On Friday, Marriott International (MAR) completed its $13 billion acquisition of Starwood Hotels.
Beating out China’s Anbang group in March of this year, the company is now poised to integrate Starwood brands like the Sheraton, Westin and W into the company’s 17 chains that span from Courtyard to Ritz Carlton.
CEO Arne Sorenson sat down with Yahoo Finance in an interview at the W hotel in Times Square to explain the importance of the company’s new, enlarged scale.
“It’s breathtaking in many respects,” Sorenson said. “It’s transformative for the company. We are excited to be welcoming the Starwood Hotels and Starwood associates into our system.”
Now the largest hotel company in the world, Marriott operates or franchises more than 5,700 properties and 1.1 million rooms in over 110 countries (1 in every 15 hotel rooms across the globe), well ahead of global peers like Hilton (HLT).
Good for consumer, says CEO
Key in focus as a result of the consolidation has been what this means for the consumer, especially given potential pricing power for the conglomerate.
Sorenson explained that choice and loyalty programs were a big motivation for the deal.
“The most exciting [thing] for us is to be able to offer our customers more choice,” Sorenson said.
Starting Friday, members of Starwood and Marriott’s loyalty programs will be able to link their accounts together (each Starwood point will be worth three Marriott Rewards points).
“One of the things that makes these loyalty programs so strong is you can stay wherever you want to go,” Sorenson said. “One of the most exciting things today is for us to be able to say to folks, ‘you can today link your accounts between SPG and Marriott rewards.'”
Meanwhile, Sorenson explained that while online travel sites like Expedia (EXPE) and Priceline (PCLN) are important partners, for a company as large as his, having a separate, loyal base of guests that book directly is key.
“They are good partners of ours, especially when they’re delivering that occasionally leisure traveler… That could be good incremental business to us and we’d love to have it,” Sorenson said. “At the same time, we want to make sure that we’ve got an ecosystem of loyal, regular travelers who we’ve got a relationship with directly so we can know you, market to you, and obviously have you book directly with us.”
The consumer is stronger in the US than the business traveler
“The consumer is stronger in the US than the business traveler is,” Sorenson said. “Job growth is happening, modest wage growth, stability … and so we see vacation travel do quite well.”
“Business conditions on the other hand are quite anemic. You look at GDP growth in the US first two quarters of the year at 1%,” Sorenson said. “Demand for hotel rooms—like demand for much of the economy—is driven by GDP growth, particularly when it comes to business travel.”
Trump’s nationalist rhetoric bad for travel industry
Sorenson, a registered Democrat, said he would not endorse a particular candidate, but explained that the nationalist and protectionist rhetoric dominating the campaign could be destructive to the travel business.
“I am a student of politics,” Sorenson said. “We don’t seem to be trying to find a way to resolve issues as opposed to demonize issues.”
“I do worry from a travel perspective about tone in the US and in other countries around the world which is increasingly nationalistic, which is stressing closing borders,” Sorenson said. “We’ve gotta be really careful about that, because the world creates opportunities—not just in travel but in commerce—when people move around, when trade occurs, when we welcome each other.”