Largest hotel chain
The Marriott-Starwood merger is historic because it creates the world’s largest hotel chain. Spanning across 110 countries, it will have more than 5,700 properties. Combined, the properties will have a total of 1.1 million rooms—almost 40% more than its closest rival Hilton Worldwide (HLT). It also means that globally, the combined duo will control one out every 15 hotel rooms. Currently, Hilton has 773,000 rooms, followed by Intercontinental Group (IHG) with 766,000 rooms.
The merger also brings together many big brands—a total of 30 brands, in fact. The brands include big names from Marriott (MAR) like Ritz-Carlton, Marriott, and Courtyard along with Starwood’s Sheraton, Westin, W Hotel, and St. Regis.
However, the journey hasn’t been easy. Initially, Starwood received interest from many players including Hilton, Hyatt (H), Intercontinental Group, Marriott, and Chinese insurance group Anbang. Marriott and Anbang were the only ones that lasted, but they ended up in a bitter bidding war. The war ended when the Chinese company suddenly withdrew its offer three days after the latest offer. To learn more, read The Marriott-Anbang Takeover Tussle for Starwood.
According to Marriott’s final offer, Starwood shareholders would receive $21 per share in cash and 0.80 shares of Marriott for each share they hold of Starwood. This values Starwood at ~$13.6 billion—a significant premium to Marriott’s initial offer of $12 billion in November 2015.
Investors can gain exposure to Marriott by investing in the First Trust NASDAQ-100 Equal Weighted Index Fund (QQEW), which invests ~1.1% of its portfolio in the stock. In the next part, we’ll discuss the events in detail.