Hotel merger 'good for corporate guests'

They are expected to enjoy better loyalty scheme benefits with Marriott's proposed purchase of Starwood

St. Regis is one of the hotels under the Starwood group. Analysts say the merger is unlikely to have an impact on room rates for now.
St. Regis is one of the hotels under the Starwood group. Analysts say the merger is unlikely to have an impact on room rates for now. ST PHOTO: ASHLEIGH SIM

Marriott International surprised the hospitality industry with its proposed US$12.2 billion (S$17.3 billion) acquisition of Starwood Hotels & Resorts Worldwide last week - a deal that analysts say is significant and "transformative".

The merger, which will create the world's largest hotel firm, is set for completion by mid-2016.

It is unlikely to affect guests in the short term, given there is no change in the number of hotel rooms here.

But market watchers expect the group to reap cost savings from economies of scale and benefit from the far larger customer base.

In Singapore, the combined company will have 2,323 existing hotel rooms, including properties such as Marriott Hotel, Sheraton Towers, The Westin and Ritz-Carlton.


Marriott said that makes the group the fifth-largest hotel player in Singapore based on the number of rooms. Following the merger, the group will have the "ability to drive down distribution costs, in particular with the big online travel agencies", said Mr Tony Ryan, global head of mergers and acquisitions at JLL hotels and hospitality group.

A big advantage arising from the proposed deal is in the loyalty schemes, which will expand their customer database.

Consultancy Savills (Singapore) said the group will be able to tie up with more significant partners to offer better loyalty scheme benefits. "This is especially important for corporate travellers, and this will be Marriott and Starwood's advantage over other chains," said Mr Julien Naouri, associate director of hotels, Asia-Pacific, at Savills (Singapore).

Marriott chief executive Arne Sorenson said in a Twitter post last week that the firm will be looking at developing its strategy for the Starwood Preferred Guest and Marriott Rewards programmes in the coming months. Marriott and Starwood will be the world's largest hotel company, with 1.1 million rooms in over 5,500 hotels globally, across 30 brands.

Analysts said the proposed merger is unlikely to have an impact on room rates for now, as the deal will not be completed until next year.

Citing Singapore Tourism Board figures, Mr Naouri said the average room rates from the beginning of the year till September in Singapore are $263.60 for upscale hotels and $449.20 for the luxury segment.

Knight Frank estimated that there are 19,600 five-star and luxury hotel rooms, as of the third quarter - 37 per cent of all rooms here.

Ms Alice Tan, head of consultancy and research at Knight Frank Singapore, expects the consolidation to strengthen Marriott's market share in the luxury and upscale hotels segments amid "stiff competition from a growing supply" of rooms here.

Pan Pacific Hotels Group (PPHG) said the merger brings together the "enormous know-how" from two very established companies. And this could present opportunities in harnessing technologies, which could benefit the consumers. Another area to watch is whether there would be a rebranding exercise and its potential impact on hotel owners and customers, said PPHG chief executive officer Bernold Schroeder.

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A version of this article appeared in the print edition of The Straits Times on November 26, 2015, with the headline Hotel merger 'good for corporate guests'. Subscribe