|Marriott expands portfolio, acquires Gaylord Hotels.|
Friday, 1st June 2012
Source : Marriott International, Inc.
Marriott International has entered into an agreement with Gaylord Entertainment Company to acquire the Gaylord brand and hotel management company for $210 million.
The transaction is conditioned on Gaylord Entertainment’s shareholders approving the company’s conversion into a real estate investment trust. If approved, Gaylord will continue to own the existing Gaylord hotels and Marriott will assume management of these properties under long-term agreements. The transaction will add 4 hotels and approximately 7,800 rooms to Marriott’s portfolio.
Gaylord Hotels include Gaylord Opryland® in Nashville, Tennessee; Gaylord Palms® in Kissimmee, Florida near Orlando; Gaylord Texan® on Lake Grapevine near Dallas, Texas, and Gaylord National® on the Potomac in National Harbor, Maryland, near Washington, D.C. Gaylord Hotels are uniquely positioned in the group and family leisure segments with approximately 2 million square feet of meeting and event space. They offer multiple opportunities for recreation, shopping, and dining, as well as entertainment, such as the partnership with DreamWorks ™.
Arne Sorenson, Marriott International president and chief executive officer, said, “We are excited to add Gaylord Hotels to our brand portfolio and are thrilled Gaylord Entertainment selected us to manage their properties. We have long been impressed with the hotels Gaylord has created, as well as their skill in hosting major meetings and events and attracting the family leisure market. This is a tremendous opportunity to advance growth and opportunity for both Marriott International and the Gaylord hotel brand.
“Gaylord properties will benefit from Marriott’s economies of scale, including lower costs for central reservations, procurement and other services, plus strong sales, revenue management, marketing and distribution systems, while Marriott will be able to capture even a greater share of the major event market. Gaylord’s “everything-in-one-place” properties are very attractive to group meeting planners. As a new REIT owner, Gaylord Entertainment should benefit from improved hotel profitability associated with Marriott’s ability to generate substantial cost savings and incremental demand.”
Robert McCarthy, Marriott International chief operations officer, said, “Both Marriott and Gaylord have well-defined cultures that revolve around putting people first and we expect Gaylord’s ‘STARs’ and Marriott associates will find significant opportunities for career growth in this combination. Gaylord customers will continue to enjoy the outstanding service for which that brand is known.”
"We chose Marriott – a brand that is a recognized leader in the hospitality industry - due to their focus on providing the highest quality experience for both group and leisure customers,” said Colin V. Reed, Chairman and Chief Executive Officer, Gaylord Entertainment Company. “According to a recent survey conducted on behalf of Gaylord in February of over 400 high-quality meeting planners, Gaylord ranked first in all under one-roof offerings and amenities and Marriott ranked as the number one preferred group destination provider overall due to its service standards and wide distribution.”
Upon completion of the transaction, Marriott will operate the hotels under management agreements with an initial term of 35 years. Marriott International expects to earn an incentive fee in its first full year of management, based on improvement in Gaylord Hotels’ profitability, and further expects the transaction to be accretive to Marriott’s earnings per share by approximately 2 cents in 2013.
The agreement is subject to the previously mentioned Gaylord Entertainment shareholder approval, which is expected in August, as well as lender consent to amendments to Gaylord’s credit facility and other customary closing conditions and regulatory approvals. The transaction is expected to close by October.
Mr. Sorenson will participate in a conference call Gaylord Entertainment will hold at 10:00 a.m. eastern time today to discuss this announcement.