Marriott’s $12.2bn (£8bn) purchase of Starwood Hotels and Resorts recently created the world's largest hotel chain, boasting over one million rooms in more than 5,500 hotels.
And now Sabre is to buy Trust Group for $154 Million.
The current industry trend towards consolidation is becoming increasingly evident. Add in IHG's purchase of Kimpton in December 2014 and Accor's interest in the $3bn (£2bn) purchase of FRHI, and it has clearly been a busy twelve months for M&A activity in the hotel industry. The FT's Malcolm Moore argues that the steady increase in mergers reflects a favourable phase in the economic cycle. Hilton President and CEO Chris Nassetta also predicts further activity to come, meaning that some of the traditional giants of the hotel sector may be about to grow considerably larger.
Why?
Merged hotel groups benefit from economies of scale, faster expansion, wider brand recognition and increased customer loyalty. However, these advantages seem minor in comparison to the ability to stand up to OTAs. OTA mergers and consolidation have also been rife since 2014 and it is often the smallest hotels that pay the most commission. With their increased size, chains such as Marriott are able (as Moore puts it) to function almost like OTAs themselves, providing a one-stop location where potential bookers can choose from a range of options to suit their needs; and by bringing in bookings this way, chains can cut down the often exorbitant OTA commissions.
So how does a smaller hotel ensure it is not cast in the shadow of major international chains? Here are the questions you need to ask yourself:
- What makes you unique?
Carve a more personal niche which reflects your own brand, your specific offering and the sector you are targeting. Executing this will necessarily vary from hotel to hotel: successful solutions will look beyond merely aiming to be ‘Marriott-lite’ and instead focus on what you can offer that guests won’t find elsewhere. Are people mainly attracted to your hotel because of its location, interesting sights nearby, or a particular service that you offer? Do your guests belong disproportionately to a particular demographic, and are there any specific groups that you would like to attract in greater numbers? Any successful strategy to take on the giants will need to begin with a detailed look at what sets you apart from other hotels.
We particularly like Rocco Forte’s festive packages, tailored to the cities of their hotels. Independents are uniquely placed to show off their local traditions. For inspiration, check out Rosewood’s Soul Searching in Mexico pages.
- Do your guests love you?
Travellers increasingly look more to online review sites than to brand recognition. This considerably lessens the advantage that the big names have traditionally enjoyed. The former automatic trust in established brands has been replaced with newer sources of reassurance, namely, reviews. Consider this a test of the success of your personalisation: if you’re successfully filling the right niche, you’ll find the evidence in your reviews.
Unfortunately, a lot of hotels do not seem to get it: bad reviews are met with defensiveness, recriminations or just with silence. Given the massive growth of intermediaries and metasearch sites in, this is not something you can afford to get wrong or simply ignore. TripAdvisor’s Instant Booking in particular has demonstrated the smooth transition from 3rd party reviews to becoming an ‘OTA lite’, to quote Tnooz. There are a number of practical and constructive steps you can take instead, allowing you both to minimise the damage in the present and prevent it being repeated in future.
- Does your website work?
So you’re offering the right service, getting good reviews and channeling traffic to your website via a variety of platforms. But does your website let you down?
With the growing role of smartphones in particular as an integral part of the booking process, your website simply has to be mobile and tablet friendly. We like this this five-step guide on improving the booking experience. The key criterion at every stage is how it will look and feel from the point of view of a potential guest: if your website does not entice your customers with pictures and testimonials, show when there is availability and make the booking experience simple and painless, many would-be bookers simply will not complete their booking with you.
- Do you think outside the box?
We all know the cliché. But when it’s original thinking that keeps you on the map, it pays to find new ways to maintain independence. Design Hotels have proven there is always another avenue by launching a partnership with Starwood that allows you to list your independent property on the Starwood Hotels website. This keeps each Design Hotel unique and authentic, while opening the door to the marketing might of the bigger groups.
The current trend of M&A consolidation is an opportunity, a sign of underlying strength in the industry that you can capitalise on as much as the big brands. When taken together, these solutions offer an integrated approach to fighting back against sky-high OTA commissions, whether through engaging with guests personally and directly or by building up trust with your potential guests by showing they are getting the best price available. The big beasts of the travel industry may keep growing, but it remains in your power to keep your guests happy through attentive, personalised service and a relationship founded on trust.
Is your hotel unique? Tell us about the personal touches only you add that make your guests love you.
