So, will it be Marwood or Anwood? Hotel investors and brokers at the HICAP Update this week in Hong Kong were split down the middle as to who, between Marriott International and Anbang Insurance Group, will fit the glass shoe and save damsel-in-distress Starwood Hotels & Resorts before the stroke of midnight Eastern time on March 17.
That question, along with the whole issue of hotel consolidation, was the hot topic at the event, which ended Wednesday.
Hotel owning companies such as Hong Kong-based SHKP Hotels, whose portfolio includes Marriott brand Ritz-Carlton (in Hong Kong and Shanghai), and Starwood’s W Hong Kong and St. Regis Beijing, are watching the development closely.
Asked what he thinks will happen, SHKP Hotels CEO Ricco deBlank said: “It will result in three options. Either Marriott will come back with a bigger offer, which means it will have to pay a little over US$13 billion; two, Marriott walks away, with US$400 million in break-up fees from Starwood, and Starwood goes with Anbang; or three, they will possibly split, with Anbang taking the real estate assets, which they are more interested in, and leave the operation to Marriott. That’s not a bad option as Marriott is an asset-light company and therefore keeps the management of all those hotels, still having 5,500 hotels, still going from 19 to 30 brands, but not having to put money into buying assets they don’t want.”
Asked what he’d prefer, deBlank said from an owner’s standpoint, it would be Marriott, if only because of familiarity. “If it’s Anbang, we would have to understand what its long-term strategy is, see if it is easy to work with, see if it understands the hotel business – lots of questions we would not have with Marriott,” he said.
Another owner, Bill Heinecke, chairman and CEO of The Minor Group, Bangkok picked Anbang. Minor has in its portfolio the St. Regis Bangkok, JW Marriott Phuket Resort & Spa and the Marriott Pattaya Resort & Spa.
Contacted by email for his views, Heinecke said, “This is an interesting new dilemma and the final result will see Starwood forging one of two very different paths.
“I feel that the union of Marriott and Starwood will lead to the homogenization of two great brands and I don’t think this benefits anyone. The brands’ and guest experience will be streamlined, a restructuring will occur and jobs will be lost, common operating platforms and standards will be used, all resulting in a diminished offering to guests and owners alike,” Heinecke said.
Heinecke added: “Of course this could be beneficial for companies such as Minor Hotel Group as we continue to showcase a diversified guest experience across all our brands. In addition, I think it will ensure a larger pool of talented individuals who are looking to work for a dynamic and energetic company… such as Minor Hotels.
“If Starwood is acquired by Anbang, I feel that the hotel company will continue to operate with a high level of autonomy through the appointment of a seasoned hotel professional overseeing Starwood while representing the owning companies interests. On many occasions we have seen Chinese companies acquiring international brands and overall it has not been ‘business as usual’ but more dynamic leadership.”
Robert Hecker, managing director, Pacific Asia at Horwath HTL, also preferred an Anwood deal. “I guess I’d like to see Anbang because then at least Starwood will still be separate from another hotel company and its brands would be separate. There will still be some dynamism in the market, one more competition out there. Which consumer is asking for a bigger hotel company?”
When news of Marwood first broke, Hecker figured one of the Chinese contenders would make the best offer. “The industry didn’t really need a new ‘largest’ hotel company like this, whereas Starwood seemed a perfect way for a new owner to enter the global hotel market,” he said.
Sympathies also went to employees of both hotel chains, particularly Starwood, for having to go through so much uncertainty. “I have friends at both as they are both clients,” said Robert Williams, a partner at Withersworldwide. “I was just swapping texts with one of them and he said it’s just ‘nutty’. With these M&As, literally on day two, people look at the organization charts and say, ‘That’s me, I don’t have a job.’ After all, the driver for Marwood is massive reduction in overheads.
“If you ask a Starwood employee who he prefers, he might say I prefer Anbang as there is still a need for me. If you ask Starwood owners, they might say we’re not sure about Marwood, the brands overlap is massive, and especially in cities with neighboring properties, owners are likely to prefer an Anbang outcome, but then worry about Chinese integration in what is a big U.S. group.”
Eric Levy, managing director, Tourism Solutions International, added: “I don’t really care, but emotionally, if Anbang buys Starwood, then Starwood lives, the famous SPG (loyalty program) lives and the integrity of the brands continues.
“Certainly for my friends in top positions in Starwood, their future will be less uncertain.”