Tasos Kousloglou.
JONES Lang LaSalle (JLL) Hotels & Hospitality Group expects the Marriott-Starwood deal to herald more hotel chain consolidation in 2016, citing the increasing strength of OTAs and the emergence of disruptive companies such as Airbnb as key driving forces.
Tasos Kousloglou, executive vice president, Strategic Advisory & Asset Management, and president of Hospitality Asset Managers Association of Asia-Pacific, said: “Marriott’s announcement to acquire Starwood and create the largest hotel company could spur more M&As in the hotel industry and set a precedent for other groups to follow suit.”
Tony Ryan, hotel industry lawyer and soon-to-be managing director, Global Mergers & Acquisitions, said: “At JLL Hotels & Hospitality Group, we have identified local and international consolidation of hotel management companies as a key feature of the hotel landscape in 2016 and beyond. This development (Marriott-Starwood) confirms the intensity and magnitude of this potent trend.
“The hotel industry landscape has changed dramatically over the last few years, largely thanks to the arrival of powerful OTAs and sharing platforms such as Airbnb. The Marriott-Starwood deal responds to that trend by creating a truly global company with market-leading loyalty programmes and an eye-watering distribution platform across continents. Scale and growth are the drivers for this transaction so as to provide a compelling proposition to owners and guests and, at the same time, challenge the industry disruptors.”
Kousloglou pointed out that the hotel industry remained highly fragmented compared with other industries in the travel space such as OTAs, airlines or others such as technology that are normally dominated by fewer players.
“The merged hotel group dominates the upscale segment and gains a strong competitive advantage in marketing and distribution against other hotel companies. Its size also gives it a much stronger negotiation power with OTA giants such as Expedia. In addition, the increasing strength and consolidation of the OTAs, emergence of disruptive companies such as Airbnb and fewer opportunities for organic growth in certain hotel markets, are putting additional pressure on its competitors to consider inorganic growth in an effort to save costs, grow a pipeline of new hotels and loyalty customer base and attract talent.”
Kousloglou foresees that the scale and breadth of brands of the combined Marriott and Starwood company could prompt several other hotel groups such as Hilton, IHG, Accor, Hyatt and Fairmont Raffles joining forces either with each other, or with smaller operators to remain competitive.
