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Marriott/Starwood Has Executives Talking Consolidation

Hotel executives believe there’s room for more consolidation in the current cycle. Speaking at several recent conferences, they weighed in on Marriott’s acquisition of Starwood and what the future holds. 
By the HNN editorial staff
October 14, 2016 | 6:54 P.M.

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GLOBAL REPORT—News of the 23 September closure of Marriott International’s acquisition of Starwood Hotels & Resorts Worldwide was all the buzz at several recent global conferences. Here, hotel executives look back on the $13.3-billion deal, as well as ahead to what other consolidation activity might be on the horizon and what that could mean for the industry.

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Jamie Sabatier, CEO, Two Roads Hospitality
“I would be surprised if there wasn’t more consolidation. It can take many different forms. There are a fair amount of players out there who I would suggest don’t have a reason to be in this changing environment and need to find a solution. It would be my expectation that consolidation would continue to happen.”

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Arturo Garcia Rosa, founder and president, South America Hotel Investment Conference
“This deal is huge in (Latin America) because Starwood had very good coverage in the region, and Marriott will take advantage of that. Starwood was a pioneer in Latin America for many years … and they developed owners here and managers, people who actually live here. Now Marriott will have people in the region with lots of experience working for so many years right here.”
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Desmond Taljaard, managing director of hotels, London & Regional Properties
“The Marriott/Starwood deal certainly has moved the industry, but for us, we’ll invest only if we own the asset and the brand, unless we inherit encumbered. We’re at the stage in hotel industry Darwinian evolution that will see some brands die, and I am staggered some have not gone already.”
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Jim Chu, global Head of select service and franchise strategy, Hyatt Hotels Corporation
“By the nature that there’s less out there would lead you to say there’s less to consolidate. There are fewer lodging companies than there were three years ago—we’re a business that has matured over a long period of time due to (mergers & acquisitions) activity. … (Hyatt executives) are excited and committed that our strategy is sound regardless of what we decide to do. We are uniquely sized, which gives us great flexibility.”

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Don Schappacher, president and CEO, American Hospitality Management
“I think it’s (consolidation) going to continue. I wouldn’t be surprised to see (InterContinental Hotels Group) be involved in the consolidation activity.”
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Niki Leondakis, CEO of hotels and resorts, Two Roads Hospitality
“Consolidation will continue—not just consolidation of hotel companies buying other hotel companies … we’ll see consolidation in our broader industry. More hotel companies will be buying related business so they can own the travel experience of the customer and serve up a more holistic environment.”
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Osama Hirzalla, VP of brand marketing and e-commerce, Europe, Marriott International
“Loyalty was always about the hotel stay, not about other areas of the guest experience. Now there is a guest requirement for instant gratification and immediate redemption. Marriott/Starwood undoubtedly will change the game.”
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Andrew Alexander, president, Red Roof Inn
“This (consolidation) is cyclical. … (Revenue per available room) growth is now slowing. As companies look to other ways to increase their value and bottom line, they have to look to those expense synergies, growth synergies. The way to increase the bottom line is have those consolidations that lead to potential accretion on the transactions.”

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