Hyatt in talks to buy larger peer Starwood Hotels

06 Nov 2015

Hyatt Hotels Corporation is in talks to buy its larger peer Starwood Hotels and Resorts Worldwide in order to create one of the world's largest lodging chains, according to a New York Times report.

The report comes barely a few days after several media reports said that three Chinese firms were competing to bid for Starwood Hotels in a deal that would value the operator of the W and Sheraton Hotels at more than $12 billion. (See: Three Chinese firms competing for Starwood Hotels & Resorts)

Hyatt, which has been struggling to expand, is preparing a cash-and-stock bid that could be announced within the next few weeks, the report said.

A successful deal will help Hyatt and Starwood to better compete with their larger peers Marriott International and Hilton Worldwide although both Hyatt and Starwood have a total of less than 500,000 rooms globally compared to more than 700,000 rooms each by Marriott and Hilton.

Hyatt has a market cap of around $7 billion, while its larger rival Starwood has $12.6 billion.

Starwood has more than 1,200 properties world-wide with brands that include The Luxury Collection, W, Westin, Le Meridien, Sheraton, St. Regis, Aloft, and Element luxury hotels and resorts.

The Connecticut-based company has sold properties worth about $1.5-billion over the past two years including its interest in Park Lane Hotel, London to Sir Richard Suttons Settled Estates.

In April, Starwood hired investment bank Lazard to help it explore strategic alternatives including a possible sale or merger.

Since then, the company sold a few hotel properties, and last week agreed to sell its time-share subsidiary Vistana Signature Experiences to Interval Leisure Group for about $1.5 billion.

Chicago-based Hyatt develops, owns, operates, manages, franchises, hotels, resorts, branded residences and vacation ownership properties, including under the Hyatt, Park Hyatt, Andaz, Grand Hyatt, Hyatt Centric, Hyatt Regency, Hyatt Place, Hyatt House, Hyatt Zilara, Hyatt Ziva, Hyatt Residences and Hyatt Residence Club brand names on six continents.

The company's worldwide portfolio comprises of 627 properties in 52 countries and posted net income of $334 million in 2014 on revenues of $4.42 billion.