Skip to main content

Hotel mergers and acquisitions: Which hotel chain will be the next?

In mid-January, Wyndham announced that it would purchase La Quinta’s franchise and management business for $1.95 billion. Currently, Wyndham Worldwide operates more than 8,100 hotels in 79 countries, with a total room inventory of more than 705,700 rooms.
The company’s portfolio includes 19 brands, ranging from the economy segment, such as Super 8 and Days Inn, to the upscale and luxury segments, such as Wyndham Grand and Esplendor Boutique Hotels. Wyndham’s award-winning reward program has 53 million members.
La Quinta Holdings Inc., the franchise and management business of La Quinta, runs more than 880 properties in 48 states in the U.S., Canada, Mexico, and Honduras. The brand focuses on midscale and upper-midscale segments, with about 87,500 rooms. La Quinta’s frequent traveler program has 13 million members.
Wyndham’s acquisition will help the company strengthen its performance and market share in the midscale and upper-midscale segments. Wyndham will become another giant hotel chain, running about 9,000 properties, 20+ hotel brands, and 800,000 rooms.
By comparison, the world’s largest hotel chain, Marriott Internationaloperates more than 6,400 hotels in 126 countries and territories after its merger with Starwood Hotels and Resorts. Marriott’s portfolio includes 30 brands, largely focusing on the upper midscale, upscale, and luxury segments, providing a total of 1.2 million rooms. The company has more than 100 million combined loyalty members.
In recent years, more hotel chains turn themselves into a giant player through mergers and acquisitions. Here are some examples:


Recent deals in hotel mergers and acquisitions

Last year, the merger of Marriott and Starwood was probably the most talked-about news regarding hotel mergers and acquisitions. In addition:
In conclusion, four of the five world’s largest hotels, namely Marriott, Wyndham, InterContinental, and Accor, were all involved at least one merger or acquisition in the last five years. Meanwhile, let’s not forget about Hilton, another of world’s largest hotel chains, which was purchased by The Blackstone Group for $26 billion back in 2007.
It appears that the world’s top five lodging companies grew through mergers and acquisitions. Does that mean bigger is better?

The benefits of being BIG

Mergers result in fewer competitors in the market. By combining different frequent traveler programs, hotels can reach a larger customers network with an even bigger loyalty program. With more brands in the portfolio, a hotel chain can also offer a more diverse mix of products and services to consumers.
Companies can further combine resources and cut operation costs through consolidations. In the case of Wyndham, for instance, the company is expected to see an increase of revenue at $55 to $70 million through cost savings and revenue growth.
In other examples, hotels can also acquire the business intelligence from their competitors, resulting in huge savings in product developmentKimpton Hotels and Restaurants, for example, can help IHG strengthen its market position in the boutique hotel segment. Likewise, Marriott can benefit from Starwood’s business insights about boutique hotels and millennials.

Who will be the next?

I feel positive that the merger and acquisition trend will continue. Then, will Hilton be the next since it is the only world’s top five lodging companies that has not made a move since 2007?
While the other four top five lodging companies have recently acquired other hotel chains, will they want to buy more as long as they have enough cash flow?
How about Hyatt Hotels? Hyatt recently announced a plan to sell its $1.5 billion worth of real estate to pursue an asset-light strategy, and it will have the cash flow. Hyatt’s new partnership with the Oasis Collection also indicates the hotel is interested in new opportunities, including short-term residential rental business that can help the hotel compete with Airbnb.
From a business standpoint, what are the advantages and disadvantages for hotel mergers and acquisitions? Who will be the next in the wave of hotel mergers and acquisitions?
Note: This article is also available on MultiBriefs.com; The picture was downloaded rom Insperity.com

Comments

  1. Hospitality given in hotels in camps bay can mean many things, but for me, it means being truly caring, trusting and investing in customers. It's hospitality that makes businesses strong and helps eliminate anxiety created by the paradox of choice—the overwhelming amount of options that customers are faced with on a daily basis

    ReplyDelete

Post a Comment

Popular posts from this blog

Luxury vs. Millennials and Their Technology: The Ritz-Carlton (By Julia Shorr)

Embodying the finest luxury experience, The Ritz-Carlton Hotel Company, LLC has been established since 1983. In 1998, Marriott International purchased the brand offering it more opportunity for growth while being independently owned and operated. They are known for their enhanced service level as the motto states, “Ladies and Gentlemen serving Ladies and Gentlemen”. The luxury brand now carries 97 hotels and resorts internationally and is attempting to keep the aspects of luxury while keeping up with the trends of the technologically improving generations. The Varying Demographics of the Target Market The Ritz-Carlton’s typical target market includes: business executives, corporate, leisure travelers, typically middle-aged persons and elders, and families from the upper and upper-middle class section of society .   This infers a large range of types of travelers in which all are similar in that they are not opposed to spending extra for the luxurious ambiance. However, with

The challenges of SB 93 (California Senate Bill No. 93) will impose on the employers and their human resource management team (by Brittany Schaffer)

The COVID-19 pandemic started in early 2020, and it has caused massive changes within a short period of time. One of the most rememberable effects of the COVID-19 pandemic was that businesses had to come to a complete halt, forcing them to lay off employees. California's unemployment rates went up.  Now that the stay-at-home orders have lifted, people start to come out. Businesses are now reopening, looking to rehire their laid-off employees. Before the pandemic, employers had the option of recalling only a certain number of laid-off employees they would want to rehire based on employees' job performance. That option had been changed after Governor Gavin Newsome signed into law - Senate Bill 93, which went into effect on April 16th, 2021. The California Senate Bill No. 93 (SB 93) According to SB 93, companies in specific industries, mainly the hospitality industry, have the obligation to provide job opportunities in written form to qualified employees being laid off due to COVI

The complicated situation of tattoos in the workplace (by Harry Law)

Tattoos are a form of expression that convey the individuality of their owners. They can represent a multitude of things, like a tie to a family member, a favorite quote with a special meaning, or even a favorite cartoon character. Tattoos also can carry great cultural and/or religious significance. Every tattoo is unique and says something about the individual person who wears it. The problem that many companies face is when a tattoo is considered appropriate and when it should be covered.  Employees are after all the faces of a company, so the tattoos on their bodies are connected to and represent that company as well. Some workplaces have instituted rules and regulations when it comes to their employees’ tattoos, but there can be negative consequences when a company goes too far in telling their employees what they can and cannot do with their own bodies. The Disney Company has recently changed its policy on tattoos. Disney’s goal is to create a magical, fantasy experience for their