We've Only Seen The Beginning of Hotel Mergers

Travel News 08 Feb 2016

Like London buses, where you can wait forever for one to come along and then two turn up almost at once, the hospitality world seems poised to go through a new phase of merger mania.

Following hard on the heels of Marriott International’s $12.2bn deal for Starwood Hotels (see news, November 2015), France’s Accorhotels has just captured the Fairmont, Raffles and Swissotel hotel brands for $2.9bn, including three iconic properties - the Savoy in London, the New York Plaza and Singapore’s Raffles (see news, December 2015).

But the two deals are unlikely to be the last among global hoteliers planning to grow via mergers or acquisitions: Hilton, IHG, Hyatt and Four Seasons among others are already being tipped to be in the frame for future consolidation.

Driving the deals is the changing status of global hoteliers. The past decade has seen them increasingly become asset-lite, leaving the ownership of actual brick-and-mortar properties to financial investors. This means the major chains now earn most of their money from franchising or managing the hotels on behalf of their owners – all backed by sophisticated computer booking systems, loyalty schemes and significant investment in the brands themselves.

And boosting the number of brands – either organically or by acquisition - is key to driving growth and revenues. The top ten global hotel chains (as defined by French consultants MKG Hospitality) have some 116 brands between them – and the numbers are growing all the time as new market niches from budget to boutique are identified.

 

By David Churchill. This article is a fragment originally published on businesstraveller.com.au and can be read in full here.