In the ongoing rounds of international acquisitions in the hospitality industry, Accor Hotels swallows the Raffles, Fairmont and Swissotel brands in a US$2.9 billion deal. The three brands are officially part of the French multinational as of today. By Kannan Chandran
With the US$13 billion Marriott-Starwood merger due for regulatory completion, creating a global operation of 30 brands (including Sheraton, Westin and W), about 5,500 hotels with 1.1 million rooms, it’s a clear sign of the times that these massive deals are critical for the big boys to boost economies of scale. New properties and brands require time to nurture and grow, so inorganic growth is the way to proceed quickly.
The “Marwood” entity would overtake the InterContinental Hotel Group (IHG) as the world’s largest group in terms of rooms. Besides increasing reach, these deals also provide the larger organisations with the clout to negotiate better outcomes with online travel agents.
Loyalty programmes will probably be in disarray for a while until better solutions are found that will keep new owners and customers happy.
The next phase in these global business dealings could still yield interesting outcomes if China’s Anbang Insurance, who missed out on the Starwood deal, decides to regroup and launch a new attack on the industry.
Meanwhile, it is hoped that by acquiring brands, the backroom boys don’t obliterate some of them. The Starwood name may vanish this month following the acquisition by Marriott. Would Swissotel continue to exist as a brand under Accor if its positioning overlaps existing brands in the French company’s portfolio? Will there still be a Singapore-grown Raffles brand in future?
When cold, calculating investment bankers and deal makers wielding their wealth come together, emotional ties are sometimes left outside the rooms where deals are cut.