Johannebsurg - International hotel chain Marriott has signed a letter of intent to buy Protea Hotel's operations and brands, the companies said in a joint statement on Friday.
Protea Hospitality Group chief executive Arthur Gillis said: “Aligning with a global giant such as Marriott ensures we can realise the Group's full potential for all of our stakeholders.”
The details of the non-binding agreement would not be disclosed yet, but the definitive agreements are expected to be signed by the end of the year, with the deal closed in the first three months of 2014.
The proposed terms included that Marriott would manage about 46 percent of the rooms, another 40 percent would be franchised and about 14 percent of the rooms would be leased.
As part of the transaction, Protea would form a property ownership company to retain the ownership of the hotels it now owns, and enter long-term management and lease agreements with Marriott for these hotels.
Marriott chief executive Arne Sorenson said: “With the Protea Hotels acquisition, our expanded footprint should allow us to become the first choice of Africa's rapidly growing population of young, sophisticated travellers, and drive loyalty to our Marriott Rewards program both within Africa and globally.”
The combined portfolio would help to accelerate growth and job creation in South Africa and across Africa.
President of Marriott's Middle Eastern and African operations Alex Kyriakidis described the acquisition as “the strongest way to jumpstart Marriott's footprint in Africa”.
In terms of the letter of intent, the parties would negotiate exclusively with each other.
The transaction would be subject to a number of processes including completion of due diligence, negotiation and execution of definitive documents and governmental consents and approvals. - Sapa