Friday November 8th, 2013 - 11:51AM
BETHESDA, MD—Marriott International, Inc. has signed a letter of intent with Protea Hospitality Holdings of Cape Town, South Africa, to acquire Protea Hotels’ brands and its management business that operates or franchises 116 hotels across three brands with 10,184 rooms in South Africa and six other Sub-Saharan African countries.
The transaction would nearly double Marriott’s distribution in Africa to more than 23,000 rooms, and would also provide Marriott with a proven operational platform and leadership team to accelerate Marriott’s expansion plans in the African hotel market, according to the company.
Protea Hotels, founded in 1984, manages, franchises and leases hotels across the Protea Hotels brand (104 hotels); the lifestyle boutique Protea Hotel Fire & Ice! brand (2 hotels); and the African Pride Hotels collection (10 hotels). In addition to 80 hotels in South Africa, Protea Hotels has a presence in Malawi, Namibia, Nigeria, Tanzania, Uganda and Zambia.
Arne Sorenson, president and CEO of Marriott International, said in a statement, “Africa has significant untapped potential for travel and tourism, both as a destination and source of new global travelers. The continent’s GDP is anticipated to grow at over 5% annually over the next several years, which we expect will raise more people into the emerging middle class.”
Alex Kyriakidis, president of Marriott International for the Middle East and Africa, added to the statement, “The development cycle for opening new hotels in Africa is typically long due to the challenges posed by emerging infrastructure, so joining forces with Protea Hotels and their highly respected management team is the strongest way to jumpstart Marriott’s footprint in Africa.”
The otherwise non-binding letter of intent includes provisions that the parties will negotiate exclusively with each other. The transaction is subject to completion of due diligence, negotiation and execution of definitive documents, receipt of customary third party and governmental consents and approvals and satisfaction of other customary conditions for transactions of this kind that the parties expect will be included in the definitive transaction documents.
The proposed terms of the transaction are not being disclosed at this time. The parties stated that they plan to sign definitive agreements by year-end 2013 and the transaction could close in the first three months of 2014.