Design Hotels, based in Berlin, provides distribution, sales, marketing and consulting services for more than 200 independently owned member hotels in 40 countries, such as the Crosby Street Hotel in New York and London's Haymarket Hotel.
The deal follows Arabella Hospitality’s plans to focus mainly on ownership and asset management. Starwood will continue to manage or franchise 20 of Arabella Hospitality’s hotels in Europe.
Starwood Hotels & Resorts president and chief executive Frits van Paasschen said: "As a shareholder, we are delighted to have a seat at the table of this dynamic company."
Design Hotels founder and chief executive Claus Sendlinger added: "Having Starwood as an investor is a further validation that Design Hotels is a strong brand of global relevance as we continue to grow and focus on our niche in the new luxury hotel segment."
Starwood Hotels North West Europe senior vice president Michael Wale told C&IT: "The announcement has no direct effect on the C&I market. We are not involved in the day-to-day operations of Design Hotels nor will Design Hotels’ members participate in Starwood’s centralised services or Starwood Preferred Guest loyalty programme."
The transaction, subject to anti-trust approval in Germany, is expected to close in the first quarter of 2012.