PHOTO: Delta Hotels & Resorts flagship property Delta Toronto (Courtesy Marriott International)
Marriott International, Inc. announced today it has signed definitive agreements to acquire the Delta Hotels and Resorts brand and management and franchise business from Delta Hotels Limited Partnership, a subsidiary of British Columbia Investment Management Corporation (bcIMC), for approximately $135 million.
Delta Hotels & Resorts is a popular brand in Canada that features 38 hotels and 10,000 rooms in more than 30 cities across the country. It has gained a following based on innovative approaches in technology and guest room design (its new ModeRoom offers multiple connectivity options, a mobile-friendly design and free Internet), exemplified in its flagship property Delta Toronto, located in the center of Canada's thriving high-rise neighborhood, South Core.
Not only does the acquisition add another strong brand to Marriott's offerings, but it's also significant in that it helps Marriott expand its global portfolio, which it has been focusing on lately. When completed, the transaction will increase Marriott's distribution in Canada to more than 120 hotels and 27,000 rooms, making Marriott the largest full service hotel company in Canada.
"Delta has an impressive portfolio of hotels that are among the most preferred in Canada," said Arne Sorenson, president and chief executive officer of Marriott International, via a press release. "With this acquisition, we are continuing our focus on building our brand portfolio and growing in attractive regions outside the U.S. Combining the strong Delta brand with Marriott's hotel development expertise will accelerate growth of the brand in Canada and in other markets around the world."
David Grissen, group president overseeing The Americas for Marriott International, said, "At completion, this transaction will propel Marriott to a leading position in Canada. Canada represents the largest international source market for our hotels in the United States, and the integration of Delta into Marriott's 4,100 plus hotel global portfolio will provide new travel opportunities for both Delta and Marriott customers. We expect integrating Delta into Marriott's systems, sales engines, Marriott.com, and the more than 49 million member Marriott Rewards loyalty program will create meaningful operational synergies for owners and franchisees.
Marriott's Americas management team looks forward to working closely with Delta's hotel owners and franchisees, and welcoming Delta employees, who will have access to a larger range of opportunities in North America and globally once the transaction closes."
Marriott is acquiring the Delta management and franchise business, as well as the Delta brand and related intellectual property as part of the agreement. At stabilization, after realizing certain operating synergies, Marriott expects the purchase price to be approximately 10 times annualized earnings before interest, taxes, depreciation and amortization (EBITDA).
As far as bcIMC is concerned, the company's affiliates own 13 Delta hotels (and one under development) and will sign new 30-year management agreements with Marriott for these properties. The other 25 Delta hotels are owned by third parties (15 are managed by Delta and 10 are franchised). Five managed hotels (about 1,100 rooms) are under development.
Assuming consent by third parties and the Canadian Competition Bureau, the transaction is expected to be finalized in the second quarter of 2015. Marriott does not expect the transaction will have a material impact on its 2015 results, excluding one-time transaction and integration costs.
For the latest travel news, updates and deals, subscribe to the daily TravelPulse newsletter.
Topics From This Article to Explore
