AccorHotels continued its acquisitive streak this week with the announcement that it is to acquire Mövenpick Hotels & Resorts for CHF560 million (€482 million, £412 million) in cash.
The acquisition will add 84 hotels and more than 20,000 rooms in 27 countries to Accor's already extensive portfolio. Mövenpick also has a strong pipeline, with 42 additional hotels planned to open before 2021, with significant expansion in Middle East, Africa and Asia-Pacific.
The announcement comes two years after the French hotel group acquired a number of other groups at the luxury end of the hotel market — Raffles, Fairmont and Swissôtel.
Sébastien Bazin, Chairman and CEO of AccorHotels, indicated what the deal would enable. He said, "By joining the Group, it will benefit from AccorHotels' power, particularly in terms of distribution, loyalty-building and development. This transaction illustrates the strategy we intend to pursue with the opening up of AccorInvest's capital: to seize tactical opportunities to strengthen our positions and consolidate our leaderships, as well as leverage our growth."
Consolidation is rife in the hotel sector. In March, IHG announced it was buying a controlling stake in Regent Hotels while it bought out Kimpton Hotels at the end of 2014. At the beginning of 2018, Wyndham bought LaQuinta Holdings in a near US$2 billion deal.
These are dwarfed, of course, by the US$13.6 million merger of Marriott and Starwood in 2016.
Consolidations tend to happen in waves. Investors see one group make a successful merger or acquisition and then start thinking about what deal they could do to achieve similar success. There is also the worry that a much larger competitor will make life difficult or impossible for a suddenly much smaller one.
The Marriott-Starwood merger was largely about market dominance and synergies. The first means building market share to a point where they can subtly control the market to make changes to things like cancellation policies and loyalty programmes knowing that others will probably follow. The second means achieving economies of scale in a world where technology has enabled cut-throat comparison of rates across multiple channels.
The other deals, including the latest Accor one, are about filling geographical holes or adding a new service category to an existing portfolio.
For travel buyers, the worry has to be that they will be the ones who pay the price of consolidation in higher rates. They will need to maintain pressure to keep the best deals in place but also look at the new disruptive hotel groups who always emerge at times like these to ensure that the mega hotel groups don't get too big for their boots.