3 Groups Hoping That Anbang Wins the Starwood Strategic Hotels Deal

Savills Studley’s Marc Magazine

WASHINGTON, DC–Last week began with a surprise offer for Starwood Strategic Hotels & Resorts by a consortium of Chinese investors led by Anbang Insurance Group Co. The deal was sweetened and Blackstone eventually decided to accept what had become a $13.2-billion offer to acquire the portfolio it had just closed on in December 2015. As for Marriott International’s stock-and-cash merger deal it had struck with the Starwood last November, that is on its way to being terminated. According to the terms of the agreement, Marriott would receive a $400-million breakup fee . On Friday, Marriott was sounding that it wasn’t quite ready to let go, saying that it continues to believe that a combination “is the best course for both companies and offers the best value to Starwood shareholders.” Marriott has the right to propose revised terms and Starwood must negotiate in good faith with Marriott for a period of five business days ending on Monday, March 28 at 11:59 p.m. ET. Starwood can only cancel the merger agreement if its board continues to view the Anbang offer as a “superior proposal” after negotiating with Marriott. In short, this is not yet a done deal. As we watch the end game play out, there are three constituencies hoping to see Anbang win the deal, according to Marc A. Magazine, executive managing director of Savills Studley’s Hospitality Group. They are: 1. Public hospitality REITs. Like  hotel REITs are undervalued now in the market and Starwood Hotels & Resorts Worldwide is no except. The offer it received from Marriott last year, valued Starwood at $12.2 billion , was below market, Magazine said. “The REITs will benefit from this public display of hospitality being undervalued,” Magazine told GlobeSt.com. “Hospitality REITs have suffered because of perception that the hospitality market is peaking. Now here is a public indication of someone willing to pay top price for hospitality.” 2. Starwood hotel owners. The latest offer from the Anbang consortium is a better deal for Starwood Property Group members, Magazine also said. Starwood property owners don’t have to worry about their hotels merging with a particular Marriott brand in markets where there is a lot of overlap, Magazine said. Such activity would also affect valuations in the individual markets. 3. Starwood’s regular customers. They don’t have to worry about Marriott merging the two loyalty systems with an Anbang deal, Marriott said. And why should they worry about that? Because, Magazine said, Starwood points are worth more than Marriott points.