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Marriott Completes Acquisition of Protea Hospitality

Marriott Completes Acquisition of Protea Hospitality

BETHESDA, Md., and Cape Town—Marriott International has become the largest hotel company in Africa according to published information, and has 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, 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 including South Africa. The company now manages, franchises, and leases hotels across the Protea Hotels brand (103 hotels), comprising a full and diverse range of hotels and resorts; the lifestyle boutique Protea Hotel Fire and 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.

“Today is the culmination of months of highly productive collaboration between Protea and Marriott International teams,” said Alex Kyriakidis, president and managing director of Marriott International’s Middle East and Africa region. “We are delighted that such a tremendously dedicated, talented, and effective team, which has been so well-led by Protea Chief Executive Officer Arthur Gillis, is now joining the Marriott International family. With the addition of Protea’s regional knowledge, expertise and infrastructure, we are incredibly well-positioned to continue growing in one of the fastest expanding economic markets in the world.”

According to the World Bank, Sub-Saharan Africa is expected to grow at a more than 5 percent pace through 2015.

Kyriakidis said Gillis will become non-executive chairman, Africa development for Marriott International, focusing on exploring opportunities for new African hotel growth for all of Marriott International’s brands. In addition, Mark Satterfield, currently chief operations officer for Marriott International’s MEA region, will relocate to Cape Town, Protea’s headquarters, to act as business leader overseeing the integration of the two companies. He will continue to report to Kyriakidis.

As previously disclosed, Marriott paid approximately 2.02 billion rand, or approximately $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 does not expect the Protea acquisition to have a material impact on 2014 earnings.

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