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The buyout presents great growth opportunities for Marriott international. The buyout
presents assets which can be leveraged to achieve dominant market position in the
market. The buyout put more than 5500 properties, 30 brands along with more than
1.1million rooms under the Marriott umbrella. One huge add-on would be the more than
21 million Starwood guests linked through reward programs which would now combine
with more 54 million customers of Marriott. However there are many similarities between
Starwood and Marriott but the strategic advantage of the merger stems from the
differences that made Starwood a very attractive opportunity for Marriott. Since the
start of 2014, Marriott has been on luxury brand hiring spree. Luxury and upscale brands
would bring significant revenues. Hence, Mariott has been spending more than 15 billion
dollars across 200 luxury and upscale brands. The spending would increase its share in
this sector from 11% to 25%. Therefore Starwood which has a sea of such brands, its
acquisition is perfectly in line with its strategy.
The merger would allow to achieve a broader and a wider selection of high end
properties to choose from once Starwood is bought. This would also give Marriott
ownership in some of the largest growing cities of United States of America. The cities
include the likes of Detroit, Los Angeles. The merger would also give give Marriott
exposure to big urban cities like Newyork which it has been lacking till now. It would help
Marriott to have a wider selection of rooms, price points and greater number of types of
travellers.
Also Starwood have been one of the prime competitor of Marriott. Now with a firm
competitor along with itself, Marriott can move towards cost-leadership. It has always
been known that merging competitive companies produces lower competition, and the
acquiring company can move towards greater bargaining in setting prices. Hence in this
case Marriott may just be able to secure not only greater number of price points but also
greater and better prices as well. With the SPG program of Starwood on the verge of
reconsideration, travellers just have to dig their pockets deeper.
Asia pacific with its increasing human resource, its buying power, its affordability and its
development graph is slowly becoming a very attractive market for any hotel company in
the world. This is where Marriott was originaly lacking but now with the strength of
Starwood the company double strong as ever would have access to these markets.
Earlier only 9% of its hotels were located in this region. This would mean Marriott would
now have over 15% of its hotels in this region. This region being demand rich might just
end up opening gates for Marriott international.
So concluding the segment we can enlist the basic advantages/ rationale that Marriott
may have by merger
References
1. http://www.meetings-conventions.com/News/Research/meeting-planner-opinions-MarriottStarwood-merger/
2. http://www.investopedia.com/articles/markets/012516/marriot-international-vs-starwoodhotel-resorts-marhot.asp
3. http://millionmilesecrets.com/2016/02/09/what-will-happen-to-your-starwood-points-afterthe-marriott-merger/
4. http://www.fool.com/investing/general/2015/12/04/marriott-starwood-deal-winners-andpotential-loser.aspx
5. https://www.google.co.in/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF8#q=marriott+international+starwood+merger+complete+story
6. http://www.nytimes.com/2015/11/17/business/marriott-to-buy-starwood-hotels.html?_r=1
7. http://www.forbes.com/sites/elyrazin/2016/01/13/behind-the-curtain-of-the-marriottstarwood-hotel-deal-what-about-the-lenders/#758e923c24eb
8. http://www.smartmeetings.com/news/82654/marriott-starwood-marriage
9. https://ehotelier.com/insights/2015/12/01/marriott-starwood-merger-the-impact-onowners-franchisees-and-developers/