Host Marriot Looks to Acquire Starwood Assets

According to reports, Host Marriott is in discussions with Starwood Hotels to purchase 20 to as many as 80 full service hotels in a multibillion deal. Both firms refuse comment.

LaFleur says that the possible deal fits Host Marriott's strategy of expansion in major cities with convention-styled hotels. The deal would also conform to Starwood's plans of "reducing its real estate exposure" and increasing its portfolio of hotel properties it manages. LaFleur says that unlike other major hoteliers, Starwood has not been able to buy back its stock. He notes that some analysts have speculated that Starwood's failure to repurchase its stock was due possibly to a large deal in the works.

Starwood recently signed definitive agreements to purchase the brand, management and franchise businesses for more than 130 Le Meridien hotels and resorts. The locally based hotelier had announced four months ago its intent to purchase the brand. No sale price for the transaction was released. In addition Lehman Brothers and Starwood Capital Group of Greenwich, CT are forming a joint venture to acquire the owned and leased hotel portfolio of Le Meridien, which includes about 36 properties.

Host Marriott, headquartered in Bethesda, MD, currently owns 107 properties throughout the US, Canada and Mexico that operate primarily under the Marriott, Ritz Carlton, Hyatt, Four Seasons, Fairmont, Hilton and Westin brands. Its latest deal was its sale in March of 85% of its interest in the Courtyard joint venture, which involves the ownership of 120 Courtyard by Marriott hotels, in a deal valued at $92 million. Starwood operates 750 hotel/resorts properties in more than 80 countries.

On July 20, in announcing its second quarter results, W. Edward Walter, executive vice president and chief financial officer of Host Marriott, stated, "The significant improvement in our operations combined with the strengthened balance sheet leaves the company well positioned to pursue our strategy of acquisitions, investments in our portfolio and other corporate goals." The company stated at the time that as of June 17, it had $404 million of cash and cash equivalents, $167 million of restricted cash as well as $575 million of availability under its credit facility with no amounts outstanding.