Could IHG Be a Potential Merger Partner for Starwood?

Merger speculation surrounding Starwood began back in April when Starwood Chairman Bruce Duncan noted that a strategic review was occurring and that “no option for increasing shareholder value” was off the table. Former CEO Frits van Paasschen had resigned just a few months earlier and speculation was that he was not interested in a merger. In an investment note yesterday, MKM Partners analyst Chris Agnew added to the speculation with these thoughts:

“Starwood could buy La Quinta or there’s always private money in Asia,” he said. “I think a merger with InterContinental Hotels Group (IHG) makes the most sense because of geographical overlap. And InterContinental has higher-end properties, as does Starwood.”

TheStreet notes that Agnew also points to tax advantages from a merger between InterContinental and Starwood, as InterContinental is headquartered in the United Kingdom.

What are your thoughts? Would you support an IHG/Starwood merger? I love the SPG program and value their hotel points above most others. I also love their airline transfers. On the other hand, while I use IHG Rewards strategically, it doesn’t come close to the benefits I receive with Starwood and I never feel that my status is recognized in the same way.

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Comments

  1. To the extent that IHG became Starwood I would be pleased. Especially if IHG points somehow rose to the value of Starwood Points (I can dream).

    To the extent that Starwood became IHG I would be heartbroken. IHG is like Walmart – they’re good when you’re in a pinch and need a reliable option that won’t completely break the bank, but I’d prefer doing a little legwork for the higher-quality, usually higher-payoff upscale brands.

    Totally agree with you that Starwood is excellent when it comes to recognizing and catering to status. To the extent the status became more like IHG it would be very disappointing.

  2. Independent of any attributes of each chain, Starwood treats customers as friends, iHg sees customers as enemies.

  3. Yeah, great idea. Because a hotel chain with 25 brands is really going to be super efficient.

    And you need to keep (most of) the brands, or what are you really buying?

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