Marriott CEO Arne Sorenson initially against Starwood deal

BERLIN, Germany—Marriott International’s acquisition of Starwood Hotels & Resorts—announced in late 2015 and finalized last year—was both a “defensive and offensive” move, Arne Sorenson, the company's CEO, told delegates at this year’s International Hotel Investment Forum, here at the InterContinental Berlin

Sorenson said that the company was initially against the deal, but became convinced that “that the bigger we could make the loyalty programme, the more powerful our platform.”

Sorenson explained: “Not only were we not fully committed to [the deal] but we were against it. We looked at it and thought it was too expensive and we were moving quite well without it—why would we risk it?

"Then, over the course of the next few months, the stock position of Marriott International compared to Starwood Hotels & Resorts changed and the relative cost of the deal changed for us. 

“We became convinced that the bigger we could make the loyalty programme, the more powerful our platform. With that much more choice we could create a deeper connection which could protect us from intermediaries. 

“There is so much money that is made in our business online. The commission levels were too high. The intermediaries are all trying to make money by booking rules in our rooms. It was a defensive and offensive deal.”

When asked about the response to the deal so far, Sorenson said: “I don’t think the takeover of Starwood Hotels & Resorts is a sign of success in itself. We need to make the two companies bigger and better than they would have been on their own. While closing a deal is a big deal, we won’t claim that it was successful until we prove to our associates, owners and guests that it was the right move.”

Sorenson was speaking at the conference after receiving the IHIF Lifetime Achievement Award 2017, an award he described as “a bit like Obama winning the Nobel Peace Price in his first year—a vote of hope.” 

Looking at the current environment, the CEO warned that “too many countries in the world, including my own, are turning too far inward. The biggest threat is a global wave of nationalism or populism, which we saw in England with the Brexit vote and in the U.S. 

“In some respects, we could say that Hillary Clinton lost as much as Donald Trump won the election, but having said that people say that the rules of immigration were not being run as we want. Society is asking how we protect ourselves, from security or economic threat.”

He said that immigration and refugees were issues where there was no consensus and the risk for the sector was that, even though travel was different from immigration, there was a crossover. 

Sorenson said: “Inbound travel in the U.S. is affected by many things. The U.S. is very expensive, which is a more profound effect than the executive order which ran for four days and was shelved. If you are a regular traveller they may not care for our president, but it won’t impact on their decision to visit.

“The trend towards inward looking is so untimely. There are 120 million outbound trips by the Chinese; 10 years ago it was one million. The Chinese government wants that because it gives the Chinese people a higher quality of life. There is also a growing middle class—and where do they want to go? They want to see the great destinations. We need to communicate: you’re welcome.”

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