Torres Consulting

Consolidation in the Hotel industry

“In the hotel industry it will in the end be four or five big hotel groups.” That is what Federico J Gonzalez, CEO of the Radisson group, stated in an interview in November 2019.

How much truth is there? If one looks at the large corporations, it’s a fact that there have been large moves lately. The one that has generated more headlights had been the acquisition of Starwood by Marriott. Accor has also had a high appetite in the last few years, getting hold of Fairmont-Raffles-Swissotel (plus other brands on the non-hotel lodging sector). And that’s just the tip of the iceberg.

M&A’s have however cooled down over the last few years, and the large companies seem to have paused on their efforts to control a larger share of the market. Instead, focus goes now into smaller, more targeted acquisitions.  

However, if we look into the bigger picture, only 1/3 of all global accommodation businesses are branded, with many of them being individual, family-run businesses.

Although many get commercial support selling under a shared umbrella ( Preferred, Leading, OYO,…), that still represents a minority vs the total global lodging market.

With increasing pressure from owners towards operators when it comes to return on their investment, the statement from Mr Gonzalez could be more a signal for investors on what is to be expected to happen between the big players in the near future. Consolidation.

From the tourist point of view, however, the option to choose a completely independent Hotel should still be, for many years to come, an easy option to find.

Pablo Torres

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