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Marriott International Acquires Starwood To Create the World’s Largest Hotel Company

Nov 17, 2015 04:50 AM EST

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Marriott and Starwood merger is going to create the biggest chain of hotelier in the world that includes Sheraton, the Autograph Collection and Ritz Carlton.  Marriott International Inc. is buying Starwood Hotels & Resorts for a $12.2 billion deal after a successful bidding that was also joined by Chinese businesses and Hyatt Hotels Corp.

According to Marriott's statement, Marriott and Starwood merger will franchise nearly 5,500 hotels with 1.1 million rooms all across the world that would make the biggest hotel company to dominate in Latin America, Europe and even Asia specifically in China and India, CNBC reports. At present, Starwood, which owns Aloft and St. Regis hotels have greater revenues outside the country while Marriott has bigger presence in the United States.

"The deal makes sense from a strategic perspective," Lukas Hartwich, an analyst at real estate research firm Green Street Advisors LLC, said in an e-mail. "Scale matters a lot in the hotel business. The winners in the long run will likely be the ones with the most hotels, in the most locations, at the most price points."

Marriott and Starwood merger is the biggest deal in history after Blackstone Group LP purchased Hilton in 2007 for $26 billion. According to Bloomberg, Starwood's former head Frits van Paasschen was put under fire in February after its failure to increase the number of hotels carrying the brand.  During the time, they are also being overtaken by Airbnb Inc. in terms of revenue.  In April, Starwood expressed their will in discovering other strategic options for the company.

Starwood was overtaken by its rivals in terms of its capacity to serve their customers fully with their limited service.  Early this year, negotiations for bidding was in the news including offers from Hyatt Hotels Corp. and Holiday Inn owner Intercontinental Hotels Group. With Marriott and Starwood merger, it will surpass Hilton as the biggest hotel company in the world that owns 4,500 properties and around 735,000 rooms worldwide, Advisor CA reports.

Marriott and Starwood union has its edge over the others as it targets corporate travel departments searching for one hotel to accommodate their employees. It will also be a good deal for frequent travelers and businessmen since Marriott  is tied up with Chase and United Airlines, and Starwood has partnership with Delta Air Lines, Uber and American Express.

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