COLLEGE PARK, Md. — Host Marriott Corp. will buy 38 hotels from Starwood Hotels & Resorts Worldwide Inc. for about $3.4 billion in a deal that Starwood hopes will free it to build its luxury brands and that boosts Host's upscale and overseas hotel and resort holdings.
The deal announced Monday between the two lodging companies calls for Bethesda, Md.-based Host to give Starwood shareholders $2.33 billion of Host stock and pay $1.06 billion in cash. Host would also take on $700 million of debt as part of the deal.
Starwood, headquartered in White Plains, N.Y., owns and operates brand names including Sheraton, Westin, St. Regis and W hotels. The company is moving toward a model of operating its properties, rather than owning them, an approach adopted by competitors such as Marriott International Inc.
Starwood shares rose 76 cents to $60.02. Host's shares fell 79 cents, or 4.5%, to $16.65.
The sale to Host would account for about 40% of the rooms Starwood owns, but Starwood would continue to manage most of the properties that Host was buying for the next 40 years. Host would pay Starwood management fees, an arrangement that is usually more profitable for lodging companies than owning their own hotels, said William Crow, a lodging analyst with Raymond Jones & Associates.