So What Do These Hotel Mergers (or Not) Really Mean?
Lots in the news lately about Marriott trying to acquire Starwood and now a Chinese company coming in to steal them away with a better offer. I have witnessed a lot of industries merge and when one pair does it to get larger all the others feel they need to merge to get equally large in order to have scale to compete. I have seen it in the oil industry and we have all seen it play out over the last few years with airlines. So is this the start for hotels now? Let’s look at the major chains stats.
BRANDS: The Ritz-Carlton, BVlgari, EDITION, JW Marriott, Autograph Collection Hotels, Renaissance Hotels, Marriott Hotels, Delta Hotels and Resorts, Marriott Executive Apartments, Marriott Vacation Club, Gaylord Hotels, AC Hotels by Marriott, Courtyard, Residence Inn, SpringHill Suites, Fairfield Inn & Suites, TownePlace Suites, Protea Hotels, and Moxy Hotels.
PROPERTIES: 4,332. ROOMS: 741,856.
REVENUE PER AVAILABLE ROOM: $128.88. REVENUE: $13.8 billion.
Hilton Worldwide Holdings Inc.
BRANDS: Hilton Hotels & Resorts, Waldorf Astoria Hotels & Resorts, Conrad Hotels & Resorts, Canopy by Hilton, Curio -A Collection by Hilton, DoubleTree by Hilton, Embassy Suites Hotels, Hilton Garden Inn, Hampton Hotels, Homewood Suites by Hilton and Home2 Suites by Hilton.
PROPERTIES: 4,563. ROOMS: 747,852. REVENUE: $10.5 billion.
Intercontinental Hotels Group Plc.
BRANDS: InterContinental, HUALUXE, Crowne Plaza, Hotel Indigo, Holiday Inn, Holiday Inn Express, Candlewood Suites, Staybridge Suites, EVEN, and Kimpton.
PROPERTIES: 4,891. ROOMS: 705,690. REVENUE: $1.89 billion.
BRANDS: Wyndham Hotels and Resorts, Ramada, Days Inn, Super 8, Howard Johnson, Wingate by Wyndham, Microtel Inns & Suites, Tryp by Wyndham.
PROPERTIES: 7,730. ROOMS: 671,177. REVENUE: $5.28 billion.
Choice Hotels International:
BRANDS: Comfort Inn, Comfort Suites, Quality, Sleep Inn, Clarion, Cambria hotels & suites, MainStay Suites, Suburban Extended Stay Hotel, Econo Lodge and Rodeway Inn brands.
PROPERTIES: 6,380. ROOMS: 504,901. REVENUE: $758 million.
Starwood Hotels & Resorts Worldwide Inc.:
BRANDS: St. Regis, The Luxury Collection, W Hotels, Westin, Le Méridien, Sheraton, Four Points by Sheraton, Aloft, Element, Design Hotels and the Tribute Portfolio.
PROPERTIES: 1,271. ROOMS: 362,821 REVENUE: $5.98 billion.
BRANDS: Sofitel, Pullman, MGallery, Grand Mercure, The Sebel, Novotel, Suite Novotel, Mercure, Adagio, Adagio Access, ibis, ibis Styles, ibis budget, hotelF1, Thalassa, Fairmont, Raffles and Swissotel.
PROPERTIES: 3,786. ROOMS: 507,512. REVENUE: $5.45 billion.
BRANDS: Hyatt, Park Hyatt, Andaz, Grand Hyatt, Hyatt Regency, Hyatt Place, Hyatt House, Hyatt Ziva, Hyatt Zilara, Hyatt Centric.
PROPERTIES: 611. ROOMS: 162,336. REVENUE: $4.42 billion.
Analysis: We see that Marriott, Hilton, Intercontinental, and Wyndham are all comparable at about 700,000 rooms. Don’t go by revenue as that can change quite a bit on a year to year basis as you can see with Intercontinental. The next group is the mid-tiers of Choice and Accor which are about two-thirds the size of the majors. Then we see Starwood at 362,000 and Hyatt at 162,336. I don’t think most people realize how small they are in comparison to the major given how much we hear about them.
So if the Marriott acquisition did go through, you can see that it would make them about 50% larger than any other major chain. The economy of scale they could get with this size (less overhead) mean they could either lower prices to gain market share or increase their net profit per room. I would predict that someone else would then feel they needed to swallow one of the smaller chains (looking at you Hyatt) to stay competitive. If the Chinese suitor wins the bidding then I think the pressure will be off, but if Marriott ultimately succeeds, expect either Hilton or Intercontinental to find the financing to go after Hyatt. You heard it here first!
