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Amid The Starwood Drama, No One Is Talking About This

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One of the hottest topics of debate on Wall Street these days is the fate of Starwood Hotels & Resorts Worldwide Inc (NYSE: HOT). One of the critical parts of any buyout will be the handling of Starwood's top luxury brand: W Hotels.

After Chinese insurance company Anbang made multiple unsuccessful attempts to buy out Starwood in 2015, Marriott International Inc (NASDAQ: MAR) swooped in with a $12.2 billion buyout bid of its own in November. Not to be outdone, Anbang quickly entered a competing bid, and the resulting bidding war raised Mariott’s offer to $13.6 billion. Now, Anbang has once again topped Mariott with a $14 billion offer.

Baird analyst David Loeb believes that the bidding war is now over as far as Marriott is concerned.

“I just think Marriott is too disciplined to pay more than what they’ve already offered,” Loeb said on CBNC Monday.

Related Link: FT, WSJ Both Cautious On Starwood-Anbang Combo

Although questions have been raised about Anbang’s ability to actually raise that type of money, Starwood shareholders are cheering each bid.

The Issue No One Is Talking About

Hotel connoisseurs, on the other hand, are left wondering about the fate of Starwood’s W Hotel luxury brand.

"One should be mindful that the "mating & dating" and "beverage & food" versus "food & beverage" culture of The W Hotels brand may conflict directly with the core values-driven ethos of Marriott International Inc," The Talented Blonde retail analyst Kristin Bentz said on Tuesday.

"The W Hotels brand is known as a dynamic series of 77 properties that use design, fashion and music as the core unique selling proposition. The properties are sexy: the bass is pumping, the cocktails are stiff, and the lighting makes everyone look like a supermodel," she added.

Hardly anyone can say that about a typical Marriott location.

Anbang, meanwhile, has a history of acquiring extremely high-end hotels, such as the Waldorf Astoria in New York, which it purchased for a record $1.95 billion. The handling of the W Hotels brand is worth watching, as mismanagement could damage the brand’s value for decades to come.

Disclosure: the author holds no position in the stocks mentioned.

Latest Ratings for HOT

Sep 2016CitigroupTerminatesNeutral
Aug 2016CitigroupMaintainsNeutral
Jul 2016Canaccord GenuityTerminatesHold

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