NEW YORK—Marriott International President and CEO Arne Sorenson said during last week’s NYU International Hospitality Industry Investment Conference that Marriott International and Gaylord Entertainment Company are proceeding with detailed plans to integrate the Gaylord brand into Marriott’s portfolio.
The companies announced on 31 May that Marriott was acquiring the management for the four Gaylord properties and the Gaylord brand name for $210 million. The deal is subject to shareholder approval. At the same time, Gaylord announced it will convert to a real-estate investment trust from its current status as a C-Corporation.
Sorenson told HotelNewsNow.com during an event at the Renaissance New York Times Square Hotel that the companies have a team working on the detailed transition of the transaction.
“I suspect we will do less early, so we will keep the property teams largely intact,” Sorenson said. “Over time, we’ll see that we get more and more coordination between the sales forces, but we want to make sure we retain the relationships we have with the customers, both on the Marriott side and the Gaylord side.
“But we’ll move aggressively on things like reservation systems, on a rewards program and the hook up of those sorts of things, on procurement, on a number of these other spaces where we think there are real margin opportunities and very little risk.”
Sorenson also said he is “hopeful there will be growth” beyond the four properties that fly the Gaylord flag.
“Obviously, the project that’s outside of Denver in Aurora, there’s been a lot of work that’s already under way. I don’t think Gaylord will do that on its balance sheet, but hopefully we can find a way to make that project come to life and maybe some other projects come to life over time,” he said. “Projects of this size take a long time to go from idea to opening, so we’re not announcing any next openings.”
Growth and development
Colin Reed, chairman and CEO of Gaylord, said during an interview conducted during the same event at the Renaissance that once the deal is complete, the responsibility for the brand’s growth will lie solely with Marriott.
“I would like to see growth in markets where Gaylord isn’t—there are five or six of them in the country, places like San Antonio (Texas), San Diego,” Reed said. “… but this is going to be Marriott’s responsibility.”
Sorenson said the nature of Gaylord’s business model fits in well with Marriott’s offerings.
“It really is an expansion of our group and association business into a new brand with four great hotels,” he said. “They’re big boxes in terms of the number of rooms, and they are also huge in terms of the amount of meeting space they have—usually about half a million square feet of meeting space, which makes them almost like self contained convention centers.”
Sorenson said it is “too soon to tell” whether Marriott would develop smaller Gaylord-branded hotels, a so-called “Gaylord Light” brand.
Sorenson also said there’s a clear road Marriott must take as it continues to expand its portfolio of brands—which will stand at 14 hotel-specific brands when the Gaylord deal is closed.
“We’ve got to make sure we’re investing in our brand teams efficiently so we can keep those brands distinct and keep some real discipline around that distinction,” he said. “I don’t think it’s hard to keep Gaylord distinct because of the kind of product that’s associated with it. Yes, it’s another brand but it doesn’t pose any looming challenges.”
Reed said Gaylord’s plan is to grow.
“When it becomes a real-estate investment trust, which will be around January of next year after our shareholders have voted, the REIT will be acquiring assets,” he said. “The good thing from our company’s perspective is we can basically affiliate with any of the big companies. It’s going to give the new REIT the opportunity to grow in ways that we don’t have today.”
Reed said he expects to be the chief executive when the REIT is launched. In the meantime, he said he expects the shareholder vote to occur in late August or September, and from there the transition will quickly occur.
Gaylord’s largest shareholders had been vocal before the announcement of the Marriott deal, and were seeking removal of the company’s poison pill plan that could allow an outside group to grab control of Gaylord.
During a conference call shortly after the announcement of the deal, Reed said the company’s largest shareholders were kept abreast of the company’s plans. When asked whether a stalking horse could come in and bid for Gaylord, Sorenson said he was consident a full auction had taken place.
“Once that vote has taken place, then Marriott will assume the day-to-day operating responsibilities probably sometime around the end of September or the beginning of October,” he said during the New York event. “The REIT will actually convert to a real-estate investment trust on the first of January.”