Marriott completes Protea acquisition

New MEA pipeline totals 65 hotels with 20 in Sub-Saharan Africa

Left to right: Mark Satterfield, Arthur Gillis, Alex Kyriakidis and Otto Stehlik, founder of Protea Hospitality Group.
Left to right: Mark Satterfield, Arthur Gillis, Alex Kyriakidis and Otto Stehlik, founder of Protea Hospitality Group.

Marriott International today (April 1 2014) became the largest hotel company in Africa having completed its acquisition of the 116-hotel Protea Hospitality Group (PHG), based in South Africa.

Doubling its presence in the Middle East and Africa to more than 160 hotels and 23,000 rooms, Marriott will now operate or franchise more than 4,000 hotels in 79 countries.

Arne Sorenson, Marriott International’s president and chief executive officer, said, “Today marks a new beginning. We can now officially say ‘molweni!’ {Xhosa}, ‘sawubona!’ {Zulu} and ‘hello!’ to South Africa and ‘welcome!’ to our approximately 15,000 new associates at both managed and franchised hotels across Protea’s portfolio. We look forward to integrating the superb Protea team into the Marriott International family, and together, to work toward new opportunities for growth and advancement throughout South Africa and the continent.”

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Alex Kyriakidis, president and managing director of Marriott International’s Middle East and Africa (MEA) region, said, “Today is the culmination of months of highly productive collaboration between Protea and Marriott International teams. We are delighted that such a tremendously dedicated, talented and effective team, which has been so well-led by Protea Chief Executive Officer Arthur Gillis, is now joining the Marriott International family. With the addition of Protea’s regional knowledge, expertise and infrastructure, we are incredibly well-positioned to continue growing in one of the fastest expanding economic markets in the world.”

At the same time, Marriott said that its pipeline of new hotels in the Middle East and Africa, including Protea’s pipeline, is now more than 65 hotels and 14,300 rooms, including more than 20 hotels and 3,000 rooms in Sub-Saharan Africa.

According to the World Bank, Sub-Saharan Africa is expected to grow at a more than 5 percent pace through 2015.

Kyriakidis said that Arthur Gillis will become non-executive chairman, Africa Development for Marriott International, focusing on exploring opportunities for new African hotel growth for all of Marriott’s brands.

In addition, Mark Satterfield, currently chief operations officer for Marriott International’s MEA region, will relocate to Cape Town, Protea’s headquarters, to act as business leader overseeing the integration of the two companies. He will continue to report to Kyriakidis.

As previously disclosed, Marriott paid approximately 2.02 billion rand, or approximately US $200 million at current exchange rates, which represents roughly 10 times anticipated pro forma 2014 calendar year EBITDA (earnings before interest, taxes, depreciation and amortization) excluding transaction costs.

As part of the transaction, the previous owners of Protea Hospitality Group created an independent property ownership company that retained ownership of the hotels PHG formerly owned, and entered into long-term management and lease agreements with Marriott for those hotels.

The property ownership company also retained a number of minority interests in other Protea hotels. Marriott now manages approximately 45 percent of Protea’s rooms, franchises approximately 39 percent, and leases approximately 16 percent.

Marriott expects that the Protea portfolio will be available for booking on Marriott.com or via Marriott International’s Global Reservations Centers toward the end of May, and the hotels will join the Marriott Rewards guest loyalty program at a later point, to be announced.

Marriott does not expect the Protea acquisition to have a material impact on 2014 earnings.

 

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