No changes expected at Sheraton Kona Resort Spa at Keauhou Bay amid proposed merger

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KAILUA-KONA — It will be business as usual at Sheraton Kona Resort Spa at Keauhou Bay amid a proposed merger between the hotel’s owner, Starwood Hotels and Resorts, and Marriott International.


KAILUA-KONA — It will be business as usual at Sheraton Kona Resort Spa at Keauhou Bay amid a proposed merger between the hotel’s owner, Starwood Hotels and Resorts, and Marriott International.

“It will not affect any associates and teams at the property levels, so the Sheraton Kona Resort and Spa at Keauhou Bay will continue to operate as normal,” Jean Dickinson, Hawaii area director of communications for Starwood Hotels and Resorts, told West Hawaii Today on Tuesday. “There will be no changes at the property level.”

The 485-room, 24-suite Sheraton Kona Resort and Spa is situated on 22 oceanfront acres at Keauhou Bay.

Starwood Hotels and Resorts Worldwide Inc. accepted on Monday an improved takeover offer from Marriott International Inc. valued at $13.6 billion, proceeding with plans to form the world’s largest hotel operator after investors led by China’s Anbang Insurance Group Co. sought to thwart a November 2015 deal.

A combination with Marriott would create the world’s largest hotel company, with about 30 brands, giving it more leverage in negotiating commissions with travel agents, a larger frequent-guest program and cost savings, Bloomberg News reported. Marriott said it expects to save about $250 million a year with the merger. The cost savings estimate increased by $50 million a year from the initial one made in November.

“We are pleased that Marriott has recognized the value that Starwood brings to this merger and enhanced the consideration being paid to Starwood shareholders,” said Bruce Duncan, chairman of the board of directors of Starwood Hotels and Resorts Worldwide, in a prepared statement. “We continue to be excited about the combination of Starwood and Marriott, which will create the world’s largest hotel company with an unparalleled platform for global growth in the upscale segment.”

Under the terms of the new offer, Starwood shareholders will receive $21 in cash and 0.80 share of Marriott common stock for each Starwood share, according to a statement by Starwood. It values the company at $79.53 a share, based on Marriott’s closing price Friday, compared with a cash bid of $78 a share, or about $13.2 billion, from the Anbang-led group.

An Anbang representative declined to comment to Bloomberg News. The Beijing-based insurance company, which is working with private equity firm J.C. Flowers &Co. and Chinese investment firm Primavera Capital on the Starwood bid, has been making a push into U.S. real estate. Anbang last year purchased New York’s Waldorf Astoria hotel for $1.95 billion, and it has an agreement with Blackstone Group LP to acquire Strategic Hotels &Resorts, an owner of 16 luxury properties.

The Sheraton is Starwood’s lone Hawaii Island hotel and one of 11 properties across the state managed by the company. Four are located on Oahu, three on Maui and three on Kauai. Starwood is owner of brands such as Sheraton, Westin, W and St. Regis.

“Our other 10 resorts on the other three islands will continue to operate as normal,” Dickinson said.

Marriott’s brands currently operate on three Hawaii Island properties: Courtyard King Kamehameha’s Kona Beach Hotel, Waikoloa Beach Marriott Resort and Spa and Autograph Collection at Mauna Kea Beach Hotel. The Sheraton would give the Marriott its first location south of Kailua-Kona and give a stronger presence on the Kona and Kohala coasts.

The transaction is subject to stockholder approvals, completion of Starwood’s planned disposition of its timeshare business, obtaining remaining regulatory approvals and other customary closing conditions. The transaction is expected to close in mid-2016.

Opened in July 1972 as Kona Surf, what is now today known as the Sheraton Kona Resort and Spa at Keauhou Bay closed its doors to guests in 2002.


It eventually came under new ownership and a renovation was completed. It reopened in 2004 as Sheraton Keauhou Bay Resort and Spa. In 2011, Kona Surf Partners LLC purchased the hotel and a $20 million renewal was finished in 2012. It was then given its current name, Sheraton Kona Resort and Spa at Keauhou Bay.

Bloomberg News contributed to this report.

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