Consolidation of the hotel operators has been mooted for many years, with brokers and brands salivating over the fees and the potential for market domination.
Kevin Edwards, Business Development Director
But is consolidation taking a different form and inadvertently driving greater fragmentation of the proposed consolidators?
The sector habitually naps at the wheel when it comes to seismic industry changes. First there was the evolution of internet booking, which opened up the revenue opportunity to third-party booking agents which merrily feasted at the slow adoption from direct booking sites.
Then we see the emergence of the ‘sharing economy’. Hotels were once again blindsided by consumer demand, and stripped of further revenue in the process. The reality is that the sharing economy doesn’t quite cut it when it comes to quality assurance, and the likes of AirBnB seem to have irked just about every neighbourhood in the process, meaning that its longevity may well be called into question.
However Seb, Chris, Keith and Tony shouldn’t be popping the corks just yet, the wave of COVID disruption could yet bite the sector, and this time the owners could well be the ones in a not-so-awkward position.
The ‘Wall of Money’ continues to loom, waiting to be deployed, the brokers salivating once more, the bonus pool looking even better for 2022. But with prices being held up by buyer demand, suppression of distress by the banks could well force that cash into different pots. Enter the new world hospitality order.
The bruising that some commercial real estate owners have had during the pandemic has hurt and they don’t feel it has been shared by their partners the operators. Maybe a little bias and having no skin in the game is giving rise to some funds starting to think about changing the game. Rather than just buying the real estate, let’s operate the damn thing too.
If you can secure your own demand through effective distribution and channel management, is a brand really going to make a difference? With there being over 140 title flags across just four hospitality stables, has the old world order paved the way for that wall of money to be deployed against them, creating new ESG friendly, technologically-streamlined brands that hit the mark of the modern day traveller, and hey they may even book direct?