Marriott International is set to become the world’s largest hotel company — and nobody is more surprised than its chairman.
“It’s something I never, ever even imagined,” John Willard “Bill” Marriott Jr. said last week on a private flight to tour textile mills in Thomaston, Ga., and Union, S.C., where the company purchases towels. “I’ve always said we’ve built the business one hotel at a time. I can’t imagine that we [will] have more than 5,500, almost 6,000, hotels.”
The hotel operator’s proposed takeover of Starwood Hotels and Resorts, slated to be completed this summer, would create a behemoth, with nearly $20 billion in annual revenue and 1.1 million rooms around the world.
Executives at Bethesda-based Marriott say they are looking for ways to combine the two companies’ computer systems, sales teams and rewards programs. The deal is projected to save the combined company $200 million in annual costs by eliminating redundancies and finding other efficiencies.
“We’re working on a total organization plan,” said Marriott, whose father founded the company in 1927. “So far, as we know, it’s been really well received by shareholders on both sides.”
Shareholders of the two companies are scheduled to vote this month on the $12.2 billion deal, which is awaiting approval from regulators.
Marriott has purchased a number of smaller brands in recent years, including South Africa-based Protea Hotels and Delta Hotels, located primarily in Canada. But combining forces hasn’t always been easy. The company’s 2012 takeover of four Gaylord resorts was particularly rocky as Marriott struggled to combine its sales team with Gaylord’s.
“I think we are hopefully learning from the experiences we’ve had in the past few years,” Arne M. Sorenson, president and chief executive of Marriott, said in a February call with Wall Street analysts. “You can, to some extent, look at the Gaylord acquisition and the Protea and Delta acquisitions as warm-up acts for this. And hopefully, we’re getting better at it.”
“Generally,” he added, “our plan is, as quickly as feasible, to move to one system, not two.”
One area where that may be tricky is in combining the companies’ corporate headquarters.
Marriott is planning to move its headquarters from a sprawling suburban complex in coming years. Starwood, meanwhile, still has a lease on its headquarters in Stamford, Conn., which has about 2,000 employees.
Marriott has more than 900,000 square feet at its headquarters, on Fernwood Road. Sorenson said last year that the company planned to move when its lease expires in 2022. The hospitality giant is focusing on sites near Metrorail stations and would prefer to stay in the Washington area, where Hilton Worldwide, Choice Hotels and other large hotel firms are based.
Marriott has hired real estate consultant JLL to locate and review the company’s options. Meanwhile, officials in the District, Maryland and Virginia have begun considering which properties near Metro stations might best interest the company. And it is not just state, city and suburban officials who are competing for the new headquarters.
In Montgomery County, a group of business leaders and residents, the Friends of White Flint, has begun publicly jockeying for the company to relocate to a redeveloping section of Rockville Pike, being branded as the Pike District.
The group purchased a bus advertisement in front of the company’s headquarters, saying “If Marriott picks the PIKE DISTRICT, you’d be eating dinner by now.”
On Thursday, Bill Marriott said the company is considering a number of locations but has not decided whether to remain in Maryland.
He also said it is too soon to tell when — and how — Starwood’s corporate employees would be brought into the fold.
“We don’t know yet,” he said. “We’ve got a bunch of sites we’re looking at, but we have no idea where we’re going yet.”
Bill Marriott did not say specifically where the company was looking. But, he added, executives are searching for a site large enough to accommodate its 2,000-plus employees, as well as including a 275-child day-care center and gym.
Would it also include a pilates studio? Marriott, who turns 84 this month, is known to be a practitioner.
“I sure hope so,” he said.
Jonathan O’Connell contributed to this report.