Marriott International, Inc. reported on Tuesday that it has signed definitive agreements to acquire the Delta Hotels and Resorts® brand and management and franchise business from Delta Hotels Limited Partnership, a subsidiary of British Columbia Investment Management Corporation (bcIMC) for $168 million (CDN).
The transaction is subject to receipt of third party and government consents, including by the Canadian Competition Bureau. Both Marriott and Delta expect the transaction to close in 2Q 2015.
The Delta brand is comprised of 38 hotels and 10,000 rooms in more than 30 cities across Canada. bcIMC-affiliated entities own 13 Delta hotels (and one under development) and will sign new 30-year management agreements with Marriott for these properties. Third parties own the other 25 Delta hotels—15 are managed by Delta and 10 are franchised. In total, five managed hotels representing some 1,100 rooms are under development.
When completed, the transaction will increase Marriott’s distribution in Canada to more than 120 hotels and 27,000 rooms, making it the largest full service hotel company in Canada.
Marriott explains that after “realizing certain operating synergies,” the purchase price will be approximately 10 times annualized earnings before interest, taxes, depreciation and amortization (EBITDA).
Arne Sorenson, president and CEO of Marriott International, said: “Delta has an impressive portfolio of hotels that are among the most preferred in Canada. With this acquisition, we are continuing our focus on building our brand portfolio and growing in attractive regions outside the U.S. Combining the strong Delta brand with Marriott’s hotel development expertise will accelerate growth of the brand in Canada and in other markets around the world.”
David Grissen, group president overseeing The Americas for Marriott International, said that “at completion, this transaction will propel Marriott to a leading position in Canada. Canada represents the largest international source market for our hotels in the United States, and the integration of Delta into Marriott’s 4,100 plus hotel global portfolio will provide new travel opportunities for both Delta and Marriott customers. We expect integrating Delta into Marriott’s systems, sales engines, Marriott.com, and the more than 49 million member Marriott Rewards loyalty program will create meaningful operational synergies for owners and franchisees.
“Marriott’s Americas management team looks forward to working closely with Delta’s hotel owners and franchisees, and welcoming Delta employees, who will have access to a larger range of opportunities in North America and globally once the transaction closes,” he explained.