Monopolies and Meetings

monopolies
Sofitel Mexico City Reforma (Photo Credit: Christopher Amat)

When Marriott International, Inc. and Starwood Hotels & Resorts Worldwide, Inc. merged, it created the largest hotel company in the world and was just one of many monopolies in the industry. Marriott has 1.3 million rooms in 130 countries and territories under 30 brands across the globe.

As the dust settled, these monopolies weren’t the best scenarios for meeting professionals. The Marriott-Starwood merger was one of many. Others included InterContinental Hotels Group purchasing Bangkok-based Six Senses Hotels Resorts Spas for $300 million following its majority investment in Regent Hotels and its 2014 acquisition of Kimpton. IHG’s portfolio now includes more than 5,500 hotels in nearly 100 countries, accounting for approximately 826,000 guest rooms. Wyndham Hotel Group acquired Dolce Hotels and Resorts, Hyatt Hotels Corporation acquired Two Roads Hospitality, and for the hefty price tag of $2.7 billion, Accor bought FRHI, owner of the Fairmont, Raffles, and Swissotel brands.

Why the increase in consolidation? So hotel companies can add more rooms and meeting space under the same umbrella. Many meeting professionals shared their frustration with the fact these conglomerates have resulted in less negotiating power.

Decreased competition for meetings and events means meeting professionals have lost their leverage. Plus, pre-COVID-19, when looking for a hotel with space and rooms necessary for a large group, that pool gets even smaller and more controlled.

Now there is talk about an Accor-InterContinental Hotels Group merger that will create the world’s largest hotel group. If the merger does indeed happen, it will create a company with 11,000 hotels and 1.6 million rooms with a reported market value of $2.3 billion. A combined company would also share some 50 brands between them, from Accor’s Sofitel, Raffles and Fairmont flagships to IHG’s Intercontinental, Kimpton and Six Senses, among many others.

This will push it ahead of Marriott International, which had close to 1.4 million rooms at the end of last year.

More Monopolies On Horizon

Joan Eisenstodt, founder of Washington, D.C.-based meeting consulting firm Eisenstodt Associates LLC, predicts mergers will become de rigueur. “We will see many more mergers in the industry. Plus, more hotels will close as if people don’t go back to offices, what happens to the hotel nights booked by companies. Plus, there will be higher prices. It won’t matter the flag or management or owners, prices have to increase to cover costs.”

An unfortunate reality of all these mergers is the loss of relationships.

“Hotel companies have rid themselves of senior salespeople and others with whom many of us had and have long-term relationships and have thus severed our trust in negotiations. It is unclear to what model all are going. In one case, we dealt with the director of sales and marketing at a major convention hotel to negotiate a rebooking. One person at that level has no idea of the intricacies the client, and I had been through to get to the original contract.  And the overwhelming issues of what will continue to be the reality well into 2021, and longer I expect, cannot be done by one person,” explains Eisenstodt.

Focusing on the past is not going to help, she adds. “We need to not focus on all that has been, including negotiations, and refocus on what and how to employ people and create smart and viable virtual meetings. To meet distanced doesn’t accomplish stopping the spread because people violate it and is not an option for people whose hearing is less than perfect or who want to talk with others without being heard by many. I’m pretty frustrated and angry!”

One thing is for sure, we all need to buckle our seatbelts and get ready for a bumpy ride.

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