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HOTELS


Trading places


Another day, another acquisition. Hotel takeovers show no signs of slowing, but how does this trend affect rates and quality, and does it present new opportunities for buyers?


ByNICK EASEN


how it affects travel buyers is like trying to make sense of Brexit. There’s so much going on, yet so little clarity of a complicated and constantly evolving situation. As travel bookers spend their next


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quarter buried in hotel sourcing reviews to arm themselves with a strategy prior to that once-a-year negotiation, the task looks daunting. The hotel market is fragmented with many providers, brands and sub- brands coalescing and multiplying. Buying habits are evolving fast, with multiple ways to book the same room. At the same time there’s consolidation


in some sectors. Prices in others are on the rise, yet in many cases opaqueness is still a big factor; it is no wonder that the RFP process sucks in a lot of time and effort. “We’ve never seen such a dynamic


playing field than at the present time,” says Lukasz Dabrowski, senior vice-president for hotel solutions at HRS. “Transparency is an issue and it’s increasingly difficult to align or marry the supply side with corporate


82 BBT July/August 2018


AKING SENSE OF WHAT’S GOING ON in the hotel space right now, particularly with four-star properties, and


travel programmes. It is also difficult to know what’s worth negotiating.” The biggest story in the hotel sector is


still one of acquisition, such as Accorhotels’ billion pound-plus purchase of Fairmont, Swissotel, and Raffles brands, as well as other purchases, not forgetting Marriott’s gobbling up of Starwood. More than a year later, the effects of these mega-mergers are still reverberating throughout the industry, with a global race for scale and distribution. “The corporate market is now dictated


by price and location,” explains Chris Roe, vice-president for sales, distribution and loyalty, UK and Ireland, at Accorhotels. “The whole dynamic is changing. There is still a lot of competition and integration may have allowed us to become sticky, but you cannot rest on your laurels.”


GROWTH DRIVING DEMAND In the four-star market demand for rooms remains strong. Global economic growth is driving this demand, as are the burgeoning middle, leisure and business classes increasingly travelling worldwide, buoyed by robust emerging markets. According to corporate travel consultancy Advito, while there has been a solid impetus by big chains, led by


Marriott, to push up room rates in some regions (backed up by recent STR global average rates analysis), rising prices are in turn tempered by increased supply. “We’ve found that the proliferation of


available rooms in major cities has led to a decrease in the average daily rates for corporate hotel chains,” notes Kevin Mauffrey, senior director for global lodging, at Egencia. “I’m not convinced that consolidation will


directly cause rates to rise in the future,” he adds. “Mega-brands such as Hilton and Accor have multiple brands under ownership and are careful not to cannibalise their own businesses. Major chains are unlikely to hike their prices as it will cause adverse knock-on effects for their subsidiary brands.” At the same time, independent hotels


are becoming increasingly popular, with traveller expectations of what a business hotel should offer now shifting demand. Airbnb and Homeaway have also blurred the lines as they work in this space, bolstering the sharing economy. They have a huge inventory online for business travellers now, while others are fawning over the rising millennial executive. “Buyers are having to keep up with a fairly rapid pace of change in the four-star


BUYINGBUSINESSTRAVEL.COM


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