Mergers and acquisitions, and the formation of strategic partnerships, typically indicate a dynamic, healthy financial condition for the hospitality industry. The other side of the coin? Ultimately, a few giants can dominate the market.
Consider Marriott’s recent $13-billion takeover of the large hotel chain Starwood Hotels & Resorts Worldwide Inc. This has placed 5,800 hotels worldwide under a single corporate name. Significantly, Marriott now handles close to half the business travel in Los Angeles.
Indeed, six corporations—Marriott, Hilton, Best Western, Intercontinental, Choice Hotels, and Wyndham Worldwide—run half of today’s U.S. hotels.
Sustaining Customer Choice
Local customer demand still influences rates at many of the big-brand hotels. That is because so many become franchises. Franchisees remain attached to their local market and assist in dictating the corporate pricing structures for big-brands.
Moreover, the big names encompass a spectrum of brands and price points. Wyndham includes renowned luxury hotels costing hundreds of dollars nightly, as well as, Days Inn – a vastly different price point hotel. This allows for brands to reach customers in all walks of life.
The Airbnb Effect
Today’s customers, including businesses, routinely compare hotel rates online. And now the big names compete with Airbnb and other diverse options in cities. The agile disrupters are merging too. HomeAway took over VRBO, went public, and now boasts more than a million global vacation rentals.
TripAdvisor, with its travel reviews numbering in the hundreds of millions, is also a game-changer. A TripAdvisor hotel booking can lead to airline, car, and restaurant reservations immediately.
Looking Ahead
It’s no wonder frequent business and leisure hotel guests rarely notice the dominance of a few big names in the industry. Now, how will luxury hotels maintain public demand for what they have to offer? A key factor is their capacity to give perks, like loyalty points for discounted or free stays.
Financial experts predict a strong outlook for the hospitality sphere in 2017 and on—notwithstanding unprecedented changes in the way customers think about travel.