Skift Take

Marriott gets a bit of flash, while Starwood gets some leadership (again) that's interested in innovation.

Marriott International and Starwood Hotels and Resorts signed a $12.2 billion deal on Sunday to combine the two companies and create the world’s largest hotel company.

This morning before the market opened Marriott CEO Arne Sorenson appeared on CNBC’s Squawk Box to provide the first non-press release answers about the deal.

According to Sorenson, Marriott began looking at the acquisition as soon as Starwood announced its strategic alternative plan seven months ago. “We thought it was expensive and initially backed away from it,” Sorenson said. “But as the months went by we saw a relative shift in values of the companies.”

The relative shift was a 15% downturn in the value of Starwood’s stock. At that point, “We became more and more convinced that there was value we could create having the two companies pulled together,” Sorenson said.

The deal was also more affordable after Starwood announced it would sell off its timeshare business.

For Marriott, Starwood’s global presence in emerging markets made it attractive. “It will accelerate our globalization. Starwood is more global than Marriott is. and we think it is a good thing we will have more sources around the world. When you look at growth in developing markets like China and India I think we will see in the long term that contribution is fabulous.”

Still, Sorenson added, the deal is “Not principally China-focused.”

He also focused on the power of the two hotel giants’ loyalty programs. “The global piece is powerful. The value we can get by pulling together Marriott Rewards and Starwood Preferred Guest for example, these are the two leading loyalty programs in our industry. Put them together and spend that much more on technology and marketing.”

A combined Marriott-Starwood will have thirty hotel brands, many of which overlap considerably, but Sorenson says the brands will stay. Mostly: “Our philosophy is to merge these companies as quickly as we can and run one company. But we will keep the brands.”

“To say ‘all’ is a little too soon for that. Generally I think we will have these brands. They are really good, strong powerful brands with great distribution. We want to take them, we want to strengthen them, and we want to grow them faster than they’ve been growing in the past.”

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Tags: marriott, marwood, starwood

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