and developers until the transaction is complete, which is expected for mid-2016. Analysts predict other brands will merge to create the size and influence to compete with the largest hotel company in the world.