The deal, expected to close in 2016, will make Marriott the largest hotel company in the world.
Marriott International agreed Monday to purchase Starwood Hotels & Resorts for $12.2 billion. The deal will create the world’s largest hotel company.
The Washington Post reports that the combined company will operate in Bethesda, Maryland and would oversee over 5,000 properties. In total, the company will have more that 1 million hotel rooms. This deal is the largest hotel acquisition since Blackstone Group purchased Hilton Worldwide in 2007, for $26 billion.
Arne Sorenson, president and chief executive for Marriott said that the company was drawn to Starwood, saying that many of its aspects “complement Marriott.” Starwood has a strong international presence, a similar rewards program for guests, and popularity with younger travelers. Starwood owns 11 brands, such as Westin, W, and Sheraton.
The combined company will have 30 brands, over a million rooms, and over $2 billion in anticipated revenue, yearly. Marriott will replace Hilton Worldwide as the largest hotel company in the world.
Some analysts are concerned about the deal, saying that the purchase means that customers have one less choice when choosing where to stay. Anti-trust experts speculate that the Federal Trade Commission will look into the acquisition.
Marriott has aggressively purchased a number of global companies, in an effort to grow their international presence. In 2014, the company purchased Protea Hospitality Group, making Marriott the largest hotel company in Africa. In early 2015, Marriott purchased Delta Hotels, becoming the largest full-service hotel company in Canada.
The merger is expected to save Marriott $200 million in operating costs through 2018. The company expects to expand its board of directors to 14 people, adding three from Starwood’s board. The headquarters in Bethesda currently employ around 2,000 people. The number may grow as a product of the deal.
The deal, held in cash and stock, is supposed to be completed in mid-2016. Those with stocks in Starwood will receive 0.92 shares in Marriott, and $2.00 cash per share.