Marriott and Starwood get a room for $12 billion

Adriene Hill Nov 16, 2015
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Marriott and Starwood get a room for $12 billion

Adriene Hill Nov 16, 2015
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Marriott International said it will buy Starwood Hotels and Resorts Worldwide,  in a cash and stock deal worth $12.2 billion.  The merger will make Marriott the world’s largest hotel company, with more than a million hotel rooms around the world. 

Marriott already operates a large portfolio of properties, including Ritz Carlton, JW Marriott, and Courtyard. Starwood will add 11 brands to the mix, including St. Regis, W Hotels, Sheraton and Westin. 

It’s a marriage that should yield some pretty significant economies of scale.

There’s a lot of money to be saved by combining hotel operations, such as “property management systems, reservation systems, booking systems, websites, accounting, marketing, said Steven Carvell, an associate professor at Cornell University’s School of Hotel Administration.

But Carvell said Marriott may not get a whole lot of additional leverage from its bigger orders for things like bath towels and little shampoos“Once you’re already the size of Marriott, I don’t know how much more of a discount you’re going to get,” he said. “But it certainly won’t hurt them.”

But what about us travelers? Will the merger hurt us?

It shouldn’t, said associate professor A.J. Singh, from The School of Hospitality Business at Michigan State University.The good news about the hotel industry is that there are still a lot of independent hotels in our business.”

Marriott may soon have a million rooms worldwide, but there are more than five million rooms in the U.S. alone, Singh said. Airbnb is also adding to the competition.

As for the different rewards programs, it is likely Marriott will do it’s best to keep Starwood’s SPG members happy. Part of what Marriott is buying in the deal is the loyalty of Starwood’s often young and affluent travelers.

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