Marriott International (MAR) may have to assess cutting its hefty list of brands if one activist gets his way.
Shares of the hotel chain have gotten a lift on Monday as an aggressive shareholder return and international expansion plan boosted optimism on the company. That footprint could be spun out between many companies if the Stamford-based Land and Buildings has its way.
At present, Marriott oversees a whopping 30 brands, bolstered by the addition of 10 brands from Starwood Hotels. That is too many, according to the Jonathan Litt-led hedge fund, which is attempting to use its small stake to gain a seat on the board in order to induce the company into paring down its portfolio of brands.
According to Reuters, the company is indeed evaluating the idea of adding Litt or a Land and Buildings affiliated individual to the board, but CEO Arne Sorenson remains resistant to the spinoff ambitions of the investor.
"Absolutely not," he told CNBC's Squawk Box when asked if the company had too many brands. "One of the primary reasons we did the Starwood deal is to say we need to have under our loyalty umbrella a breadth of choice. The broader that choice is for each of our traveling customers, the more likely they are to stay with us."
As such, spinoffs would lead only to a number of smaller brands unable to compete with the decentralized and diversified base that a company like Airbnb offers and destroy the value it would purport to create.
Nonetheless, those watching the company closely appear to believe a medium can be struck, with specific brands coming into the cross-hairs of insiders.
Marriott continues to revamp its @Sheraton brand with revamped food & beverage options and investment in new hotel management. Question is if it's enough to increase customer satisfaction. If $MAR were to sell/spin-off any of its 30 brands, most insiders say: Sheraton.— Seema Mody (@seemacnbc) March 18, 2019