Marriott seen as suitor for Westin World's largest chain of hotels would build luxury-tier presence


Despite already having plans to spend $1 billion to acquire the Renaissance Hotel Group, Marriott International Inc. is likely to be on a short list of bidders if the Westin Hotels & Resorts chain comes on the market.

Spending another $1 billion to acquire Westin would further Marriott's penetration into the luxury tier of the lodging business, after its announcement last month that it would be buying Renaissance.

But for now, Bethesda-based Marriott is being coy.

"Westin would be attractive to companies because it's a quality name in the quality tier of hotel companies," said William J. Shaw, who is set to become Marriott's president and chief operating officer this month. "They're in a segment that is performing well, and there's a lot of growth opportunities. But we always are looking to develop new brands."

The decision by Westin's owners to explore a sale comes in the wake of the hotel industry's estimated $11.2 billion record profit last year and as the industry is consolidating to fend off competition. In late January, for instance, Hilton Hotels Corp. made an unsolicited $10.5 billion offer for ITT Corp., owner of the Sheraton hotel chain. Marriott is no stranger to the luxury end of the business: In early 1995, the company bought a 49 percent stake in the Ritz-Carlton hotel chain for $200 million.

With Westin, Marriott would add 102 hotels, a reputation for quality with guests, a proven track record for financial growth and an aggressive approach to expanding, analysts say.

Buying Westin would also dovetail with Marriott's plan to expand internationally. More than half of Westin's hotels are outside the United States.

Westin also has expressed interest in operating a proposed 800-room hotel at 300 E. Pratt St., site of the former News American. There, New York-based Schulweis Realty Co. wants to build a 44-story tower that would primarily serve the recently expanded convention center.

Westin owners Goldman, Sachs & Co. and Starwood Capital Group Ltd. Partnership are considering selling the Seattle-based chain for roughly $1 billion to maximize returns for investors, the Wall Street Journal reported yesterday. Goldman, Sachs and Starwood bought Westin in May 1995 for $537 million.

In addition to Marriott -- the world's largest hotel chain with more than $10 billion in annual revenues -- Westin suitors would also likely include Doubletree Corp. and Starwood Lodging Trust, a real estate investment trust affiliated with Westin's current owner.

If Westin is sold to a competitor, it would stand in contrast to a planned initial public offering announced last November. Although various analysts believe Westin would garner more from a sale, some contend the company will continue to pursue the offering.

"We continue to be focused on the quality of our guests' experiences and the quality of our earnings," said Fred J. Kleisner, Westin's president and chief operating officer. "I can't say any more than that at this time."

Although the privately held Westin does not release earnings, it said its revenues grew nearly 10 percent between 1995 and 1996, to $2.6 billion. But some analysts question whether Marriott could digest Renaissance's 150 hotels -- and the 14 cents per share dilution to earnings projected for this year and next with the purchase -- and Westin at the same time.

"Marriott is projected to generate a lot of cash flow this year, so if they wanted to do both, it would be feasible," said Camille E. Humphries, an Alex. Brown & Sons Inc. lodging analyst.

"It would be a lot to digest, but with their breadth and depth they could do it. When there's a window of opportunity, you have to jump through it," she said.

Shaw projects that Marriott will have about $750 million to work with this year, on a pretax basis. He also did not rule out issuing new equity to pay for Westin or another purchase.

"We aren't terribly troubled about a short-term dilution in earnings if we can create long-term value," he said.

Pub Date: 3/11/97

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