One of the key educational sessions featured Arne Sorenson, President and Chief Executive Officer of Marriott International. Sorenson gave the attendees some details of his upbringing which included being born in Japan and having a number of Lutheran preachers in his family. Sorenson noted that “rather than become a preacher, I became a lawyer.” While some family members were disappointed he didn’t follow in the clergy line, he has obviously done well. His Minnesota connection is that he graduated from the University of Minnesota law school.
He spoke about the pressure of being the first person not named Marriott to lead the company. Bill Marriott came to rely on Sorenson during various merger and acquisition discussions over the years and was even named the company’s CFO without having financial management experience. Mr. Marriott wanted him to be a partner and look at the company with an objective set of eyes.
What attendees most wanted to hear was details about the recently announced merger with Starwood. The new company, once all regulatory hurdles have been cleared, will go from 750,000 rooms in 80 countries to 1.1 million rooms in 100 countries. Locally, in the Minneapolis hotel market the combined Marriott will grow to about 30% of total rooms if all hotels and brands remain intact.
He said he will continue to focus on core businesses and on exiting those that are peripheral to that focus. He recognizes the changing needs of the marketplace and the desire for travelers to be more experiential in their travel pursuits. According to Sorenson, Asia is still a top strategic priority because of the greater affluence of many Asian countries, notwithstanding the current economic challenges in China.
He shared a few details about the deal itself. Many of us that are not close to the deal had read in various industry publications about a potential Hyatt-Starwood combination. Even many within the Marriott family were surprised about the blockbuster news of the Marriott-Starwood deal, as it had been kept very much under wraps and was actually put together in three weeks, although some prior conversations between the two companies had taken place.
He estimated a combined company would yield more than $200 million in operational and staffing savings. He was quick to note that he wanted preserve the best of both companies and was extremely interested in capitalizing on what he characterized as the marketing prowess in the DNA of Starwood that will complement Marriott’s strength as an operating company.
We also saw that our local hotel brand Carlson has announced its exploration of a potential sale and undoubtedly other brands have conversations if not deals in the works to strengthen their competitive positions. We will all have to stay tuned.