The Latest In The Marriott And Starwood Merger

After an intense bidding war, Marriott International is moving closer to its takeover of Starwood Hotels & Resorts.

Shareholders for both companies approved the acquisition on Friday. Marriott’s shareholders voted 97% in favor of the deal; Starwood’s voted 95% in favor.

“Starwood associates were eager to tell us about their renowned brands, their innovative culture, and how proud they were of what they had been a part of building, Marriott President and CEO Arne Sorenson said in a post on LinkedIn. “It was then that Bill [Marriott] and I knew just how great this new company would become.”

Still, the deal needs to pass regulatory reviews in China and the European Union.  Starwood also needs to complete the sale of its vacation ownership business. Marriott said it’s on track to close by mid-year.

Travel professionals have their concerns
Another review is already in the works—and it comes from travel professionals, who are watching the proceedings for signs of change in their own relationships with the new and expanded Marriott.

Suheyl Muskara, president of Premiere Travel Network Inc., in Tallahassee, FL, is concerned because Marriott only accepts IATA cards in order to identify travel agents for commissions and other benefits, where Starwood accepts the Cruise Line International Association (CLIA) card.

“Will Starwood keep its policy,” he asked, “or will it merge the programs like the airlines did? Marriott is the only major hotel chain that doesn’t recognize CLIA.”

Colleen Gillette, owner of New Paltz Travel in New Paltz, NY, said Marriott’s policy stems from tradition, and reinforces the professionalism of travel agents.

CLIA says it does not expect Starwood to change its policy any time soon.

“Starwood currently is a CLIA partner,” a CLIA spokesperson told TMR. “We don’t anticipate the recent Marriott Starwood merger changing this.”

The background
Just a few weeks ago, it looked as though Marriott had been outbid by Anbang Insurance Group for control of the parent of Westin, Sheraton, and W Hotels, until the group unexpectedly backed out, citing unspecified “market considerations.”

Marriott would not have countered Anbang’s final bid, Marriott International executive chairman Bill Marriott said at the World Travel & Tourism Council Global Summit in Dallas last week. Marriott offered a cash-and-stock bid worth $77.94 per share, or about $13.3 billion. The combined company will operate more than 5,500 hotels with 1.1 million rooms worldwide.

Several Marriott and Starwood brands overlap; for example, the Marriott, Renaissance, Sheraton, and Le Meridien brands all fall under the “upper-upscale” tier. Analysts predict Sheraton, which has been called a “tired” brand, is likely to be phased out.

In the Luxury tier, Starwood-owned St.Regis and Marriott-owned Ritz-Carlton also overlap. Additionally, Marriott operates the Autograph Collection, four-and-five star independent hotels, which compares to Starwood’s Tribute Portfolio.

Bjorn Hansen, clinical professor at New York University’s Preston Robert Tisch Center for Hospitality and Tourism, said Marriott needs to determine how it will redefine brands that are less strong, to keep them from competing with one another. Another big question is how the companies will combine loyalty programs—for travelers and for travel agents.

“We are committed to bringing the programs together in a way that builds on the best of both,” Sorenson said in his blog.