Briefing: Bigger is better for competitive companies
In April this year, shareholders from both Marriott and Starwood voted to approve a merger of the two companies, which will create the world’s largest hotel group. In the same month, Shanghai based Home Inns Hotel Group completed a merger with Hong Kong based BTG Hotels Group.
The industry is reshaping to meet the evolving needs of the consumer and to stay competitive. While these international hotel groups are growing to record levels more sub-brands are being created within them. In these videos, four experts discuss industry consolidation and the reasons behind it:
Consolidation is widely accepted as one of the big trends for 2016. So why are these companies joining up?
The Marriott – Starwood Merger means that they will be a force to be reckoned with. For example, it will allow them to strongly compete in new spaces. An early press release about the merger from November 2015 states also that merging with Starwood, which has ‘first mover advantage’ in the lifestyle segment will make the combined companies a leader in this space.
The vote shows stockholder confidence from both sides but the companies had to also convince loyalty members that the merger be positive. While the loyalty programmes will not immediately combine, in a statement to its reward members, Marriot said that it was excite to be able to ‘Give our members access to our collective portfolio of 5,500 hotels and resorts in more than 100 countries’.
And, importantly for any business, it will save them money. Again in the November statement Marriott said; ‘Marriott expects to deliver at least $200 million in annual cost savings in the second full year after closing. This will be accomplished by leveraging operating and G&A efficiencies.’
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