Don't look for a Marriott-Starwood merger anytime soon. Not that you were.
Marriott CEO Arne Sorenson is bullish on merger and acquisition activity, such as its purchases of AC Hotels, Gaylord Hotels, Protea Hospitality Group, and Delta Hotels in recent years, but he is decidedly not interested in Starwood-type deals.
Asked about rival Starwood’s decision to investigate financial and strategic alternatives, Sorenson said the quartet of acquisitions that Marriott carried out over the last three to four years occurred for a price tag of $100 million to $200 million at up to multiples of 10 times EBITDA.
Sorenson said each acquisition brought flat results in the first year or so but were “accretive” thereafter, and provided a platform for increased management and franchise contracts at light capital costs “that provides nearly infinite returns and that’s what we want to remain focused on.”
Let’s ignore the “infinite returns” part as Sorenson was apparently caught up in the moment.
“We would love to do more deals if there are more deals in the market that meet those kinds of parameters,” Sorenson said during Marriott’s first quarter earnings call April 30.
Sorenson said he wouldn’t comment a lot about Starwood’s moves but then came the zinger.
“But I think if you compare the attributes of the deals I just talked about our having done in the last few years, with the attributes that would be associated with a deal with somebody like them, you can see there are quite profound differences between the deals that we have done and that hypothetical transaction.”
In Sorenson’s view, there are Marriott deals and then there are Starwood deals and you shouldn’t confuse the two.
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Photo Credit: Marriott CEO Arne Sorenson prepares for a TV interview. Marriott / Marriott International
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