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Starwood Acquires Le Meridien Worldwide
Will Retain Distinct Identity, Le Meridien
Will Be Seventh Starwood Brand: Meridien CEO
Savio Rodrigues, Mumbai
US based hotel conglomerate - Starwood Hotels
and Resorts Worldwide Inc. has acquired premium European hotel
company - Le Meridien Hotels and Resorts from Nomura International
Plc. The outcome of the ongoing negotiations were revealed
exclusively to Express Hotelier & Caterer by Robert E
Riley, chief executive officer, Le Meridien Hotels and Resorts
in a telephonic conversation. Riley said "Starwood Hotels
& Resorts has bought the Le Meridien Brand."
Unveiling details of this acquisition,
he stated that Starwood Hotels and Resorts will manage all
135 Le Meridien properties. Since a provisional agreement
in February 2004, the Lehman Brothers Holdings (who previously
acquired the senior debt of Le Meridien in 2003) have been
negotiating an agreement with Starwood Hotels. Also according
to the arrangement, the Le Meridien owned and leased hotel
portfolio (comprising 36 hotels worldwide) will be sold to
Newco (a company jointly controlled by Lehman Brothers and
Starwood Capital Group). Conditional to this transaction,
Starwood will enter into management agreements with each hotel
owned and leased by Newco.
When contacted, Thomas J Monahan, senior
vice president - acquisitions & development, Starwood
Asia Pacific Hotels & Resorts Pte Ltd, said, "All
I can say right now is that the European Union (EU) has approved
the acquisition of Le Meridien group by Starwood Hotels and
Resorts."
Commenting on the future of Le Meridien
under Starwood and on its related impact to its existing management
tie-ups, Riley revealed, "Le Meridien is to become the
seventh brand of Starwood. The Le Meridien management and
hotels are being separated and Le Meridien is now solely a
hotel management company and I think that Starwood's infrastructure
can be used to our strong advantage with additional sales
and cost saving and a larger platform for human resources.
This is the first time that the Le Meridien brand will be
owned and managed by a hotel group."
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THE INDIA IMPACT
Le Meridien holds the mantle of being
a leader in the international luxury segment in India.
In light of this major development (that will undoubtedly
have a global impact on the existing Le Meridien properties),
the stance Starwood Hotels and Resorts Worldwide Inc.
will adopt for its Indian operations is left to be seen.
Recently, Starwood announced its
plans to bring its other leading brands after Sheraton
- St. Regis, W, Westin, Four Points Sheraton and Luxury
Collection to India. Also, with the existing Starwood
- ITC Hotel 30-year relationship, with the Sheraton
brand, in question, it could lead to an interesting
scenario where similar brands, all from the same stable,
will be positioned to compete with each other.
Leading hospitality consultants opine
that considering that the brands compete in the same
hotel business space, issues could arise with the Indian
owners where the brands come under the management/franchise
ambit (a prevailing business relationship model in India
for both Sheraton and Le Meridien).
It would also be interesting to see what route Starwood
takes - whether it will push its old brands (some not
yet established) or its newly acquired brand (established)
in the Indian market.
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Le Meridien Changing Hands Over
The Years
In late 1994, Le Meridien was acquired
by UK hotel giant, Forte, which in turn was acquired
by Granada Group plc in 1996. In April 2000, Le Meridien
signed a global strategic alliance with Japan's Nikko
Hotels International, encompassing 22 Nikko hotels worldwide
and giving the group a greater presence in key markets
such as Asia Pacific and certain areas of North America.
Through a merger in the summer of
2000 between Forte's parent company, Granada Group plc,
and global contract catering giant, Compass Group plc
- and the subsequent de-merger of the two companies
in February 2001 - the ownership of the Forte Hotel
Group and its three brands (Le Meridien, Heritage Hotels
and Posthouse Hotels) passed solely to Compass Group.
In May 2001, Nomura International
plc acquired Le Meridien from the Compass Group plc
for £1.9 billion and Le Meridien was merged with
Principal Hotels, which was acquired in February 2001.
In December 2003, Lehman Brothers Holdings acquired
the senior debt of Le Meridien.
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