Marriott to acquire lifestyle brand citizenM for $355 million

BETHESDA, Md. - Marriott International (NASDAQ: MAR), the $65 billion hospitality giant with impressive gross profit margins of 82%, has reached an agreement to purchase the citizenM hotel brand, known for its innovative approach to the select-service segment, in a deal valued at $355 million. The acquisition, announced today, is set to bolster Marriott’s presence in the lifestyle lodging sector and accelerate its global expansion. According to InvestingPro data, Marriott’s strong financial health and consistent profitability make it well-positioned for this strategic move.

The citizenM portfolio includes 36 hotels with 8,544 rooms across key cities in the U.S., Europe, and Asia Pacific. The brand is recognized for its tech-forward amenities, efficient space utilization, and emphasis on art and design, catering to modern, value-conscious travelers. Marriott’s move to integrate citizenM’s offerings aligns with their strategy to diversify guest options and enhance the Marriott Bonvoy membership experience. With revenue growth of 5.05% and an EBITDA of $4.26 billion in the last twelve months, Marriott demonstrates strong operational performance. For detailed analysis and additional insights, investors can access comprehensive research reports on InvestingPro.

Anthony Capuano, CEO of Marriott International, expressed enthusiasm for the addition of citizenM to their select-service brand portfolio, highlighting the anticipated growth and development benefits. The transaction is expected to contribute approximately $30 million in annual stabilized fees from the existing and in-progress citizenM properties. Additionally, the seller may receive up to $110 million in earn-out payments based on the brand’s future expansion over a specified period, starting from the fourth year post-closing. With a P/E ratio of 28.08 and a current dividend yield of 1.07%, Marriott continues to balance growth investments with shareholder returns.

Rattan Chadha, citizenM’s Founder and Chairman, and Lennert de Jong, CEO of citizenM, both conveyed their optimism about the brand’s future under Marriott’s stewardship, citing shared values and a commitment to maintaining the brand’s distinct identity.

Subject to customary closing conditions, including U.S. regulatory approval, the transaction is anticipated to close within 2025. Upon completion, Marriott projects that its net rooms growth for the year will be close to 5 percent.

Morgan Stanley & Co. International plc and Eastdil Secured served as financial advisors to the seller in this deal. This acquisition announcement is based on a press release statement and contains forward-looking statements regarding the closing of the transaction and expected future growth.

In other recent news, Marriott International has introduced the City Express by Marriott brand to the U.S. midscale market with its first property opening in Duluth, Georgia. This marks a strategic move to expand Marriott’s presence in the affordable hotel segment, with plans for additional locations across North America. In financial developments, Stifel has lowered its price target for Marriott to $240, maintaining a Hold rating, due to a cautious outlook on future earnings amid economic uncertainties. Similarly, Goldman Sachs downgraded Marriott from Buy to Neutral, citing macroeconomic volatility and reduced their price target to $245. Meanwhile, UBS has maintained its Neutral rating with a $301 price target, highlighting Marriott’s ongoing digital transformation efforts.

In related industry news, Sonder Holdings has secured $18 million in equity financing as it continues its integration with Marriott’s digital channels. This partnership is expected to enhance Sonder’s exposure and profitability through Marriott’s extensive sales network. These recent developments reflect the dynamic nature of the hospitality sector as companies like Marriott and Sonder navigate economic challenges and pursue strategic growth initiatives.

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