Hyatt, China—all in reported talks for Starwood

The Starwood saga continues. News broke yesterday that three potential Chinese companies are vying for ownership of the Stamford, Conn.-based hotel company, which is reportedly valued at $14 billion.

According to The Wall Street Journal, Shanghai Jin Jiang International Hotels, along with HNA Group, parent of Hainan Airlines Co. and sovereign-wealth fund China Investment Corp., each has presented a separate proposal to the Chinese government over the past two months.

As The Journal further reports, "the Chinese government wants only one domestic company to make a bid, so that Chinese companies don’t drive up the price by bidding against one another."


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Starwood's brands include W, Westin, Sheraton and St. Regis and has more than 1,200 properties worldwide, but fewer than half of its rooms are in the U.S. In April, Starwood’s board indicated it would be open to a sale "amid concerns it wasn’t growing as fast as rival hotel operators."

According to The Journal, more than 53,000 of Starwood’s 360,000 rooms are in Greater China, which includes Hong Kong and Taiwan.

But is it wise for a China-based company to acquire the company? According to The Journal, maybe not. It writes: "Chinese bidders, knowing well that the hotel industry in their home country suffers from oversupply, may not want more China exposure. In the second quarter, Starwood’s revenue per available room at same-store hotels in China was down 0.3 percent from a year earlier in constant-dollar terms; at its North American properties, that metric was up 5.3 percent.

Moreover, even as China's economy slows, new supply is up. At the start of the year, the number of hotel rooms under construction or planned stood at 292,000—equal to 15 percent of current supply—according to STR Global.

Meanwhile, there hasn't been much noise about a U.S.-based hotel company acquiring Starwood, until now. CNBC is reporting that Hyatt Hotels Corp. has jumped into the mix.

Hyatt in talks to buy Starwood Hotels

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