Hyatt, IHG, and Hilton May All Be in the Merger Market Now

Marriott’s finally left alone to swallow Starwood. Accor put together a deal to buy Fairmont. But the musical chairs in the hotel space are far from over. In fact, each of the rest of the major chains could be a player in an upcoming deal.


Lobby of the Fairmont Royal York, Toronto

Hyatt was a potential suitor for Starwood, but the complex deal structure got in the way. The Pritzker family’s shares have 10 times the voting rights of ordinary shares. While Hyatt was going to restructure their stock in order to do the Starwood deal, the restructure wasn’t going to give this away entirely (privileging shares held for long periods with extra voting rights).

It would seem as though Hyatt would be a logical acquisition target for another big chain looking to grow (it’s about half Starwood’s size), but the Pritzker shares rule out hostile takeovers and make Hyatt as likely to remain an acquirer as an acquiree — the only problem is, who? IHG of course is closer in market cap to Hyatt than Starwood was.


View from the Park Hyatt Sydney

IHG has been in the market to either acquire or be acquired. They purchased Kimpton, and haven’t digested it yet, but it was a small acquisition and the hotelier has gaps at the upper end. Starwood might have made sense for them.

Wyndham had been rumored to be a possible acquirer of Starwood. So many Starwood executives have gone over to Wyndham in the past few years that the chain acquired the nickname ‘Wynwood’.

Carlson Hotels is a small player that could become an acquisition target.

In January Hilton’s CEO said they planned to grow without a merger, suggesting he didn’t see any deals on the horizon for the chain. Weigh that statement about as heavily as Marrott’s CEO saying last year that Marriott wouldn’t be doing Starwood-type deals.

With the high price that Starwood fetched — much higher than it appeared in November — smaller chains are looking to sell themselves. With Marriott bulking up and seeing size as the preeminent determinant of success both against online travel agencies and in obtaining corporate travel deals (and individual purchase decisions through a global loyalty program) other chains are going to want to bulk up to go head-to-head.

It’s unlikely we’ve seen the end of hotel industry consolidation.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. Wait what was the point of this article? I’m honestly confused. There is literally no news here, just a recitation of some very basic facts and then naming off hotel chains. The closest it came to making a point was saying Marriott said it wouldn’t do a deal then did a deal so that implies Hilton is in the market?
    That’s such a ridiculous headline compared against the content in the article.
    Could you not think of anything to write about? Is it that slow in this space? Hell, if you want to focus on m&a fine, start educating yourself on acquisitions and do some diligence and provide some actual insight. If you’re throwing stuff into the garbage just to make sure the dump truck is full, I suggest you look in the mirror and think if this is really what you’re trying to accomplish with this site.

  2. Actually, @TJJ, a lot of this article was news to me. I guess if you are already very steeped in this stuff, this is just a regurgitation of facts you knew. But for me, who is only moderately knowledgable in this space, this was an informative post.

  3. let’s hope the pritzker’s ownership of hyatt stays the way it is for a long time.
    in terms of quality and value, the hyatt program is the best in the industry in my humble opinion.

  4. This is a post that could have used from self-censoring. I hate to be a harsh critic since I benefit from this blog, but this post does not tell me anything. Really, this post could have been written about any industry in travel. Airlines, car rentals, whatever.

  5. Come on guys, lighten up. If you want to read, then read. If it doesn’t interest you then just move on. Reminds me of what mother used to say “If you don’t have anything nice to say, don’t say it at all.” Just my two cents.

  6. there are constructive criticisms and there are bitchings out of spite.
    if you don’t like the blogger, why bother wasting your time here?
    go away, losers.

  7. I’ll throw something Gary’s way. Any CEO of any business, is always looking to grow their business/revenue, in anyway possible. In the hotel business, buying a competitor, small or large, eliminates a competitor. This is Economics 101. The fact is the hotels are going to mirror the airlines, there will be only a few large chains, and a handful of much smaller chains. The writings on the wall!

  8. I also hate these stupid critics. Why does Gary or anyone else have to have something amazing every day?
    It’s certainly nicer to read than your criticisms.
    My mother put it slightly differently: if you have nothing nice to say then say it.
    I have no problem reading these ramblings.

  9. Agree with Sheik, Dr. Bob, steven k and Frank- If you don’t like the message, shut up, turn page, move on or better yet, write your own blog. It’s Gary’s blog and he can write anything he wishes, and thank you Gary for all the information you provide.

  10. IHG and Carlson are close to each other in terms of quality and value of loyalty programs. Radisson and Holiday Inn are basically the same, at least in the U.S.

    Wyndham? Who stays there? That’s like–Ramada Inn? I don’t think I have stayed at a Ramada Inn since the 1980s.

    I still think you could see some Marriott/Starwood brands sold-off because they simply have too many. And where does Sheraton fit into the new Marriott? Starwood’s Westin and Marriott’s Renaissance are close to each other, although I suspect some would compare a top-end Westin to an average J.W. Marriott. The average Marriott will be on par with the average Sheraton.

    Where I live, in the Detroit suburbs, there are two Marriotts, one Renaissance, one Westin, one Crowne Plaza and one Sheraton all within 10 minutes of each other. There are another five Marriotts, two Westins, one Sheraton and one Crowne Plaza within 25 minutes. I would said this market would be similar to Washington, D.C., where there are a large number of Marriott-flagged hotels within 30 minutes of the nation’s capital.

    One of three things will happen in the Marriott acquisition of Starwood:

    (1) There will be no competition and, as a result, hotels become stagnant and standards slip. (This is already the case in Detroit, where some of the Marriott properties are very uncompetitive and dated. Southfield has to be the worst Marriott in the lower 48.)
    (2) Older properties will be reflagged within the new Marriott portfolio.
    (3) Excess brands will be eliminated or sold-off to other hotel companies.

  11. TJJ … You mistook this blog for a a newspaper column. Instead of spewing bile, I suggest that you write your own blog and after 5 years you are recognized and named one of the “World’s Top Travel Experts” by Conde’ Nast Traveler, this hotelier will start reading.

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