Update: Marriott has agreed to buy Starwood. Hyatt Hotels deal did not go through as previously reported on CNBC. We will see if the FTC actually lets this merger go through as it would make the largest hotel chain.
Previously Chicago-based Hyatt Hotels was in talks to acquire Connecticut-based Starwood could come as soon as next. Hyatt is preparing a cash-and-stock bid driven partially by the hoteliers’ growth struggles according to CNBC. Both Hyatt and Starwood have been hampered by several consecutive quarters of declining sales due to slowing global business travel and swings in the currency markets.
Some are saying that a combination of Hyatt and Starwood could help the two chains better compete with their larger peers Marriott International and Hilton Worldwide. One benefit to a takeover by Hyatt could be the lowered costs of the combined platforms bringing two companies to have over 500,000 rooms to considerably close the gap between them and Hilton and Marriott who each have more than 700,000 rooms.
Starwood brands include St. Regis, Sheraton, W and Westin. Although in July, the InterContinental Hotels Group was reported to be in talks to acquire Starwood, but those rumors were quashed by InterContinental. Acquiring Starwood would improve Hyatt’s global exposure. The majority of Starwood’s rooms are outside North America, while almost all Hyatt’s properties are in the United States.
What could be worse than a Hyatt takeover is that Chinese companies are bidding for Starwood. Starwood has already started selling part of the company. The Interval Leisure Group had agreed to buy Starwood’s time-share subsidiary, Vistana Signature Experiences, after the unit completes an already announced spinoff.
It’s already been predicted that hotel rates for U.S. business travelers will climb 6.5 to 7.5%–the largest in nearly a decade starting in 2016. A merger will only make things worse for hotel prices and points programs that have been on the path to devaluation each year. If you look back at past mergers it’s never a good thing when two big rewards programs come together.
Now may be a good time to apply for a Starwood American Express card and rack up some points to possibly transfer into Hyatt’s program if a merger goes through.
