Hotel Company Consolidation Continues

Posted by Kevin Iwamoto on 03/03/2016

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In my predictions for 2016, I forecasted the continuation of large hotel corporation mergers and acquisitions. According to industry buzz, it looks like my prediction is proving to be true.

The latest round of hotel company consolidation – with the merger of Commune Hotels & Resorts and Destination Hotels –  demonstrated the trickle-down effect of mergers.

Consolidation at the boutique property level, like Commune and Destination Hotels, shouldn’t be a big surprise, as smaller chains and niche sector suppliers are high-risk for being bought, sold or merged, given the current consolidation craze.

Destination Hotels currently operates more than 40 independent hotels and resorts around the country, and is a privately-owned subsidiary of Lowe Enterprises. Commune operates more than 45 hotels in North America, Asia and Europe under the Thompson Hotels, Joie de Vivre Hotels, Tommie, and Alila Hotels and Resorts brands. Combined, they will be about 85 hotel properties – their new combined volume of properties should help them to weather the next rounds of consolidation in the hotel sector.

Most industry experts predict higher pricing dynamics after the rounds of consolidation are complete – similar to what happened with airlines and travel management companies, after their respective rounds of industry consolidation. Time will tell, but frankly, the hotels today control the pricing power. If anything, consolidation will only strengthen their dominance in client negotiations.  

So far, there have been two major hotel group consolidations: Marriott and Starwood, and Accor acquiring Fairmont, Raffles, and Swissôtel. There’s a lot of rumors swirling around the industry about other major hotel brands, and what their reactionary plans – Will hotel brands preserve their size and scale in the new environment of mega hotel groups?

The airlines leveraged their consolidation efforts to increase prices and add fees for everything under the sun – and ended up making billions of dollars in profit. Most hotels are in a much better place than the airlines, so consolidation will add higher revenues to their balance sheets, giving them the ability to drive more consumer-direct campaigns.

What does this mean for YOU?

All of these rounds of consolidation are going to have an impact on your hotel programs, changing the dynamics and, no doubt, your preferred supplier.

With combination of types of hotel offerings including Airbnb, the hotel programs of tomorrow are going to rely heavily on corporations ability to demonstrate their own command of buying power numbers, market share, and the ability to move business.

Those who can demonstrate their ability to move share and articulate their spend numbers will be the only ones who will be having meaningful negotiations with consolidated hotel groups. All others may simply be relegated to dynamic pricing.

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Read the original article here.


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What’s so awesome about their phones? Most likely, they were engaged with an app. 


...read the original article here.


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