There are solid rumors out there that Hyatt is in advanced talks to buy Starwood Hotels. I first learned of it this morning when Gary Leff tweeted about a CNBC article noting the advanced talks.
As a side note, it’s stories like these that keep a healthy backlog of posts for me to finish, including my Greece trip this summer.
At first blush, I don’t see a lot of downside here. I’m going to spend some time later comparing the footprints of the two chains, but both are on the smaller side when compared with their larger competitors Hilton, IHG and Marriott. Even if they did combine the two companies, they would still have less properties than any of these (to the tune of half as much if my memory serves me correctly).
Starwood has excellent coverage in Europe with some top-notch properties. Think hundreds of years old palaces like the Danieli in Venice, historic luxury such as St. Regis Rome or contemporary resorts like Arion resort overlooking the waters of Greece.
Hyatt has less coverage in Europe but some beautiful properties in Asia, like Park Hyatt Tokyo. In the US, though SPG has more coverage in some areas, Hyatt has higher quality properties overall in the mid-tier brands (Hyatt Regency v Sheraton) and limited service/extended stay (Hyatt Place and Hyatt House v Aloft, Four Points and a few Elements).
From a loyalty perspective, Starwood Preferred Guest owns the best airline relationships with an aggressive transfer ratio of 1:1.25 with most airlines.
Hyatt is a bit freer with bonus points on their co-branded credit card where SPG has generous benefits with their corporate card.
Both chains have similar strategies for the amount they choose to bonus customers with quarterly promotions and how they reward them for stays.
SPG has lifetime status tiers that are achievable for frequent travelers at both of their status levels where Hyatt has a revenue-only path to Lifetime Diamond, their top-tier status.
Since both chains are much smaller than the big boys in their market, a combination of the two would not lead to any obvious monopolistic markets in the US, so I think it’s highly unlikely the government would seek to block such a merger.
I’d like to say I see a downside here, but not yet.