Marriott Buys Renaissance
Marriott International is set to bolster its overseas presence with a deal to acquire the 150-property Renaissance Hotel group for approximately $1 billion, topping Doubletree Hotels' $890 million offer.
While a Renaissance-Doubletree match would have paired domestic and international halves, Renaissance "probably is very comfortable with Marriott as a major international player, whereas Doubletree was not," said Joseph Toy, director of hospitality consulting-Hawaii and Asia Pacific for consulting firm Coopers & Lybrand. "Marriott has a much wider international reservations system and stands as a stronger partner to help fuel the growth potential in Asia."
Combined, Marriott and Renaissance plan to open more than 350 new hotels over the next three years.
The 40-year-old Marriott group, despite its international foothold, gains markets such as China, "where they're trying to get in but haven't made that leap," Toy said. "This deal gives them instant penetration in those markets."
The deal, which is slated to close in the second quarter of this year, will boost Marriott's portfolio to about 1,300 hotels in 50 countries, adding 20 countries and 40 new markets, including Russia, China, Japan, India, Italy and Turkey.
While Renaissance would have switched to the Doubletree flag had that deal gone through, Marriott will retain the Doubletree name, rebranding only some hotels.
The deal will give Marriott 10 brands, including the Renaissance group's New World and International Ramada names. Renaissance currently licenses the Ramada name in the United States to HFS Inc.
The two companies' sales forces "will be integrated as much as is feasible," said Marriott International chairman and chief executive officer J.W. Marriott.
Other bidders had courted Renaissance after Doubletree's December offer, said Henry K.S. Cheng, chairman of Renaissance and managing director of New World Development Co., the Hong Kong-based real estate company that owns about 53 percent of Renaissance shares. The Marriott team flew to Hong Kong about three weeks ago to move the deal forward.
"We wanted to concentrate on our core business, which is real estate development," Cheng said. Doubletree, meanwhile, gains a $15 million breakup fee.
Meanwhile, Marriott has promoted William Shaw, a 22-year company veteran, to the new position of president and chief operating officer. J. W. Marriott Jr. remains chairman and chief executive officer.