DenverBrian

Drury is a very closely held private family company and Christian IIRC - most likely not in play at any time in the foreseeable future.

abk

And the "Christian" reference is relevant because? Kind of like saying Marriott is a Mormon hotel chain.

DenverBrian

And your defensiveness is relevant because? I noted it only because I see some analogies to Chick-Fil-A, In-N-Out, etc.; companies that are founded on private family religious values are generally outside the realm of traditional M&A. <shrugs>

iflyjetz

Wouldn't the 'better' solution for IHG to be to acquire a bunch of high end hotels and flag them IHG? But high end hotels are NOT where the money's at for hotel management in the current economic environment - it's the low end hotels that are most desirable for profitability.

I figured you were talking about Drury from a traditional M&A angle. Some private companies simply don't want to be acquired.

DenverBrian

Thanks. Onward to more speculation...

IHG and Starwood as a mashup has a lot of potential. IHG gains St. Regis, which could go into the RA program and the St. Regis brand might have sufficient cachet that you'd rebrand the Intercontinentals to St. Regis.

Meanwhile, Starwood would gain the niche in the US that they've been behind in for so long: A midprice chain with outstanding market penetration, Holiday Inn Express.

While Marriott, Hilton and Starwood have been birthing brands like the Duggars in recent years, the issue recently has been the inability to get the brands stood up with enough units so that travelers would have enough options. I think TownePlace Suites is the last major startup brand to have achieved reasonable market penetration in the US - and that brand started almost 20 years ago. Aloft, Indigo, Element, W, Andaz, Snarky (OK, I made that last one up but I guarantee you someone's got a TM request on that name)...all of these "lifestyle" brands are cutesy or quirky or Millennial-friendly in some way; the problem is there are only 25 of any one of them to choose from worldwide.

Hyatt realized this when they wanted to get into the midprice brand hunt and their answer was to buy AmeriSuites and rebrand them as Hyatt Place. Poof! Instant 200-unit market penetration in the US.

A merger of IHG and Starwood might stop some of the fragmented lifestyle-brand madness and allow 2 or 3 brands to come together as a single voice in various segments. Starwood + Hyatt might accomplish some of this too, to a lesser extent.

factory81

Since SPG doesn't own hotels, how can SPG incentivize people to build more Four Points? It seems SPG needs a couple hundred of these to compete in low end space.

Land-of-Miles

Isn't that the problem? People choose other brands to develop instead of 4P for a reason. I assume because the Starwood on costs to the owners are too high and thus not competitive.

factory81

Well someone else in the thread mentioned that the last successful hotel brand to be built in USA was TownPlace Suites, which they also claim took 20 years.

I guess I wonder if there is a need for more hotels, or is there just an infinite demand for more hotels in key metro cities?

Element hotels are getting a pretty big expansion. Couple dozen hotels over a few year period. It seems Starwood is pretty serious about this brand. I just checked the Four Points brand hotel directory, and I would actually say that it seems that Starwood is doing a bit of growing (Dare I say). Between Aloft/Four Points/Element - by 2018 (haha), I will actually have a few to pick from. Like they are actually building them in "good locations" too. As in not NYC, Chicago, or Miami.

Places like Spartanburg, Fargo, All over Texas, and all over Canada, Ohio, Arkansas, In other words, it looks like organic growth in cities that SPG has no presence or little presence in. Still, we need another couple hundred Element/Four Points.

http://www.starwoodhotels.com/fourpo...ortType=region
http://www.starwoodhotels.com/fourpo...ortType=region

nongsom

IMO if ihg acquire spg it make a brand damage for spg W StR. Lux
But if spg acquire ihg it make a brand improve for another ihg low-end brand
Every one known ihg is poor customer service center and brg
but spg is best in csc and brg like heaven and hell.
Maybe it will end up as a parter like Ceasar ?

iflyjetz

I'm not enthused about an IHG/SPG merge. While it's not a bad merge with respect to high end/low end mixtures, I'd hate to see IHG's loyalty program have any influence on the combined entity.

From my experiences, StR is higher end than Intercontinentals.

Holiday Inn Express would be a welcome addition; I'd stay there over Aloft/Element (not an Aloft/Element fan; reminds more of college dorms).

SPG owns some properties. That's one of the complaints against them; shareholders would prefer pure hotel management companies. More profit in simply managing hotels than owning them.
https://starwood.q4web.com/files/doc...List-Final.pdf

factory81

Have you personally stayed in a Element? I actually stayed in one for several weeks and enjoyed it. Kitchen + modern + more functional than a Aloft.

It was basically like a more appealing Four Points (to me), that was supposedly environmentally friendly.

I personally don't want SPG to really monkey with anything per se. I want SPG to focus on whatever it takes to incentivize people to open SPG properties.

UA-NYC

Agreed - there's just not nearly enough of them, but it seems like they're finally starting to grow the brand ^

iflyjetz

Yes, both Denver and NYC Element properties.
Element reminds me of Aloft with a kitchenette. College dorm style rooms.

I prefer most Four Points over Element, although some Four Points are better than others. But we all have our preferences.

bhrubin

I agree!

Disagree. IC hotels, with a few exceptions, are more midscale (with some upscale) properties. Only a very few upscale IC hotels (HKG, for example) could ever be considered for the StR brand. IC is too well known and expansive a brand--both here in the USA and internationally--for any merged IHG-Starwood to ignore or change. IC would remain its own brand in any IHG-SPG mashup.

There is no question that Holiday Inn/Holiday Inn Express would be a good budget/midscale expansion for SPG (as would Staybridge/Candlewood). However, the problem (and reason for their underperformance as part of IHG) is their inconsistency across the brand (in the same way that Sheraton is a brand consistency problem with SPG).

The IHG-SPG mashup would need to either enforce new brand standards across all Holiday Inns...or convert them or some of them into the SPG Four Points brand (and perhaps some into the Element/Aloft brands). Holiday Inn could become a new SPG brand, but if Starwood were the controlling interest in any IHG-SPG mashup, I find it more likely that Holiday Inns would be rebranded (after renovation and imposition of better brand standards) into Four Points, Aloft, Element as appropriate. Holiday Inn's brand isn't one I'm sure that anyone on WS would think is worth preserving, though I could be wrong. Certainly, Holiday Inn could be preserved as the 13th brand in SPG, while a number of them were converted eventually into the other lower tier SPG brands already mentioned.

If you hadn't noticed, most IHG Indigo properties listed are STILL Holiday Inns! IHG hadn't done much with Indigo or Even yet. SPG hadn't done much with Aloft/Element, but that partly was because of the Great Recession which significantly delayed the expansions of those brands.

W has increased substantially around the world--but not in the USA. Yet the upscale lifestyle segment isn't the sector that is showing the most growth domestically or worldwide. IHG's Kimpton would be better than W in market penetration in the USA, and in the more midscale/upscale lifestyle segment, while W would be better in the international market nowadays. There is no question that Kimpton would remain its own brand within SPG if SPG were to be the controlling program.

Which is why the Starwood acquisition of IHG's Holiday Inns/Candlewood/Staybridge properties and rebranding them into Four Points, Aloft, and Element would give SPG an immediately enormous market penetration in the USA (where there currently is more growth) and abroad (where everyone knows future growth will occur over time).

I'd love to see Hyatt and Starwood merge, but the economics from an investor standpoint don't seem to resolve the issues confronting Starwood now. Hyatt just isn't big enough to get the job done, unless investors see really good investment growth potential in the acquisition of much smaller (but more expensive) Hyatt. IHG is a cheaper and more expansive target for acquisition for Starwood than is Hyatt--especially for increased market penetration. Hyatt doesn't come close to IHG in the budget/midscale sector, both domestically and abroad.

Dieuwer

Source? It seems to be hotel chains are minting gold in Europe, just looking at the high nightly rates.