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MYSTERY BUYER


Room to expand


As hotel mega-groups keep growing, room rates remain as high as ever


Resorts for a cool Ð482 million should have come as no surprise – the French group has been on a spending spree of late, snapping up Fairmont Raffles Hotels International just two years ago and, more recently, a Chilean group. Prior to the completion of the latest


A


deals, Accor already had nearly 620,000 rooms on its books; Movenpick currently has a portfolio of 84 hotels and a pipeline of 42, taking its room count to more than 31,000 within the next few years. You don’t need to have a degree in higher maths to work that by the


CCORHOTELS’ APRIL ANNOUNCEMENTthat it was buying Switzerland- based Movenpick Hotels &


beginning of the 2020s, Accor will have around 650,000 hotel rooms worldwide. It has a way to go to catch up with the really big boys. Marriott International has well over 1.2 million rooms; Hilton Worldwide has more than 850,000, and the UK’s Intercontinental Hotels Group (IHG) has around 800,000 – between them, that’s more than 2.8 million room- nights to shift every day of the year. Accor’s 650,000-room total puts it marginally ahead of the Wyndham Hotel Group’s 600,000 but, conveniently, that takes the total room count – between just five companies – to well above the four million mark. One would have thought as these mega-companies get bigger, average room rates would come down in a struggle to retain and gain market share. In fact, it’s the reverse; in the first quarter of this year, according to hotel market data analyst STR, global average rates showed across-the-board increases. Obviously, demand, and not just from the corporate sector, plays the major role in keeping prices high. No surprise that rack rates at the Premier Inn in central Edinburgh are roughly 50 per cent higher than those at the Premier Inn in central Enfield. As television’s property presenter Kirstie Allsopp would say, it’s all about location. From the corporate point of view,


however, there are two big concerns. The first is that the greater the consolidation, the greater control mega-groups have over room rates. I’m not blaming them – if I controlled more than a million hotel rooms, I’d charge whatever I liked.


22 BBT July/August 2018


The second relates to the plethora of brands. Marriott International has nearly 30; Accor has around 25; Wyndham has 19; IHG and Hilton have around 25 between them. Given that relatively few companies have many rooms under many brands, there is a multiplicity of choice within the same company in most cities and larger towns. Furthermore, there seems to be a growing trend towards dual-branded properties – a Hampton tagged on to a Hilton, a Moxy adjoining a Marriott, etc. Does any of us really know – or care


about – the difference between an Ibis Styles and a Four Points by Sheraton? Where does a Hilton sit in relation to a Sofitel? Is a JW Marriott better or worse than a Grand Hyatt?


I want to cut costs, and improve my


travellers’ experience. The danger is that the lazier among us (including myself) will simply shift between brands within the same global group.


STICKING WITH THE BIG BOYS In one sense, there’s nothing wrong with that. On the other hand, if we simply downgrade – or upgrade – within the same “envelopes”, aren’t we doing ourselves and our travellers a disservice? The more we stick with the big boys, the less chance the smaller guys – many of which are just as good, if not better – have of survival, let alone success. My travellers demand more choice, more flexibility and more “understanding”. Do I have the time to give them what they want? Should I make the time? Is there a productivity imperative? The answer to all three questions, obviously, is “yes”. The cost to the company will be minimal and will almost certainly be outweighed by the potential return on the investment of any time spent sourcing suitable smaller company and independent properties in our key destinations. Hopefully, their gratitude for the modicum of business I can put their way will be expressed in the room rates – a classic “win-win situation”. Healthy competition within the hospitality sector is maintained, I’m happy, my travellers and my company are happy. The hoteliers, benefiting from our business, become more successful. But then Accorhotels will come along and buy them out, and the whole process starts all over again… nSee also our hotels feature, p82


BUYINGBUSINESSTRAVEL.COM


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