The world’s top-10 global hotel chains now own 113 different brands between them – 31 of which didn’t exist a decade ago. These figures alone highlight the incredible pace of change in the hotel industry, with mergers, acquisitions and new brands aplenty.
We’ve seen more consolidation in the past decade than ever before, as big hotel chains fill gaps in their portfolios. And it’s not the only big change over the period. Many properties used to be wholly owned by big industry players, but we’re now seeing more franchising. We’re also seeing more hotel brands being bought up by finance and private equity companies. With the global hotel industry booming, it is attracting investors from the US, China and Europe.
Big hotel industry players
Meanwhile, hotel properties and portfolios continue to change hands for serious money. Marriott International’s US$12bn purchase of Starwood Hotels & Resorts this year will create the world’s largest hotel group. They will boast over a million rooms in more than 100 countries.
Strategic Hotels & Resorts is a major player in the US luxury market, counting a number of Four Seasons and InterContinental properties among its portfolio. In 2015 it was bought for a whopping US$6bn by real-estate investor Blackstone.
AccorHotels is buying the parent company of upmarket hotel brands Fairmont, Raffles and Swissôtel. It’s also upping its design-led ibis Styles portfolio here in the UK to more than 2,000 rooms.
Also in the UK, Frasers Hospitality has acquired four boutique properties from Hotel du Vin owners Swire Properties. Meanwhile Best Western is busy rebranding 280 formerly independent properties.
New hotel brands on the block
In this ever-changing landscape, we’re also seeing hotel groups diversifying their brands to attract more market share. Best Western has launched its Vib urban boutiques and Hilton has its Curio collection of unique local gems. This summer it launches its new Canopy brand, promising “simple pleasures” and “a positive stay”.
All of this is about targeting a wider range of travel consumers. A number of industry trends are driving the creation of new brands. Many of these seem to be reaching out to a more informal, perhaps younger, type of traveller (see below).
Personally, I think age is less of a factor in what you’re looking for in a hotel than the type of traveller you are. If you’re an infrequent business traveller, for example, you’re likely to want to sample everything a hotel has to offer. Meanwhile, those who are on the road every day probably just want dinner in their room or the bar before bed.
What it means for the business booker
So what does all this change mean for the business booker? Takeovers of your preferred properties can spell renegotiations. You’ll need to confirm whether existing contracts, including your agreed rates and any loyalty benefits, will hold.
On the plus side, you might see improvements in local independent properties that are taken under the wing of the big brands. But be warned, all that investment will likely be reflected in rate increases 12 to 18 months down the line.
What’s more, hotels that are gobbled up by global chains are more likely to switch to a dynamic corporate pricing system. Analysis has shown that this works out significantly more expensive (19-26% higher) than customer-negotiated rates.
A buyer’s market
But overall, it’s still a buyer’s market, especially for businesses with significant volumes of travellers. If you can show that your travellers adhere to your travel policy by booking preferred partners, you’ll be in an even stronger position to negotiate with any hotel group.
And remember that the value of your business is wider than accommodation spend alone. Don’t forget to factor in the cost of meetings spend, lifestyle extras, Wi-Fi and other incidentals.
Also bear in mind that despite the many mergers, as yet no single hotel group offers total regional coverage here in the UK. So if your business could take your travellers anywhere, you’d be wise not to restrict yourself to one hotel partner.
3 buzzwords shaping the hotel industry
- Lifestyle: We’re hearing this word a lot in the travel industry at the moment. The more we travel on business, the more we want a home-from-home experience. We want a better work/life balance and greater wellbeing benefits while we’re away. Expect to see more hotels offering free health classes and other lifestyle extras for guests.
- Technology: The pace of technological change is affecting every aspect of our lives, and travel is no exception. This is driving demand for more tech-savvy hotels. Take Village, which is starting to roll out iPad and mobile check-in and Bluetooth room keys in its Hotel Club properties.
- Millennials: There’s a school of thought that says younger business travellers are more interested in tech, and staying somewhere more funky than older travellers. Hotel sub-brands are definitely targeting such travellers.
Read more of Sam’s industry insights here.
Sam Welch is director of proposition & consulting services – accommodation and meetings for Capita Travel and Events