Protea Hotels Now Part Of Marriott But Neither Bookable On Marriott.com Nor Part Of Marriott Rewards

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Marriott completed the acquisition of Cape Town based Protea Hotels yesterday expanding its African presence from just Egypt and Algeria to additional seven countries (South Africa, Malawi, Namibia, Nigeria, Tanzania, Uganda and Zambia).

Marriott Africa Protea

The Protea Hotels has 79 properties in South Africa and 37 in other countries.

Marriott Africa Protea Locations

Marriott’s plan is to have Protea hotels bookable on Marriott.com by the end of May and have them to join the Marriott Rewards program by a later date.

Marriott Protea Non-participating

Right now all Protea Hotels are excluded from the Marriott Rewards program per the terms and conditions (access here) update above.

Marriott Africa

Here’s the Marriott press release:

Bethesda, Md., USA  and Cape Town, April 1, 2014 – Marriott International, Inc. (NASDAQ: MAR) today became the largest hotel company in Africa according to published information, and nearly doubled its presence in its Middle East and Africa region to more than 160 hotels and 23,000 rooms as it completed its acquisition of the 116-hotel Protea Hospitality Group (PHG), based in South Africa.  Marriott now operates or franchises more than 4,000 hotels in 79 countries.

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.

Marriott’s new Protea portfolio consists of 10,148 rooms in seven African countries including South Africa.  The company now manages, franchises and leases hotels across the Protea Hotels brand (103 hotels), comprising a full and diverse range of outstanding hotels and resorts; the award-winning lifestyle boutique Protea Hotel Fire & Ice! (2 hotels); and the superior deluxe African Pride Hotels collection (11 hotels).  In addition to its industry-leading 79 hotels in South Africa, Marriott’s Protea portfolio also has 37 hotels in Malawi, Namibia, Nigeria, Tanzania, Uganda and Zambia.

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.”

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.”

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

Mr. Kyriakidis said that Mr. Gillis will become Non-Executive Chairman, Africa Development for Marriott International, focusing on exploring opportunities for new African hotel growth for all of Marriott International’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 Mr. 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.   Until then, please go to www.Proteahotels.com for reservations.

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

Conclusion

Marriott’s presence prior to this Protea purchase in Africa was non-existent outside of Egypt and one property on Algeria. It is interesting to see if the three Protea brands are here to stay or if Marriott will rebrand some of them under the current brands.

Let’s hope that these properties will become part of Marriott Rewards program rather soon. There is really no incentive for any Marriott Rewards member to stay at them before you can earn and burn points and receive status related benefits.

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