Asia to drive hotel industry consolidation

Tobias Ragge
Tobias Ragge

The move towards consolidation in the hotel industry is likely to continue in future, driven by Asian acquisitions, delegates at the ACTE-CAPA Global Summit have heard.

Addressing the Amsterdam event on Thursday, Tobias Ragge, CEO of HRS, said that the recent consolidation seen in the industry, including Marriott’s acquisition of Starwood, Jin Jiang’s purchase of Louvre and Plateno, and HNA Group’s investments in NH Hotels Carlson and Hilton, is likely to gather pace.

This is expected to be partially driven by Asia, and China especially, where companies are being encouraged to invest in international hotel groups. Anbang Insurance Group, which failed in its attempts to gazump Marriott’s bid for Starwood, has also been linked with bids for other major chains, including IHG.

This consolidation is likely to lead to rising average daily rates (ADR), Ragge predicted, and for corporate buyers this presents a challenge. He advised that corporate buyers should open up to independent supply, which will enable them to make greater savings than they would if they only negotiate with big chains.

Despite this consolidation trend however, the hotel industry remains incredibly fragmented – especially compared to the airline industry. The big chains still account for less than a quarter of global inventory, and this presents big opportunities – but also considerable challenges – for corporate buyers.

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