Emerging player from China could disrupt Marriott plans

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New York (AP) – A fight for control of the Starwood hotel chain is under way following a US$14 billion buyout offer in March from a consortium led by China’s Anbang Insurance Group.

Anbang, which remains largely unknown to most Americans, has quickly positioned itself to become a player in the U.S. hotel industry, acquiring marquee properties.

It made a splash in the fall of 2014 when it bought New York’s Waldorf Astoria for almost $2 billion.  And just a few weeks ago, it cut a $6.5 billion deal for Strategic Hotels & Resorts Inc., which owns properties like The Westin St. Francis in San Francisco, JW Marriott Essex House in New York and Hotel Del Coronado in San Diego.  Strategic also owned five different Four Seasons hotels, two Ritz Carltons and six other luxury properties.

This photo shows the Sheraton Fort Lauderdale Beach Hotel, a member of the Starwood Hotels and Resorts group. (AP Photo/Wilfredo Lee)

Now it is going toe-to-toe with U.S. hotel giant Marriott International Inc., which said late last year that it would buy Starwood, the owner of Sheraton, Westin and St. Regis hotels, in a deal worth $12.2 billion.  That acquisition would create the world’s largest hotel chain with 5,500 properties and more than 1.1 million rooms around the world.  Such scale would give the combined company pricing power when negotiating commissions with online travel agencies such as Expedia and Priceline, as well as help it land more corporate travel contracts.

The next-largest hotel company is Hilton Worldwide with 4,500 properties and about 735,000 rooms.

Marriott and Starwood — like other hotel chains — own very few individual hotels.  Instead they manage or franchise their brands to hundreds of individual owners, often real estate development companies.  Those individual hotel owners are responsible for setting nightly room rates.  It isn’t uncommon for a developer to own a Marriott, Hilton, Hyatt and Sheraton in the same city.  That’s how Strategic, for instance, owned hotels under the Westin, JW Marriott, Ritz Carlton, Four Seasons and InterContinental brands.

Starwood Hotels & Resorts Worldwide Inc. said that it still favors the Marriott deal, but that it’s looking at the latest bid.

Asian companies have been acquiring U.S. properties because it is a relatively safe place to park money, particularly with signs of slowing economic growth in China.

Marriott, based in Bethesda, Maryland, said that it stands behind its offer.