Abu Dhabi: An Abu Dhabi government fund is nearing a deal to buy three Marriott International Inc hotels for more than $800 million (Dh2.9 billion), say people familiar with the matter, a vote of confidence for the company’s new lifestyle brand that has been struggling to gain traction.
The hotels, in London, New York City and Miami Beach, are part of Marriott’s Edition brand of boutique-style hotels the company is developing with hotelier Ian Schrager.
The company is creating this new hotel line to take on Starwood Hotels & Resorts Worldwide Inc’s W chain and other competitors for young, affluent travellers that put a premium on style.
Still, the effort to develop a high-end chain during the downturn has proven to be an enormous challenge for Marriott. The company typically relies on third-party owners to develop hotels that Marriott either franchises or manages.
But nearly all of the management deals Marriott cut with hotel owners for new Editions collapsed. Marriott took the rare step of investing its own money to kick-start the brand by building hotels in gateway cities.
A sale to the Abu Dhabi Investment Authority (Adia) would allow Marriott to recoup its investment of about $800 million that it spent to acquire, convert and upgrade the three properties. It also would signal that a major global investor is willing to partner on the fledgling hotel brand.
A deal isn’t final and still could fall through, these people said. But if it closes, the deal would create a positive buzz that may help convince other hotel owners to fly the Edition flag, analysts say.
A deal also would be timely. In London, the Edition hotel is poised to open on September 12, according to its website. Marriott has said that the Manhattan hotel — a conversion of the more than one century old former MetLife office tower — could open in 2015, and that the Miami Beach hotel is slated to open next year.
The only Edition hotel currently operating is in Istanbul. The first Edition to open, in Honolulu, was rebranded by its owners during a legal dispute two years ago in which the owners charged that Marriott was neglecting the brand, which Marriott denied. The rebranding was a setback for the new brand.