Marriott International has become 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. The company now manages franchises and leases hotels across the Protea Hotels brand (103 hotels), comprising a range of hotels and resorts including the lifestyle boutique Protea Hotel Fire & Ice! (2 hotels) and the superior deluxe African Pride Hotels collection (11 hotels). In addition to its 79 hotels in South Africa, Marriott's Protea portfolio also has 37 hotels in Malawi, Namibia, Nigeria, Tanzania, Uganda and Zambia.
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.
Marriott does not expect the Protea acquisition to have a material impact on 2014 earnings.