Starwood Hotels, Havana Bound, Resumes Talks with Marriott
- Mar 22, 2016
Havana—The week is off to a busy start for Starwood Hotels & Resorts Worldwide. While it has resumed talks to merge with Marriott International, the hospitality giant has made history by becoming the first U.S. hotel company to enter the Cuban market in nearly six decades.
Cuba has been making a lot of headlines this week. President Obama made an historic move by becoming the first sitting U.S. president to visit the country in 88 years on Monday, March 21, and Starwood led the U.S. lodging industry’s shift in Cuba by announcing three new agreements to develop hotel assets on the Caribbean island.
“The entire U.S. hospitality industry has watched Cuba with great interest, and we are thrilled to lead the charge and bring our sophisticated, high-end brands into the market at this inflection point,” Thomas Mangas, CEO of Starwood, said in a prepared statement.
It didn’t take too long, considering. It was in December 2014 when President Obama announced that the U.S. would alter its policies toward Cuba in an effort to normalize relations, which had turned sour and come to an end in 1961. And in October 2015, the U.S. Departments of Commerce and the Treasury initiated the U.S.-Cuba Regulatory Dialogue, paving the way for the removal of certain restrictions, including those on commercial travel and U.S. companies’ freedom to establish and maintain a presence in the country, as noted in a document released by the Commerce Department.
Now, Starwood is moving full steam ahead with its creation of a new footprint in Havana, and the landmark Hotel Inglaterra will be among three upscale rebranded lodging destinations. Starwood has formed a partnership with the nearly 140-year-old hotel’s owner , Gran Caribe, and together they will relaunch the property as an 83-key hotel under Starwood’s The Luxury Collection brand. The company has also teamed with Grupo de Turismo Gaviota SA, owner of the five-year-old Hotel Quinta Avenida, on a transformation that will yield the 186-key Four Points by Sheraton Havana. And having inked a letter of intent with Hotel Santa Isabel’s owner, Habaguanex, Starwood will reinvent the property as a member of The Luxury Collection, offering 27 guestrooms.
Starwood doesn’t want to change the face of Havana’s hotel market with these three projects; it endeavors to enhance it. “Hotel conversions…allow us to preserve history, architecture and culture while offering a unique branded experience,” Jorge Giannattasio, senior vice president & chief of Latin America Operations with Starwood, noted in prepared remarks.
Starwood’s presence in Cuba will become real for visitors later this year when Hotel Inglaterra and the new Four Points by Sheraton Havana open their doors under their new flags.
Starwood will have company in Cuba, as it is being quickly followed back into the market by Marriott International Inc., which announced that the Treasury Department has signed off on its application to commence business in the country. However, any competition between the two hotel giants is now a moot point, as Starwood has accepted Marriott’s $13.6 billion merger offer that will create the world’s largest hotel company.
The amended agreement with Marriott implies that Starwood shareholders will receive $21 in cash and 0.80 share of Marriott Class A common stock for each Starwood share. Following the completion of the merger, Starwood shareholders will own roughly 34 percent of the combined company’s common stock.
Starwood accepted the offer after Anbang Insurance Group made a $12.2 billion non-binding proposal to acquire the company on March 10. This week, Marriott came back with a sweetened offer that values the company at $79.53 a share, compared to a cash bid of $78 a share from Anbang, according to a press release from Marriott and Starwood on the revised offer.