Marriott-Starwood has the biggest combined presence: Barcelona, Milan, Venice, Vienna and Warsaw. The EC said: “In each of these cities, the merged entity will continue to face effective competition from chain hotels and independent hotels.” The EC also found that within the overall European Economic Area, it “would face effective competition from a number of competitors, including Accorhotels, Hyatt, Hilton and IHG.”
STRONGER POSITION
The belief that there is plenty of competition within the hotel market, despite the recent bout of consolidation, is also widely shared within the business travel industry. Pauline Houston, hotel communities global director at American Express Global Business Travel, says: “It’s true that the combined
giving more flexibility when deciding on the property that best meets their needs.” Another bugbear for buyers has been hotel companies’ current strategy of trying to encourage direct bookings – particularly through their own websites. Watch any hotel advert and there is nearly always a direct-sell message these days. While this may be primarily aimed at the leisure market, it can have an impact on business travellers tempted to secure loyalty benefits. At its annual conference this year, the
GTMC noted the size and reach of Hilton’s ‘Stop Clicking Around’ advertising campaign extolling the loyalty benefits of booking direct. And Marriott was involved in a spat with the Institute of Travel and Meetings (ITM) a couple of years ago, when the chain began offering
Many think that buyers would be smart to start working with smaller players in their hotel programmes
room availability of Starwood and Marriott could give the group a stronger position in important cities. However, this won’t look like airline industry consolidation, where there are often regulatory concerns over dominance on certain routes.
“There will be plenty of competitors in
any given destination – so travel buyers will still hold on to a strong platform for meaningful negotiation. However, this means buyers may need to be open to working with more parties within their hotel programme.”” ACTE’s Koch also believes there is “more than enough competition from other chain properties and independent hotels” to drive hotel pricing. “The global hotel market is very volatile at the moment. Rates are going up in some markets while holding steady or dropping in others. Market nuances make it impossible to make a blanket projection.” Despite this, many think that buyers
would be smart to start working with smaller players in their hotel programmes, including independents, as a way to improve their negotiating positions and offer more choice. Keith Watson, director at corporate hotel booking specialist HRS, says: “Corporates are asking for more choice than ever before. This means offering a good balance of chain and independent hotels within programmes,
78 BBT September/October 2016
free wifi to its Rewards members – but only if they booked direct. This move was condemned by the ITM as being an “anti-corporate initiative”. Interestingly, CWT figures show that 22 per cent of all non-compliant hotel spending was made with Marriott in 2015, plus another 9 per cent with Starwood. Is this an area that an expanded Marriott will continue to mine? CEO Arne Sorenson has certainly talked up the combination of Marriott and Starwood’s loyalty programmes. He promises: “The ultimate combination of our Rewards programmes and Starwood Preferred Guest will create the most compelling frequent traveller programme in the industry by far.” Paul East, chief operating officer for
Wings Travel Management, admits there is a “continual push” for direct marketing by hotels. But, he asks: “Is this what clients want? Our experience is that clients want a complete traveller programme to ensure they know where their people are, as well as being able to bring data together to assist with negotiations for the future.” More encouragingly for buyers, there seems to have been a change in attitude from some quarters, according to ATPI’s Burrage: “Recently there has been a slight realignment by some hotel chains to clarify
Key takeaways
The deal to purchase Starwood will make Marriott the biggest global hotel company based on the number of rooms.
Consolidation within the sector could give the larger hotel companies more
leverage in corporate negotiations.
Buyers may benefit from having to do deals with fewer hotel firms, which could save time and effort during the RFP season.
Marriott wants to make the most of an enlarged loyalty scheme – so watch out for any moves that could potentially increase the leakage of bookings from hotel programmes.
Buyers need to start planning for how to deal with a more consolidated hotel sector – particularly from the 2018 RFP season onwards.
the ‘direct message’ approach which has now included making rates available via GDS for TMC bookings.” He adds that the business travel community should continue to remind hotels that travellers booking through TMCs are “higher yielding” clients. The ideal scenario is for travellers to collect loyalty points while still booking within the programme, but this is a conundrum that remains to be solved. “Some travellers will even travel further, incurring additional costs in order to stay in a loyalty card hotel, which clearly has a direct effect on the total trip cost,” adds Burrage. With Marriott’s acquisition of Starwood
still awaiting finalisation, there are lots more questions than answers about the deal’s impact – and that of wider industry consolidation – on the hotel buying process. It seems unlikely to have much effect on the current RFP season but it’s undoubtedly a situation that buyers will need to track and have a strategy for dealing with. Bigger may be better – but for who?
BUYINGBUSINESSTRAVEL.COM
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