Marriott International is awaiting approval from China
regulators to complete its acquisition of Starwood Hotels & Resorts,
Marriott CEO Arne Sorenson said on an earnings call with analysts on Thursday.
Sorenson said he expected the second phase of China’s review
to be complete by Aug. 9. He didn’t foresee additional phases, clearing the way
for the buyout to be complete within the next few weeks. He added that fully
integrating Starwood into Marriott operations would be “a two-year project.”
Marriott initially reached an agreement to buy Starwood last
November, and after engaging in a bidding war with a group led by Anbang
Insurance Group earlier this year, reached an agreement in April to acquire
Starwood for $13.6 billion, about 10% more than the November price tag.
Marriott and Starwood shareholders voted to approve the
acquisition in June. Combined, the hotel company will have 30 brands totaling
about 5,800 hotels.
“I am incredibly impressed with the people at Starwood,”
Sorenson said. “Despite the disruption and uncertainty they’ve experienced over
the last 15 months, the Starwood team has done a great job.”
Starwood added management and franchise contracts for a
quarterly record 120 hotels totaling 21,400 rooms, and broadened its development
pipeline by 12% in the process.
“Despite business interruption from the Marriott
acquisition, or perhaps because of it, the development team achieved the
strongest number of signings in company history,” SunTrust Robinson Humphrey
analyst C. Patrick Scholes wrote in a July 26 note to clients.
Marriott said Wednesday that its second-quarter revenue per
available room (RevPAR) advanced 2.9% from a year earlier, as Asia Pacific
demand gains were partially offset by a drop on Middle East and Africa revenue.
Among Marriott brands in North America, Renaissance had the strongest demand
growth, while Ritz-Carlton had the weakest. Starwood’s luxury brands (St.
Regis, W and Luxury Collection) also showed weakness in the second quarter, suggesting
a leveling off of spending on luxury lodging as well as softness in corporate
travel.
“We’re getting to the back part of the cycle,” said Bobby
Bowers, senior vice president of operations at lodging research firm STR. “Most
of the times when you have that, you see more growth in the middle to the lower
end of the market.”
Marriott’s second-quarter revenue rose 5.8%, to $3.9 billion.
Net income rose 10%, to $265 million.