Regional News

Hilton, Accor, Wyndham hotels stand strong against Airbnb

By Silvia Castro Betancourt 0 Comments NEWS, Regional News
The largest hotel chains in the world are in full expansion, as the industry boom has lasted longer than many had anticipated, thanks to the record demand of travelers.
Hilton, Accor, InterContinental Hotels Group and Wyndham are some of the companies that are launching new brands or making acquisitions to expand their portfolios. Chris Nassetta, the CEO of Hilton, summed up the atmosphere of optimism at the International Hotel Investment Forum in Berlin last month. "We register the highest levels of occupation as an industry, and as a company, of our history," he explained. "The cake does not stop growing.”
The rise of digital groups such as Airbnb had led to the prediction that shared accommodation would decimate hotel revenues. On the other hand, in 2016 Morgan Stanley analysts predicted that there would be a cyclical worsening in 2018 in the United States, the world's largest hotel market.
However, the travel industry analyst STR explains that in key markets, such as London, Airbnb only accounts for 4% of total income per accommodation. Revenue per available room (RevPAR) - the industry's preferred sales indicator - rose 3.2% in the US last year, he says, and an increase of at least 3% is forecast for this year.
Starting middle class
STR he points out that RevPARs increased practically all over the world, and that Africa and Europe recorded the highest growth. Employment levels remained at historic highs in many markets, while demand outstrips supply in regions such as the US and Europe, he adds. Analysts explain that growth is favored by a buoyant middle class, especially in Asia.
Sebastien Bazin, CEO of Accor, explained to delegates in Berlin that, contrary to their expectations, many travelers continue to show a strong interest in the services provided. by the traditional hotel chains. "Four years ago I was very wrong because I thought that [hotel] brands would be less important," he said. "Brands have enormous value, more than I ever imagined.”
But not all are convinced. Arne Sorenson is the CEO of Marriott International, which became the world's largest hotel group after acquiring Starwood Hotels & Resorts for $ 14.6 billion in 2016, and owns more than 6,500 properties and 1.2 million rooms. He explains that his company, which operates the Ritz-Carlton, W Hotels and Sheraton brands, does not plan to launch new brands, although it will open more hotels.
The previous upturn in the hospitality industry ended the 2008 financial crisis, which led to large chains to adopt a "light in assets" model, concentrating on the management of hotels and franchises instead of ownership. Sorenson believes that the industry only benefits from a period of global economic growth, and warns that groups that overreach can now be surprised.
Innovation
But Marriott's rivals are busy launching new concepts, many of them aimed at millennials since It is thought that the likelihood of younger consumers being attracted to more traditional hotels is less. Tru, by Hilton, is a mid-market brand where rooms, costing between $ 80 and $ 95, are smaller than average; the lobby, on the other hand, is much larger and offers entertainment areas such as bars equipped with pool tables. Launched last year, Tru opened nine hotels in the US, and Nassetta says his ambition is to reach between 3,000 and 4,000 globally, which will add to the 5,200 properties he already owns.
Along with this, Nassetta adds, Hilton is designing a separate "urban, affordable" concept, which he calls a "steroid pension" and that will offer even cheaper shared accommodation for younger travelers. The French group Accor, the largest hotel company in Europe that operates 4,300 properties and has 600,000 rooms, is testing a similar strategy with its Jo & Joe hotels. These are aimed at foreign tourists passing by who need a place to stay, but also local people who need a place to meet with friends and socialize or where to do yoga. Described as "open houses", they offer from private apartments and shared rooms to "out of the ordinary"stay in yurts in some locations. They are radically different from other Accor brands such as Sofitel and Novotel: they are equipped with elegant bunk beds and colorful lobbies, and guests are encouraged to cook together in community kitchens. The company plans to open 50 Jo & Joe complexes in 2020.
 Avid Hotels, of IHG, also launched in the US last year, is another business that offers smaller and cheaper rooms. Keith Barr, the CEO of IHG, explains that modern consumers do not want basic services offered by more traditional hotels, such as large desks. "Clients work half of their time in bed with the computer, and they no longer travel with as many papers and documents as before because everything is digitized," he says. "It's just about making smarter use of total space." But the expansion is not limited to the millennials, and another strategy focuses on creating luxury brands for all ages.
The industry is still very fragmented since the vast majority of hotels are small businesses. IHG plans to launch a "conversion" brand aimed at these establishments, to put together luxury hotels under a new umbrella. Wyndham tried something similar last year with the "Trademark Collection", which groups formerly independent luxury hotels under a single seal.
Acquisitions are another form of growth. In the last two years, the five main operators made procurements worth 2,400 million dollars, according to Dealogic, and the trend seems to accelerate. In January, Wyndham bought La Quinta, a US group that operates some 900 hotels, with a $ 1.50 billion deal. Last week, regulators approved Accor's 1.2 billion takeover of Mantra Group, an Australian group with more than 100 properties in the Australasian region. Barr, who assumed the reins of IHG in July of last year, assures that the company plans to acquire a chain of luxury hotels are "imminent", but does not provide more details. "I want us to remain well positioned to be one of the global leaders in the industry, and be able to acquire other brands over time," he explained. "That allows us to control our own destiny, nobody wants to be left behind.”

The above article was written and published in Spanish and has been translated into English. Click here to read the original article.

 

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