Marriott to buy Citizen M hotels in move to ‘affordable luxury'
The hotel giant behind the Ritz-Carlton and Sheraton brands has struck a deal to buy Citizen M as part of its quest to expand into the 'affordable luxury' market.
Marriott International has agreed to pay $355 million for the Citizen M brand and related intellectual property, adding that the acquisition would 'enhance options' for its guests and members of Marriott Bonvoy, the group's rewards programme.
The owners of the Dutch-based operator, which appointed Morgan Stanley and Eastdil Secured to explore options for the business last year, include the Dutch pension provider APG, its largest shareholder, as well as Citizen M's founder Rattan Chadha and the Singaporean wealth fund GIC.
The sellers could receive earn-out payments of up to $110 million based on future growth of the brand over a specified time frame, Marriott said, but these payments would not start until the fourth year following the completion of the deal.
Citizen M, which opened its first hotel at Schiphol Airport, Amsterdam, in 2008, operates 8,544 rooms across 36 hotels in more than twenty cities in Europe, Asia and the United States. It has another three hotels, with a total of 600 rooms under construction and expected to open next year.
Driven by the demands of a younger generation wanting 'authentic' travel experiences with a local feel, 'lifestyle' hotels in Europe have been getting swooped on by mature brands including Marriott, Hilton and InterContinental Hotels Group.
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'We are thrilled to add Citizen M as a unique, differentiated offering to our select-service brand portfolio as we continue to strengthen Marriott's foothold in this valuable market segment around the world,' Anthony Capuano, president and chief executive of Marriott International, said.
Chadha, founder and chairman of Citizen M, added: 'We are very excited about our agreement with Marriott and look forward to this pivotal next step for our future growth. I envisage this relationship will greatly enhance Citizen M's global reach and brand impact.'
Marriott, which runs the Grosvenor House Hotel in Park Lane, central London, has more than 9,300 properties under more than 30 brands including Ritz-Carlton, Sheraton and Le Méridien. A decade ago Marriott took over Starwood Hotels & Resort Worldwide, the owner of the Sheraton and Westin brands, for $12.2 billion, creating the world's biggest hotel group.
Assuming that the transaction will close this year, the company expects full-year net room growth to approach 5 per cent in 2025. The deal is subject to various customary conditions, including US regulatory approval.
Marriott, based in Bethesda, Maryland, reported net rooms growth of 6.8 per cent last year having increased the number of rooms it has by 123,000 units, taking its total to 1.7 million rooms worldwide. It expects revenue per available room growth for international markets, apart from greater China, to be higher than that of the United States and Canada this year.
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