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Fri 23 Sep 2016 08:35 AM

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Marriott deal approval doubles hotel giant's business in Middle East and Africa

CEO Arne Sorenson says acquisition of Starwood means Marriott now has "real scale" in the region

Marriott deal approval doubles hotel giant's business in Middle East and Africa
Arne Sorenson, chief executive of Marriott International

The completion of Marriott International’s acquisition of Starwood Hotels & Resorts has significant consequences for the Middle East and Africa, in one swoop doubling the hotel giant’s operations in the region.

On Friday morning, Marriott announced that the closure of the deal to create the world’s largest hotel chain, a $36 billion giant with more than 5,700 hotels and 1.1 million rooms.

“We’re about doubling overnight, from about 25,000 rooms to about 52,000 rooms,” Marriott chief executive officer Arne Sorenson told Arabian Business in a telephone interview.

“It’s 238 hotels open and I think we’ve got another 40,000 rooms and 150 hotels in the pipeline, so when those hotels open we will be fast approaching 100,000 rooms. That gives us real scale in the Middle East and Africa.”

Marriott now oversees 30 brands, including The Ritz-Carlton, St Regis, Sheraton, W Hotels and Westin.

The merger was approved following approval from the Chinese antitrust regulator on 20 September.

China's Ministry of Commerce (MOFCOM) was the only review pending after the companies secured premerger approvals from more than 40 countries including the United States, the European Union and Canada.

"It’s a big deal and it’s going to take a significant period of time for us to fully integrate these companies," Sorenson added. "What we want to do is make sure that we get the best from both platforms and we know that Starwood has done very well in innovation and it’s done very well in marketing and brands, particularly when you think about brands like W which are very powerful brands in the eyes of guests and hotel owners."

Sorenson also said that Marriott’s size would enable the company to operate more efficiently and drive greater economies of scale.

“I think the biggest thing that size delivers for us is choice for our guests,” he said. “We think that Marriott and Starwood already had the two leading loyalty programmes in the industry. A significant piece of that is the choice that each portfolio has offered members.

“We now can offer even dramatically more choice and that is about the number of countries, of course, the number of hotels, it also goes back to this brand question. So if you want a luxury experience, or a lifestyle experience or you need an economy experience, we’ve got a place for you to stay.”

The chief executive said that Marriott would be investing in its loyalty platform, and would also be focusing on delivering a stronger performance from the firm’s hotel owners.

“That’s about both topline growth by taking more share of wallet from our guests and about operating more efficiently because of the economies of scale we think we can deliver, which in turn should drive better new unit growth for the rest of the years ahead,” Sorenson added.

Starwood shares have now ceased trading on the New York Stock Exchange, with its shareholders receiving $21.00 in cash and 0.80 shares of Marriott International, Inc. Class A common stock for each share.

Arabian Business: why we're going behind a paywall

Ken S Khan, CHA 3 years ago

Marriott and the Starwood merger is certainly a giant and bold move in the hospitality industry. Congratulations' Mr. Bill Marriott and Arne Sorenson. I had worked with both great companies.