The Maryland-based Marriott will pay $12.2 billion in stocks and cash, per a company press release with Starwood. That comes out to $72.08 per share, and Starwood shareholders will together own 37 percent of the new company. The move will give Marriott control of such brands as Sheraton, St. Regis, Aloft and W Hotels.
“The driving force behind this transaction is growth,” said Arne Sorenson, the president and chief executive officer of Marriott, in prepared remarks. “This is an opportunity to create value by combining the distribution and strengths of Marriott and Starwood, enhancing our competitiveness in a quickly evolving marketplace. This greater scale should offer a wider choice of brands to consumers, improve economics to owners and franchisees, increase unit growth and enhance long-term value to shareholders.”
Once the merger is completed in mid-2016, Marriott will have 5,500 hotels and 1.1 million guest rooms, according to the release. Marriott had 4,200 properties before the merger, according to the company’s website.
The new entity will augment an already massive foothold in some New York City hotel markets. Starwood currently operates such hotels as the W New York Times Square, Four Points by Sheraton in Long Island City and the Aloft Manhattan Downtown – Financial District, which opened this August. Starwood is also planning a 180-room flagship Aloft in Midtown at 25 West 38th Street, which is currently being developed by Fortuna Realty Group, as Commercial Observer previously reported.
Marriott, meanwhile, has had success with its multiple brands in the Big Apple. The New York Marriott Marquis in Times Square currently has available rates ranging from $300 to $750 per night, depending on the room size. The New York Marriott at the Brooklyn Bridge at this time has rates ranging from $300 to $1,400 per night (that’s for the terrace suite). Those are well above the average daily rate citywide, which was $324.98 in September, according to the most recent data available by hotel benchmarking firm STR.
“Our board concluded that a combination with Marriott provides the greatest long-term value for our shareholders and the strongest and most certain path forward for our company,” said Starwood Board of Directors Chairman Bruce Duncan in prepared remarks. “Starwood shareholders will benefit from ownership in one of the world’s most respected companies, with vast growth potential further enhanced by cost synergies.”