Starwood Hotels & Resorts Worldwide has acquired the Le Méridien brand and the related management and franchise business for the portfolio of 130 hotels and resorts globally for approximately $225 million, roughly equal to the amount of Starwood’s current investment, including accrued interest, in the debt of Le Méridien.
The completion of this acquisition will significantly increase the company’s footprint in Europe, Africa, Middle East and Asia Pacific.
The acquisition of the Le Méridien brand management and fee business further supports Starwood’s strategic shift from its significant real estate ownership to a management and franchise-fee focused model, one of the strategic pillars that underpin Starwood’s future direction.
“The acquisition of the Le Méridien brand is an exciting and significant development for Starwood that we believe further defines us as a truly global hotel operator,” said Steven J Heyer, CEO of Starwood Hotels & Resorts. “We love the Le Méridien brand which is why we have pursued it over the last couple of years – we see great potential. Le Méridien is a perfect complement to the Starwood portfolio, with its international footprint and unique guest culture. Le Méridien hotels and resorts represents both a great growth opportunity, alongside Starwood’s W and Westin brands, and extends the number of destination choices of travel to Starwood loyalists across the world.”
With 43 properties in Europe, 47 properties in Africa and the Middle East, 28 properties in Asia Pacific and India and 12 in the Americas, the brand is also a perfect complement to Starwood’s current geographical footprint, securing its position as one of the leading consumer lifestyle hotel and leisure companies in the world.
“Le Méridien hotels are located in many markets where we don’t already have a strong presence. This coupled with the brand’s excellent reputation and its strong European DNA, is what made it such an attractive proposition for us,” added Heyer. “In addition, we have great plans to expand the brand – particularly in the US, Latin America and Asia-Pacific – to enhance the brand itself, and build on its great reputation and people. It provides us with another growth engine for our development team bringing the current hotel brand portfolio to eight.”
Starwood will continue to operate the Le Méridien flag and anticipates that the alignment of the Le Méridien brand with a larger, stable, multi-branded hotel group will enable the brand to thrive by enhancing revenue, accelerating growth and providing a robust career path for Le Méridien’s associates worldwide.
Le Méridien’s predominantly European customer base is a perfect complement to Starwood’s existing customer base. The 130 high end properties will bring Starwood’s over 24 million Starwood Preferred Guest (SPG) customers more choice in key markets such as Paris, Nice, Dubai and London. In addition it will add destinations where there is no Starwood property at present such as Monte Carlo, Barcelona, Budapest, the Seychelles and Mauritius. This match will also bring access to some 750 exciting new destinations for Le Méridien’s loyal customers.
Le Méridien has a healthy development pipeline already in place, including the recently opened Le Méridien She Shan Shanghai, a luxury 325 room hotel in the city. There are over 10 hotels planned to open in 2006, in destinations such as India, Thailand and China. Management and franchise fees from the hotels expected to operate under the Le Méridien flag in 2006 are estimated to be approximately $45 million on a full year basis.
Starwood anticipates significant business benefits from Le Méridien’s alignment with Starwood, following what Heyer says will be a “smooth and speedy” transition period. The transition will be led by Michael Wale, senior vice-president Le Méridien operations. Based in London, he and the Starwood integration team will leverage Starwood’s global scale and infrastructure to quickly bring about operating efficiencies for Le Méridien and to integrate it into the Starwood business within six to nine months.