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Political Risk and Pricing for Starwood and Marriott hotels

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Both Starwood Hotels (Sheraton, W-hotels, and The Westin are some of their brands), and Marriott own hotels and resorts in Venezuela. From the perspective of political risk, should these firms sell their properties in Venezuela? And, if a firm (for example: Starwood Hotels) decides to sell its properties in Venezuela, should one of the other firms (for example, Marriott) buy those properties?

Sources:
http://www.nytimes.com/2007/05/17/world/americas/17venezuela.html?pagewanted=all
http://www.foxnews.com/story/0,2933,269702,00.html
http://www.freerepublic.com/focus/f-news/1550432/posts
http://news.bbc.co.uk/2/hi/8307234.stm

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Solution Summary

The political risks and pricing for Starwood and Marriott hotels in Venezuela are determined.

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Political Risk and Pricing

Should The Properties Be Purchased In Venezuela?

Political risk refers to the associated risks arising from the changes in the political structure of a country in which a company is investing in. The changes in the political structure such as tariffs, tax laws and expropriation of assets are some examples of the political risks in a host country which may have an effect on a company. Marriott and star wood hotels should avoid selling their properties in Venezuela as a result of several reasons discussed hereby.

The first problem is that they two company of hotels will not obtain too much finances as a result of the existing financial regulator which will result to problems between the government and the company. In addition to this, there are chances that forced acquisitions of the properties of the two companies may be carried out without minding the existing liabilities (Venezuela takes over Hilton, 2009).

In addition to the ...

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