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Analysis

Top 200 worldwide hotel group ranking: The global landscape changes dimension

Recent months have been marked by a series of mergers and acquisitions, as battles for market dominance foretell a brand new phase in shaping the hierarchy between hotel groups at the top of the pyramid. The race for size has already begun, it accelerated rapidly with deals that may be measured in billions of dollars. While Chinese and American groups are leading in the dealings, European groups are making every effort to avoid being outpaced.

Recent years stood out for the exponential rise in power of Chinese hotel groups that progressively climbed to the top of the global ranking through internal growth and local purchases. While the movement continues, it also includes a manifest will to move outside China’s borders to take over a few jewels in the western hotel supply and be able to follow clientele throughout international travel. Not every attempt has met with success, but this doesn’t discourage any initiatives. After taking over Louvre Hotels Group, Jin Jiang Hotels frequently made the news in 2015: it added the Plateno group as well as the local group Vienna Hotels to its collection, and it also began a slow and regular foray into the capital of AccorHotels. Jin Jiang has now climbed to the leading position among Chinese operators, leaving Home Inns, its eternal rival, far behind. It goes without saying that rumours abound regarding the goal to increase its strength in the capital of the primary competitor of Louvre Hotels in France and in several other European countries. Responses from Jin Jiang International’s management remain enigmatic, praising the strategy being followed by AccorHotels’s current management, while complicating the group’s relations with its “official” Chinese partner, China Lodging Group, and creating unrest among personnel.



China Lodging Group, meanwhile, also known as Huazhu Hotels, is not sitting still. With a 12-brand portfolio, mostly positioned in the midscale and upscale range, it has undertaken a vast conversion program for existing properties so they may join one of its brands as a franchise. It was thus able to increase its supply by 40% over a year-long period, and finally integrate the Top 10 global groups. Despite double-digit growth, Home Inns lost its position as the leading Chinese group due to a lack of extensive operations for external growth. It remains the uncontested champion for economy hotel brands and now needs to both weed out its inventory and pursue growth. The year is noteworthy for the Home Inns’ merger with BTG Hotels Group of Hong Kong which is buying all the shares in circulation and removing it from the Shanghai stock exchange. Chinese groups, which are highly concentrated on economy brands, have begun to diversify with other categories and further strengthen their international positions.

Even the group HNA is trying to climb to the top. Beyond its own inventory of upscale hotels, it is a reference shareholder of the Spanish group NH Hotels, although it cannot claim ownership. It just closed on an important acquisition with the takeover of Carlson Hotels and, indirectly, its 52% subsidiary Rezidor Hotel Group. Many formalities remain to be completed with American authorities and then European financial markets where Carlson Rezidor is listed on the exchange in Stockholm. However, we have incorporated HNA and Carlson Rezidor’s supply as we have done for other groups. Moreover, if we consider ownership of groups, Club Med will also be joining the club of Chinese firms, further to its hard fought acquisition by the Fosun group, over the Italian adversary. In addition to key maneuvers in the Middle Empire that demonstrate the financial strength available to enter Western markets by the main gate, Anglo-Saxon and French groups have also played a significant role in the financial restructuring of the sector. AccorHotels is trying to further expand its base in the luxury division in order to legitimize its work undertaken with Sofitel and MGallery. By bringing former Qatari and Saudi owners into its own capital, it succeeded in beating its adversaries in the takeover of Fairmont Raffles Hotels International. Mostly financed by increasing capital, this operation counts far less in terms of volume of rooms it represents than in terms of AccorHotels’ significant return to North American markets with Fairmont and Swissotel.

But the biggest operation realized at the beginning of the year 2016 is the takeover of Starwood Hotels & Resorts by Marriott International. This led to many rebounds because the American group won over the board of Starwood Hotels, which sought a new shareholder, in the first round of bids. This happened without taking into consideration Chinese investors’ appetites, which, once again, upset the cards for the hotel industry’s regular partners. Anbang, one of China’s leading insurance companies, successfully increased the bid in association with Chinese investment funds, driving Marriott International to regularly increase its offer to result in more than 13 billion dollars in cash and shares. The merger process will take time, but already, the new entity, with over one million room keys, is firmly established in the lead.











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