COLLEGE PARK, Md. - Host Marriott Corp. will buy 38 hotels from Starwood Hotels and Resorts Worldwide Inc. for about $3.4-billion in a deal that Starwood hopes will free it to build its luxury brands and that boosts Host's upscale and overseas hotel and resort holdings.
One of the hotels included in the deal is the Sheraton Suites Tampa Airport. The deal announced Monday between the two lodging companies calls for Host of Bethesda, Md., to give Starwood shareholders $2.33-billion of Host stock and pay $1.06-billion in cash. Host will also take on $700-million of debt as part of the deal.
Starwood, headquartered in White Plains, N.Y., owns and operates brand names including Sheraton, Westin, St. Regis and W hotels. The company is moving toward a model of operating its properties, rather than owning them, an approach adopted by competitors such as Marriott International Inc.
Starwood shares rose 76 cents, or 1.3 percent, to close at $60.02 Monday on the New York Stock Exchange. Host's shares fell 79 cents, or 4.5 percent, to close at $16.65 on the NYSE.
The sale to Host accounts for about 40 percent of the rooms Starwood owns, but Starwood will continue to manage most of the properties that Host is buying for the next 40 years. Host will pay Starwood management fees, an arrangement that is usually more profitable for lodging companies than owning their own hotels.
The 38 hotels encompass about 19,000 rooms in the United States and abroad. It includes Starwood properties in New York City, California, Canada, the United Kingdom and Chile. Two resorts in Fiji are also included.
Host expects the newly acquired hotels to generate between $355-million and $365-million in pretax earnings in 2006.
