Marriott has buyer’s remorse over Starwood merger
Marriott-Starwood merger is taking longer to close, thanks to Chinese authorities extending their review, and is turning out to be less enticing than Marriott had envisioned.
Marriott was eager to speed up merger with Starwood. Now some of the excitement has worn off.
The USD 12 billion hotel merger is taking longer to close — thanks to Chinese authorities extending their review — and is turning out to be less enticing than Marriott had envisioned, according to sources.
“There is a notion of remorse,” said one source close to the deal.
Early this month, the Chinese Ministry of Commerce said it needed an additional review period that could last as long as 60 days.
The delay raised concerns that the deal was in trouble, especially since Marriott beat China’s Anbang Insurance Group in an all-out bidding war for Starwood.
Just last month, Marriott Chief Executive Arne Sorenson said he was “optimistic” that the deal would close in the coming weeks.
Marriott does not own real estate and plans to sell Starwood’s roughly USD 2 billion of property. The longer the deal takes, the greater the risk hotel real estate prices fall.
China’s review is the last regulatory hurdle to the deal.
Marriott continues to believe that the planned merger transaction poses no anti-competitive issues in China.
While it sounds great on paper, there’s growing unease at Marriott about the integration with Starwood. In particular, Marriott execs are concerned about the compatibility of combining Starwood’s loyalty-rewards program with its own, said one source.
Starwood, through brands like W Hotels, has a younger and more global clientele that is used to a more flexible points system than the staid Marriott brand.
Not gaining Chinese approval might be a good emergency exit for Marriott if they wanted out of the deal.
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