International Lodging Merger
Role of Lambert Hotel
Lambert Hotel is in second rounds of negotiations with AAA HotelCo of a possible merger between the two companies. Lambert is a strong brand with a luxurious and upscale tres comfortable Michelin rating, and AAA is rated at mid-scale category of equivalent ranking. Culturally, there is a difference in the approach to business mergers. Time wise, Lambert is eager to close the merger with AAA or consider the alternative value that is a safe bet.
During pre-negotiation, the goals at the Lambert team was to aim high and be aggressive, thus providing room to negotiation towards target goals: 1) stock ownership of 60/40 ≤ goal of 50/50; 2) provide one seat on the board ≤ goal to agree to three seats; 3) naming properties as AAA by Lambert ≤ goal expected to be accepted; 4) management team to be managed by AAA with training provided by Lambert, with expectation of training to be given to middle management, allowing for free movement of training ≤ AAA to manage their local training with Lambert assistance; 5) management incentives to adopt salary structure of Lambert with possible small percentage based on commission, with growth for merit increase ≤ expect resistance; 6) ecotourism business is not the main objective of Lambert Hotel thus we do not expect to make an offer ≤ expect some resistance; 7) timeline is short and expect to close deal today ≤ expect some resistance.
The common interests for both parties: 1) expand globally / capturing new markets; 2) increase occupancy rates; 3) increase profit margins; 4) diversify company portfolio.
Negotiations focused heavily on the salary structure and management. These two topics were the focus points as cultural differences greatly entered into discussion. On the point of salary structure, Lambert fashioned the structure on its current commission based platform with a small percentage as a base flat rate. This proposal was unaccepted by AAA, claiming this is...
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