SPG has a new Chinese suitor

Last year, Starwood Preferred Guest (SPG) Hotels has agreed to be taken over by Marriott Hotels to form the largest hotel group in the world. Marriott made the takeover bid based on a cash and stock bid, which means SPG investors would get some Marriott stock as a result.

St. Regis New York
St. Regis New York, a flagship property of SPG

Then over this week, Chinese insurance group Anbang made an all-cash offer for SPG valuing the company at $13 billion, or $78 a share. This total bid is superior on the fact of it being an all-cash offer. Meaning investors will be reimbursed fully with cash, giving them the flexibility to divest out of the hotel industry altogether.

This acquisition offer is also interesting for several reasons, one of which is that Anbang has over the past few years made several bold acquisitions. It started with the $1.9 billion purchase of New York’s Waldorf Astoria Hotel, then it bought Strategic Hotels & Resorts from Blackstone for $6.5 billion. Strategic owns some distinctive hotels & resorts across the United States, including the JW Marriott Essex House facing Central Park in New York and the Four Seasons Resort in Jackson Hole, Wyoming.

Resort lobby
Four Seasons Resort lobby in Jackson, WY; part of the Strategic Hotels & Resorts

Anbang seems to be making deals to add a list of flagship hotel properties to their portfolio. Starwood for example owns the St Regis New York, which is another prime piece of real estate in New York and also one of the city’s most distinctive hotels. Prime real estate like these are probably way more valuable than the standard run of the mill hotel properties, and SPG has one of the better portfolio of hotels in the premium segments.

As a customer, I am secretly hoping that SPG accepts Anbang’s deal instead, because the chances of the SPG member program surviving in the current state would be higher if Anbang’s deal go through as they are less likely to alter the operations of the hotel. In fact, there is an even higher chance of other hotel properties owned by Anbang being incorporated into SPG. Think of the Four Seasons in Jackson being rebranded to a St Regis, that would be nice for sure!


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