The M&A operations of the past few months have brought significant change in worldwide hotel rankings. Discover the change in supply of the leading international hotel groups as of January 2016, their position in worldwide rankings, and key elements explaining past trends and changes yet to come.
Evolution du parc : + 58% (après fusion) - Nb. d’hôtels 2016 : 5 460 (après fusion) - Nb. de chambres 2016 : 1 108 852 (après fusion)
Once the merger with Starwood Hotels is complete, the new group will be the first to surpass the million-room mark. It is a symbolic goal that the members of the Top 10 are trying to reach, as proof of their global dimension across all categories. Marriott had to fight for a 13-billion-dollar deal. Arne Sorenson’s team is hard at work to achieve 200 million in economies of scale while preserving the identity and business model of each brand. The biggest job will be to convince owners that the operation is valid while some already believe the competition is distorted in some places. Marriott, moreover, pursued organic growth while accelerating growth of Moxy, the new midscale brand, and AC by Marriott in Europe. Like others, the group signed a development agreement with a Chinese partner, Eastern Crown Hotels Group, to establish 140 Fairfield hotels in China.
2- Hilton Worldwide
Evolution du parc : + 6,1% - Nombre d’hôtels 2016 : 4 565 - Nombre de chambres 2016 : 751 350
Although it concentrates on organic growth, the Hilton group is experiencing steady expansion and remaining in second place. The hope to surpass “Marwood” is moving out of reach unless the group begins acquisitions. According to Christopher Nasseta, the group’s CEO, emphasis has been placed on profitability with a RevPAR up by 5.4% and pre-tax earnings up by 13%. The future looks bright with a pipeline of 275,000 rooms, including 100,000 signed in 2015 alone. The three new brands Home2Suite, Curio and Canopy by Hilton were off to a good start with 60,000 rooms open or signed. Hilton Worldwide is continuing its debt reduction (-$1 billion in 2015) through the sale of assets such as the Waldorf Astoria in New York. A transformation of the group is underway with the creation of three entities for each division: hotel real estate, time-share and hotel operations. The CEO is expecting to see a better dynamic and good response from the market.
Evolution du parc : + 4,8% - Nombre d’hôtels 2016 : 5 0326 - Nombre de chambres 2016 : 744 368
The group lost its first-ranking position worldwide, but it is still a record year, according to Richard Solomons, head of IHG, with 1,300 hotels in the pipeline and the benchmark of 5,000 hotels passed through organic growth. Ninety percent of openings and growth are concentrated on the new leading markets. The sell-off strategy accelerated with the sale of the InterContinental Hong Kong, the last iconic property in its portfolio. Emphasis was placed on double-digit growth in management and franchise revenues. Distribution was a central point with online mobile sales that surpassed one billion dollars. The new brands in the portfolio are promising, such as Hualuxe in China, 3 openings across the year, Even in New York, the flagship of the eco-friendly brand, and Kimpton Hotels, the boutique brand acquired last year that has been experiencing a record-year of openings. Profitability is up with an Ebitda at $680 million, for a 4.5% increase.
4- Wyndham Hotels Group
Evolution du parc : + 2,6% - Nombre d’hôtels 2016 : 7 812 - Nombre de chambres 2016 : 678 042
The leading group worldwide in terms of number of hotels, Wyndham focuses on franchising midscale economy brands, with fewer than one hundred management contracts. Still very American, the group insists on its international development with 60% of the pipeline of 120,000 rooms outside the USA. Seventy percent of the properties are new-build constructions, adding to the global offer, for fewer than 30% of conversions or brand transfers. The acquisition of Tryp and more recently Dolce contributes to this diversification. Financial results are up sharply, with a gross margin of $1 billion on $5.5 billion in turnover, generating $612 million in net distributable profit. Leading the group for 10 years, Stephen P. Holmes, chairman and CEO, rejoices over double-digit growth in revenues distributed for the 6th consecutive year. Wyndham’s distribution system generated 45% of the turnover for hotels affiliated with one of its brands.
5- Jin Jiang Hotels (INCL Plateno)
Evolution du parc : + 14,8% - Nombre d’hôtels 2016 : 3 995 - Nombre de chambres 2016 : 554 508
Jin Jiang takes its role as federator and killjoy of the global industry to heart. After a period of organic growth, it is using its extensive means to bring groups together around it. First in China, with the merger undertaken by Plateno and Vienna Hotels, and internationally with the takeover of Louvre Hotels Group and AccorHotels’ rampant entrysm strategy. What strategy is taking shape for the years to come? The rise in power is just beginning and will accompany clientele worldwide from the leading global source country: China. The group leapt forward several rungs, surpassing its rival Home Inns. The invisible chairman Yu and the enigmatic chairman Chen, the two strongmen in the group, will not stop halfway. As for the other Chinese groups, the goal of Jin Jiang is to expand its brand coverage, from Economy to Luxury and its global implantation across the continents.
6- AccorHotels (INCL FRHI)
Evolution du parc : + 14,8% - Nombre d’hôtels 2016 : 3 995 - Nombre de chambres 2016 : 554 508
Since his arrival at the helm, CEO Sébastien Bazin undertook transforming the group with a goal to clarifying activities and expanding offers. HotelInvest and HotelServices performances are clearer now with constant improvement in gross income over €650 million. Growth also occurs through acquisitions and especially the acquisition of Fairmont Raffles to consolidate the Luxury segment, and consequently bring in new reference shareholders: Qatar International fund and Prince Al-Waleed’s Kingdom Holdings. To not be surpassed by the sharing economy, acquisitions also concern rental start-ups offering hotel services. The plan adopted has now been upset by the growing strength of Jin Jiang, which owns 15% and soon close to 30% of the capital, upsetting relations with the official partner of the group, Huazhu. The months to come will be decisive for the future of the group if a market battle breaks out.
7- Choice Hotels International
Evolution du parc : + 0,5% - Nombre d’hôtels 2016 : 6 421 - Nombre de chambres 2016 : 507 246
American champion of the franchise industry, the group benefitted from the local economic recovery that translated in a RevPAR growth of 6%. Alongside the recovery, investments resumed among competitors implying a complete renovation of the network, mostly with aging Comfort Hotels. The upscale brands, such as Ascend or Cambria, more or less geared at the younger generations, are doing well. Steve Joyce’s ambition is to comfort the presence of the group internationally, through partnerships in Europe, in the Middle-East and even in Cuba, with investors interested building hundreds or thousands of room. Instead of fighting against the sharing economy, Choice International prefers to address the same market through a new digital platform, Choice Vacations, now open to market private apartments. There is now a balance between entries and exits. After many years on cleaning the network, Choice Hotels is growing.
8- BTG HOME INNS
Evolution du parc : + 16,7% - Nombre d’hôtels 2016 : 2 981 - Nombre de chambres 2016 : 345 504
The first Chinese group to have joined the Top 10 worldwide, Home Inns has been surpassed by its rival Jin Jiang through spurts of external growth. This does not prevent the group from progressing significantly and following a similar route while partnering with another group with a more upscale inventory. A merger absorption has been commenced by the current management together with Beijing Tourism Group, the leading Chinese tour operator, which brings prestigious hotel brands and its network of travel agencies. According to David Sun, the CEO and instigator of the merger, it is a question of rationalizing the supply that grew very quickly and making each brand more coherent, even if it means selling properties that don’t fit. The online distribution giant C-trip entered into the deal and will facilitate sales. The consolidation of the Chinese market is underway and Home Inns plans to participate as an actor-predator and not a diluted victim.
9- Best Western International
Evolution du parc : + 3,2% - Nombre d’hôtels 2016 : 3 992 - Nombre de chambres 2016 : 311 870
Best Western International ended the year 2015 with growth by close to 20% in the turnover of its booking platform to reach 1.8 billion dollars, and a 23.3% increase in nights to more than 17 million. This growth may be explained by increased sales through websites and the effect of the partnership signed with Expedia. Fierce enthusiast of single branding unfurled worldwide, Best Western has changed its strategy to step into the range of the new generations. It multiplied the Millennium brands like Vib and Glo. And even Best Western now exists in Premier, Plus and even BW Collection. Segmentation is now on the agenda, together with an overall rise in range, whence moderate growth in supply, following the exit of last generation properties. 2015 was a year of renewal with the creation of a new visual identity that better expresses the difference between the sub-brands and labels.
Evolution du parc : + 32,8% - Nombre d’hôtels 2016 : 2 763 - Nombre de chambres 2016 : 278 843
China Lodging Group, also known as Huazhu, joined the Top 10 further to all-out growth of its midscale brands. The group has developed no fewer than 12 brands, including part as the master franchise of AccorHotels in China for its eco and midscale brands. Huazhu fairly extensively uses the Manchise model (a mix between the property’s franchise and management by CLG teams) for more than 2,000 properties. Its pipeline already has more than 600 hotels that will open under Manchise contracts, because massive development has taken place largely through conversion of independent properties out of a concern to join a group that is well organized for commercialization. The Chinese market has reached a stage of maturity that limits growth in the RevPAR. According to Qi Ji, founding president of China Lodging Group, the challenge of an economy that is growing more slowly makes it necessary to target more upscale niches. And then there is Jin Jiang’s hold over its partner AccorHotels.
11- HNA Hospitality/ Carlson Rezidor Hotels
Evolution du parc : x 18 - Nombre d’hôtels 2016 : 1 145 - Nombre de chambres 2016 : 182 521
Carlson Hotels is now part of the HNA Hospitality Group, already present in Pierre & Vacances and major shareholder in NH Hotel Group. The Carlson family wanted to refocus on travel agencies by selling the Carlson Hotels division to HNA, which includes majority participation in Rezidor Hotel Group (See interview with Eric de Neef p. 96). Growth in America remains modest with an update of Radisson Green properties, whereas the momentum is stronger on the side of the subsidiary Rezidor, which is behind the repositioning of Park Inn by Radisson and the launch of the new brand Radisson Red. Radisson Blu strengthens its first steps in Africa. The brand Country Inn also remains centered on North America where it has a good reputation, and continues to have a symbolic presence in India. The group is also based on several master franchises ¬– Park Plaza in Europe and Radisson Edwardian in the United Kingdom.
12- Hyatt Hotels Corp
Evolution du parc : + 5,7% - Nombre d’hôtels 2016 : 605 - Nombre de chambres 2016 : 161 737
Mark Hoplamazian is pleased that the group’s strategy has led to an increase in its gross margin by 12.5%, growth in the RevPAR by 5.5% and a 13% increase in fees at a constant perimeter. The luxury group expanded its range with the creation of Centric to address new generations who are technology-, design- and simplicity- enthusiasts. The first openings in Chicago and South Beach Miami have met their public. Moreover, the new Unbound Collection includes independent luxury properties that wish to partner with Hyatt’s sales team. Overall, the year was productive with 49 openings including 21 new markets in Africa, the Middle East, China and locally in the United States. Progress is underway with a program for 2016 that includes 60 new openings, out of 260 properties in the pipeline, or some 56,000 rooms across all brands. 80% of these openings will be outside the United States.
13- Green Tree Hospitality
Evolution du parc : + 1,3% - Nombre d’hôtels 2016 : 1 600 - Nombre de chambres 2016 : 143 836
Created in 2004, Green Tree Hospitality is one of the groups that is experiencing exponential growth. In 2007 it had 200 properties in China alone and announces more than 1,600 in 2016, in 400 destinations of the continent. It is following the same diversification pattern with 5 brands: Green Tree Eastern, Green Tree Inn, Green Tree Alliance, Vatica lifestyle eco-friendly for the younger generation, with a first property inaugurated last year in Yangzhou, and Shell Hotel, launched at the beginning of the year on the budget segment with the lowest tax rate in the country: 2% of the turnover. The Shanghai-based group also decided to export with three initial openings in America in Arizona. The group plans to accelerate growth starting with the conversions of existing hotels. This is the reason for the launch of Green Tree Alliance, a “soft” brand with simpler standards, and Shell Hotel offered with pre-industrialized conversion models.
14- G6 Hospitality
Evolution du parc : + 2,7% - Nombre d’hôtels 2016 : 1 330 - Nombre de chambres 2016 : 121 921
G6 Hospitality, known for its Motel 6 and Studio 6 brands in the U.S. and Canada, announced record-breaking year, having hit a milestone of 1,300 locations, accomplishing a number of internal brand achievements. In 2015, G6 Hospitality opened 141 new locations, all under franchise contracts, including 121 Motel 6 and 20 Studio 6 properties. The enterprise continued to further penetrate Latin America by signing new area development agreements in both Ecuador and Bolivia. Likewise, G6 Hospitality continues active commercial discussions to take the Hotel 6 and Estudio 6 brands to Brazil in the future. “We are very excited to report positive numbers across all key growth metrics for 2015, solidifying our position as the uncontested leader in the budget segment,” said Jim Amorosia, President and CEO of G6 Hospitality. “G6 Hospitality is forecasting up to 200 new signings and 175 new openings in 2016, including the grand opening of its first two locations in Mexico: Estudio 6 in Puerto Vallarta and Salamanca, which are expected to open mid-year.
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