Marriott-Starwood Merger to Change Hospitality Landscape in India

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Marriott-Starwood merger to change hospitality landscape in India The Marriott-Starwood deal is set to create the world’s largest hotel company, and also make the combined entity the biggest player in India with a room invetory of 1.1 million, in 5,500 hotels globally. Thus, beating the market leader in India, Taj Hotels. The deal, expected to be closed next year, is a USD 12.2 billion merger. Arne Sorenson will remain President and CEO of Marriott International following the merger and Marriott’s headquarters will remain in Bethesda, Maryland. Marriott’s Board of Directors following the closing will increase from 11 to 14 members with the expected addition of three members of the Starwood Board of Directors, the statement added. The combined entity will shake up the hospitality industry in India, since Marriott-Starwood will now have the advantage of scale, a far wider brand portfolio, as well as distribution strength, riding on 2 very strong loyalty programmes — Marriott Rewards (54 million members worldwide) and SPG Rewards (21 million members). According to the HVS report as of August 2015, Taj Resorts and Palaces (including Ginger) has over 13,000 rooms, followed by ITC Hotels (including Fortune) with over 9,000 rooms. Carslon Rezidor ranked 3rd in terms of number of rooms with Marriott and Starwood coming in at 4th and 5th places with over 8,000 and over 7,000 rooms, respectively. Post acquisition, the entity will overtake Taj in sheer scale. Starwood has 47 operating hotels in India and 37 in the pipeline while Marriott has 30 operating and 45 in the pipeline. Currently Marriott operates 7 brands (The Ritz Carlton, JW Marriott, Renaissance, Marriott Hotels and Resorts, Marriott Executive Apartments, Courtyard and Fairfield), while Starwood too has 7 brands (St Regis, Luxury Collection, Le Meridien, Westin, Sheraton, Aloft, Four Points by Sheraton. Under the terms of the agreement, at closing, Starwood shareholders will receive 0.92 shares of Marriott International, Inc Class A common stock and USD 2.00 in cash for each share of Starwood common stock. On a pro forma basis, Starwood shareholders would own approximately 37% of the combined company’s common stock after completion of the merger using fully diluted share counts as of September 30, 2015. “One-time transaction costs for the merger are expected to total approximately $100-150 million. Transition costs are expected to be incurred over the next two years. They cannot be estimated at this time, but are expected to be meaningful,” the company said in a global statement. The transaction is subject to Marriott International and Starwood Hotels & Resorts Worldwide shareholder approvals, completion of Starwood’s planned disposition of its timeshare business, regulatory approvals and the satisfaction of other customary closing conditions. Assuming receipt of the necessary approvals, the parties expect the transaction to close in mid-2016. .

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