Marriot Enters Canada, To Acquire 38-Chain Delta Hotels For $170M

U.S. hotel chain Marriott International, Inc. will soon be seen in Canada. It announced this week it has signed definitive agreements to purchase for C$168 million (AU$170 million) the Delta Hotels and Resorts brand and management and franchise business. The latter is owned by Delta Hotels Limited Partnership, a subsidiary of British Columbia Investment Management Corporation (bcIMC).

The deal, which still has to pass through the Canadian competition authorities, involves 38 Delta hotels and resorts spanning 10,000 rooms in 30 cities in Canada. If the deal gets approved and formalised in the second quarter, Marriott thus becomes the largest full-service hotel company in Canada.

Once the transaction had been completed and finalised, Marriott will integrate Delta into its systems, sales engines and Marriott.com Web site, effectively giving it also access to its 49 million-member Marriott Rewards loyalty program. The transaction will likewise increase Marriott's Canadian distribution to over 120 hotels and 27,000 rooms.

Arne Sorenson, president and chief executive of Marriott, said in a statement that they targeted to acquire Delta because of its “impressive portfolio of hotels that are among the most preferred in Canada.” David Grissen, group president overseeing The Americas for Marriott International, said Canada represents the largest international source market for Marriot hotels in the U.S.

The acquisition will help Marriott International, Inc. forge its growth in attractive regions outside the U.S., Sorenson added. Marriott owns over 4,100 hotels around the world.

At stabilisation, after realising certain operating synergies, Marriott said it expects the purchase price to be approximately 10 times annualised earnings before interest, taxes, depreciation and amortisation (EBITDA). It added it does not expect the transaction will have a material impact on its 2015 results, excluding one-time transaction and integration costs.

Marriott’s announcement comes in the heels of a fellow U.S. brand closing shop in the North American nation, Target Canada. The latter is aborting Canada, leaving some 17,000 people without jobs and a US$5 million in debt to creditors.

Target Canada’s demise will also not stop Japanese retailer Uniqlo to pursue plans to enter Canada in 2016, opening its very first two stores in the country at Toronto.

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