By Mary-Lynn Cesar for Kapitall
On Monday, hotel operator Marriott International ( MAR ) announced its acquisition of Starwood Hotels & Restorts Worldwide ( HOT )-a $12.2 billion deal that will create the biggest hotel chain in the world. Marriott beat out Hyatt Hotels ( H ) and three Chinese firms to land the Starwood property. The new hotel company will have 1.1 million rooms and over 5,500 hotels in more than 100 countries.
The Marriott Starwood merger is the first big union within the hospitality industry, though it comes on the heels of a recent uptick in consolidation activity. In October, French hotel company Accor (OTCMKTS: AC) expressed interest in acquiring Canadian luxury hotel brand FRHI Hotels & Resorts for $3 billion. By the end of the month, Starwood sold its time-share business to Interval Leisure Group ( IILG ) for approximately $1.5 billion.
Some expect more mergers and acquisitions to occur thanks to the rise of home-share platform Airbnb. Back in April, billionaire real estate investor Thomas Barrack said that the hospitality industry will see " a wave of consolidation " that ultimately ends with a hotel manager merging with Airbnb since the startup and its homesharers aren't subject to the same level of regulation and costs as hotels.
In addition, Airbnb's prices place the company in direct competition with many hotel chain's more affordable leisure brands, reducing the hotel operators' revenue.
Choice Hotels International ( CHH ) CEO Steve Joyce disagrees with Airbnb's influence on big hotel mergers. Speaking to TheStreet in August, said, "Industry consolidation is possible, but I don't think it's because of Airbnb. The reason is because the hotel business is made up of five big companies, so when a Starwood comes out (looking for strategic alternatives), there is a lot of interest and notice."
Another factor driving the industry-wide consolidation is the shift among hotel companies from ownership to management and franchising. As a result, hotels with significant global exposure are attractive acquisition targets because their built-in customer base promises a larger reach, a bigger budget, and improved brand recognition.
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1. Belmond Ltd. ( BEL , Earnings , Analysts , Financials ): Engages in the hotel and travel businesses, and owns, invests in, or manages deluxe hotels and resorts, restaurant, tourist trains, cruises, and canal boats around the world. Market cap at $1.03B, most recent closing price at $10.12.
3. Hyatt Hotels Corporation ( H , Earnings , Analysts , Financials ): Engage in the management, franchising, ownership, and development of Hyatt-branded hotels, resorts, and residential and vacation ownership properties worldwide. Market cap at $7.12B, most recent closing price at $49.53.
4. Hilton Worldwide Holdings Inc. ( HLT , Earnings , Analysts , Financials ): Owns, leases, manages, develops, and franchises hotels, resorts, and timeshare properties worldwide. Market cap at $23.29B, most recent closing price at $24.42.
6. Morgan Hotel Group Co. ( MHGC , Earnings , Analysts , Financials ): Engages in the ownership, operation, acquisition, development, and redevelopment of boutique hotels in gateway cities and select resort markets primarily in the United States and Europe. Market cap at $114.27M, most recent closing price at $3.42.
7. Wyndham Worldwide Corporation ( WYN , Earnings , Analysts , Financials ): Provides various hospitality products and services to individual consumers and business customers in the United States and internationally. Market cap at $8.92B, most recent closing price at $77.65.
(Monthly return data sourced from Zacks Investment Research. All other data sourced from FINVIZ.)
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