uploads///MAR Acquisitions

Marriott International in 2015: Expansion through Acquisitions


Sep. 4 2015, Updated 3:06 p.m. ET

Expansion through acquisitions

Marriott International (MAR) has made some key acquisitions since 2009, including brands such as AC Hotels, Gaylord Hotels, and Protea Hospitality Group. Marriott acquired the South Africa–based 116-hotel Protea Hospitality Group for $200 million in April 2014. With this acquisition, Marriott became the largest hotel company in Africa.

Marriott doubled its presence in the Middle East and Africa, or MEA, to become the second-largest company in the region in terms of room numbers. Hilton (HLT) ranks first in the MEA region, followed by Marriott, Starwood Hotels & Resorts Worldwide (HOT), Accor, and InterContinental Hotels Group (IHG).

Marriott forms 0.56% of the Consumer Discretionary Select Sector SPDR Fund (XLY), and Wyndham Worldwide (WYN) forms 0.41% of XLY.

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These acquisitions were made with a view to improving the company’s international reach. About 80% of its hotels are located in the US. So Marriott is adding new brands in Europe, the Asia-Pacific, the Middle East, and Africa, taking advantage of a strong US dollar and seeking out growth opportunities outside the heavily consolidated American hotel market. The company also entered the financial sector with its introduction of the Moxy brand.

Delta Hotels and Resorts acquisition

Marriott signed a $168 million deal with British Columbia Investment Management earlier this year to acquire Delta Hotels, which makes Delta its nineteenth brand. This deal will allow the company to take control of 38 Canadian Delta Hotels and Resorts and 10,000 rooms in more than 30 cities across the neighboring nation. Marriott is now the largest full-service hotel chain in Canada, with more than 120 hotels and 27,000 rooms across the country.

The company believes that the current economic conditions, characterized by cheap oil and a weak dollar, will benefit the tourism industry in Canada. American and international travellers are likely to make more trips to the country, as they’ll enjoy better dollar value and cheaper transportation costs. This should, in turn, boost hotel revenues.

When the Delta transaction closed in April of this year, Marriott’s development pipeline in Canada exceeded 45 properties and 7,300 rooms. And since the acquisition, Marriott has received inquiries regarding the possible conversion of more than 50 hotels in the US and Canada to the Delta brand.

The company plans to fully integrate the Delta hotels with its world-class Marriott.com booking engine and its leading Marriott Rewards platform.


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