Starwood Deal

TAKEAWAY: STARWOOD DEAL

KAPLAN:
Let's talk about the Starwood deal. You spent, I think, $14 billion a little over a year ago to buy Starwood. You've done a lot of deals in your career. What was the strategy behind Starwood, and what's your vision for the combined entity at the end of the day?

SORENSON: 
The biggest deal the company had done beforehand was about $1 billion. So, this is 13 or 14 times that. Mr. Marriott looked at me cross-eyed when the ideas first started to be discussed. But just to show how sometimes luck and maybe a willingness to change your mind impacts things, Starwood was put on the blocks in roughly February or March of 2016. Let's see if I get this calendar right. We looked at it immediately and said forget it. Let's not buy it. It's too expensive, and there's so much work, particularly around Sheraton, the biggest brand that Starwood had, and obviously a brand that's been in Boston for a long, long time. So we passed.

Then as the summer went along, a few things happened. One, the relative value of the companies was shifting, so the cost of acquiring Starwood was getting less and less from Marriott's perspective. The second was we were becoming more and more confronted with technology disruptors. I had been at Facebook's campus. I'd been with Google. We had negotiated a deal with Expedia. I had been over to see Alibaba. Each one of them was really interested in the travel space and how did they make money in the travel space? How did they get in the middle of our relationships with our customers to some extent? These conversations are sometimes very friendly, sometimes not very friendly, depending on exactly what's being dealt with.

But it became clear to us that to compete with those disruptors, we needed to be bigger. We needed to have a bigger loyalty program. We needed to have a bigger dot-com site. We needed to have more touchpoints with our customers so that we could say to each of them, you don't need to stay in any other hotel besides one of ours, and have a chance of saying, why would you go someplace else to book that reservation? Because if you book it with us directly, you're going to get points. We're going to know who you are. We can deliver an experience to you which is better than the experience you would get otherwise.

So, we jumped in at the last moment. We were three weeks and two days from when we placed the first call to when we signed and announced the transaction.