Hilton Hotels Corp. and Starwood Hotels & Resorts are continuing to broaden their international reaches, as Starwood in recent weeks closed its Le Meridien acquisition and Hilton continues to work on purchasing its U.K.-based namesake, Hilton International.
For Starwood, the move to take on management of Le Meridien coupled with last month's sale to Host Marriott of 38 luxury and upper upscale hotels
(BTNonline, Nov. 14)—for which Starwood maintains management—signals not only an effort to bulk up the number of properties in international markets, but also a shift of Starwood's business model from one based on real estate ownership to one driven by management and franchise fees.
Starwood, which inked the pact to acquire Le Meridien in April
(BTNonline, April 28), now adds to its management portfolio 43 properties in Europe, 47 properties in Africa and the Middle East, 28 properties in Asia/Pacific and India and 12 in the Americas.
"Le Meridien hotels are located in many markets where we don't already have a strong presence," said Starwood CEO Steven Heyer in a statement. "This, coupled with the brand's excellent reputation and its strong European DNA, is what made it such an attractive proposition for us. In addition, we have great plans to expand the brand—particularly in the United States, Latin America and Asia/Pacific—to enhance the brand itself, and build on its great reputation and people." As such, the integration of Le Meridien—which will maintain its brand identity—will give corporate clients with international operations more options when negotiating chainwide deals.
While the deal brings Starwood more managed properties in such thriving business markets as Dubai, London and Paris, Le Meridien also gives Starwood a newfound presence in Monte Carlo, Barcelona, Budapest, the Seychelles and Mauritius.
Meanwhile, Le Meridien's development pipeline of more than 10 hotels will further boost Starwood's presence in India, Thailand and China.
Heyer said Le Meridien integration with the White Plains, N.Y.-based hotel giant would be "smooth and speedy." Led by Michael Wale, senior vice president of operations at Le Meridien, the company is expecting integration of Le Meridien into Starwood's business to take between six and nine months.
Meanwhile, U.S.-based Hilton Hotels Corp. is in ongoing discussions to purchase the independent Hilton International hotel division, which operates more than 400 Hilton properties outside of the United States.
According to figures released last month by MKG Worldwide, Hilton would grow its total number of rooms to 453,569 from 354,312, should the deal come to fruition, while bringing its total number of properties to 2,621. Although both parties have publicly acknowledged discussions, Hilton Hotels would not comment further on the potential transaction.
Although the two Hiltons have operated independently for decades, the hotel companies in 2000 formed a joint venture to expand the luxury Conrad brand, which now has 18 properties in more than one dozen countries. The companies also have further aligned marketing activities in recent years.
Matt Hart, president and COO of Hilton Hotels Corp., this summer told BTN that the relationship between the Hilton and Hilton International has been expanding.
"If anything, we are getting closer and closer," he said. "We meet with them twice a year. Generally, the business in the States is stronger than it is in Europe, stronger than it is in Asia. All of the things that we need to ensure a seamless customer experience are going great."
While the transaction most likely would consolidate the two Hiltons' sales efforts and centralize their client relationships, one travel buyer said the two have shared more than names since their split decades ago. "Although they're two separate companies right now," a travel buyer who requested anonymity said, "the major accounts that have a consolidated international program are serviced usually through one account rep who's their major relationship manager, and then a separate one who's the specialist for outside the U.S. They really do a decent job of consolidating that information for the client, but I would imagine that when the two companies are one they would create one salesforce. I would think some of the processes and communication and the way data is passed would be a little cleaner, more consolidated. It might make the process easier."