Who will buy Starwood?

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It would be the biggest deal of the year if someone buys Starwood Hotels & Resorts, as has been rumored since CEO Steve Heyer was unceremoniously bounced from his job on Monday. Speculation around the industry is strong that the company will be sold and perhaps soon. The question, of course, is who will buy the lodging behemoth?

One possible scenario is another hotel brand company, and if that's the case, the smart money is on Hilton. A Hilton-Starwood marriage could make a lot of sense, given Hilton's strengths in focused-service (Hampton, Hilton Garden Inn and Homewood) and Starwood's substantial presence overseas. Other brands in the two stables don't match up as well (Starwood's emerging aloft brand and the maturing Hilton Garden Inn is an example; Starwood's Luxury Collection and the Waldorf=Astoria Collection is another), but overall I believe the two brand companies could mesh together.

Stronger buzz has been linked to the notion that a private equity firm, rather than another hotel company, will end up with Starwood. These companies have plenty of cash, a strong appetite to buy and a continued affection for the hotel business. Among equity firms, The Blackstone Group is the likeliest candidate, given that it already has a strong presence in the hotel business. Others mentioned by analysts and media observers include KKR and, in a delicious piece of irony, Starwood Capital Group, an investment company headed by Starwood founder (and critic of Heyer) Barry Sternlicht.

It could be an interesting summer in the lodging business.

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