Integration Update | Begin the Journey
Since announcing our intent to acquire Starwood Hotels & Resorts in November of last year, efforts have been underway at both Marriott and Starwood to prepare for legal close. Earlier today, we announced the completion of this transaction, which has made Marriott International the world’s largest hotel company. This major milestone signals the official start of our journey, and we can now begin the process of integrating the more than 1,300 Starwood properties into the Marriott International portfolio.
As part of our efforts to-date, we have identified a number of key business objectives for the merger of the Marriott and Starwood organizations. One of those objectives is to ensure a strong value proposition for you, our hotel owners and franchisees, which we believe includes both financial and ease-of-business benefits. This value proposition includes five key components: revenue synergies, cost synergies, support, engagement, and simplification.
Perhaps most importantly, we anticipate the merger of Marriott and Starwood will lead to economic benefits in terms of both revenue and cost synergies. Specifically, we believe we can grow topline revenue for properties regardless of what legacy system they originated from – Marriott or Starwood – and that a unified loyalty program will be a driver toward achieving this. We anticipate the combined company will capture more share of wallet from both SPG and Rewards members due to the increased distribution and breadth of our brands.
In addition, we believe we will be able to achieve cost synergies from our combined scale and the merging of systems. In the near term, this will include evaluating areas for opportunities related to third-party agreements, including procurement and distribution, and we strongly believe that hotels will benefit from the scale achieved through combining these two platforms. Over the longer term, additional cost synergies will be achieved as we are able to consolidate systems and programs across the two companies.
Because Marriott and Starwood have been competing as two separate companies up to this point, we have not been able to evaluate all of these opportunities in detail. We have believed from the beginning that this integration will enable us to drive improved performance in the Starwood portfolio and deliver real incremental business to Marriott-branded hotels as well. Now that we have passed legal close, we can begin evaluating these opportunities in more detail, and we look forward to providing you additional information over the coming months.
The remaining components of the owner value proposition, the ease-of-business benefits, are pillars of Marriott’s existing Owner & Franchise Services organization. For Starwood owners and franchisees, you will continue to work with your existing contacts. However, you will hear from our Owner & Franchise Services leadership team in the coming days about the initial plans for the transition. Additionally, members of our team look forward to reaching out to welcome each of you in the coming weeks.
We believe engagement is also an important component of the value proposition. We will continue to partner with our owners and franchisees through advisory boards and councils to ensure there is a platform for us to receive feedback and advice on major issues facing the brands, system and industry. As part of that process, we have a robust structure that will be expanded with the inclusion of the new legacy Starwood brands. Additionally, we will be developing an Owner & Franchisee Integration Steering Committee, whose members will be tasked with providing guidance and insight as the merger progresses.
Finally, the fifth pillar of the owner value proposition is simplification, with the goal of streamlining our processes and systems. In support of this effort, we wanted to provide an update on the franchise owner and operator screening process.
Franchise Owner + Operator Screening
Effective immediately, all existing Marriott and Starwood owners, operators, and owner/operators in good standing* are approved to own or operate other brands within their respective tier:
- Select Service & Extended Stay: AC Hotels by Marriott, aloft, Courtyard, Element, Fairfield, Four Points, Moxy, Residence Inn, SpringHill Suites and TownePlace Suites
- Full Service – Traditional: Delta Hotels, Marriott Hotels, Sheraton
- Full Service – Lifestyle/Luxury: Autograph, JW Marriott, Le Méridien, Luxury Collection, Renaissance, St. Regis, Tribute and Westin
Additional approval may be required for existing owners, operators, and owner/operators to own or operate a hotel within a different tier. Moving forward, new owners, operators, and owner/operators will be subject to Marriott’s screening process. Additionally, for Select Service & Extended Stay brands, all third-party operators will be required to retain a minimum 10% equity position.
* Subject to approval by Marriott Owner & Franchise Services.
We would like to assure our new and existing owners and franchisees that while much of our focus in the coming months will be related to the integration, our teams are available to support you and your hotels. We will provide you regular updates regarding our progress related to the merger, as well as on business-as-usual topics.
We appreciate your partnership and support, and we look forward to our continued mutual success now that Marriott International has officially become the world’s largest hotel company.
Should you have any questions, please let us know.
