Brand consolidation is the wave of the future in the hotel industry in wake of the planned merger of big hotel lately. But that consolidation could take many forms; it is designed to combat online travel agencies, since big brands want people to book directly. That’s why, distribution challenges will continue to make large-scale mergers an appealing option in the hotel industry.
Even the best operators are being surrounded by the big OTA brands. The biggest hotels no longer look at each other as competition, but they do with the OTAs. That’s a compelling argument to join forces. They are doing it to gain lever and purchasing power over the price lines of the world.
Are expected more consolidation before the end of the current cycle, but nothing of this scale. The other big groups are playing catch-up and will be desperately looking for brands with a good growth story to add to their portfolios.
Outside the prospect of branding companies swallowing each other up, the hotel industry could face more consolidation through the major companies picking up independent properties for their soft brands collections. The market share of five or six companies will continue to grow as independent hotels become part of the big systems. That will make it easier for those portfolios and collections. Having more boutiques properties helps hotel company’s access consumers’ hearts and wallets.
The brand-owning companies are also distribution-owning companies. They make themselves a bit more like an OTA (by growing soft-brand collections). So much of that at the end of the day is about ownership of the consumer. Probably more branding are merging, but if they do it purely for distribution purposes, that could be a losing proposition.
An argument can be made that says if brand become too much like an OTA, that’s a game they probably are going to lose. They should maintain some focus on what they do as brands.