If you are a film buff or a reader of a certain age, you'll no doubt be familiar with Sylvester Stallone classic Demolition Man.
For all its great set-piece explosions, wise-guy dialogue and knockabout fun, the thing that really sticks in my mind about this 'renegade cop and violent criminal in the future' movie is the famous Taco Bell scene.
Set in the (not-so-far-off-now) year of 2032, the audience learns that there is now only one restaurant brand in the US — the aforementioned Taco Bell. It won the 'franchise war' and is now supreme, serving up everything from high-class sushi to, well, tacos.
If you are a travel manager the situation might ring a bell, if you'll excuse the pun. Hotel consolidation is all the rage and it can seem that big groups are getting bigger.
Fears that a 'super chain' will one day rule the world are thankfully still a thing of fiction, although it is easy to find dissenting voices who claim mergers will ultimately reduce the choice for customers and buyers. Far from it. While the landscape changes, consolidation can actually breed individuality and innovation.
Choice cannot be assumed
Hotel businesses are smart. And they have seen which way the wind is blowing when it comes to demand. Whether people are travelling for business or pleasure, they book with a 'consumer mindset' and want to be treated as individuals. Hotels at all price points have to offer a degree of uniqueness which caters best for their customers' needs. And as the offering evolved, it makes sense that the chains have consolidated to capture as many different types of customer as possible.
Being able to offer a broad selection of brands is obviously great for the hotel businesses but it also works well to be travel management firms working on the behalf of travel buyers.
There is no longer room to assume who buys what in organisations today. We can no longer assume that CEOs require a five-star full service hotel and trainee professionals are suitable for a low-budget economy hotel. Providing options with similar quality and price points is increasingly needed from hotel operators.
In turn, smart TMCs are helping corporate clients design policies that can flex. Does the traveller need to book a nice suite outside of the usual price parameters, for example, as they are set to seal the deal on a massive contract and require a great night's sleep? With a portfolio of brands available, switching up or down levels is easy to present and transact.
But having a broad choice of brands and propositions isn't just about practicality. Increasingly, businesses and TMCs are paying attention to staff satisfaction and the important topic of attrition. Having a policy with a comprehensive choice of hotel brands drives up programme engagement and guest satisfaction. For the hotel provider it boosts long-term loyalty, but for corporates it also means happy business travellers who are productive at work and unlikely to leave in search of a new job.
Consolidation and competition
Of course, travel managers may fear that consolidation could hurt them financially, since expanded groups potentially have a 'monopoly' in certain geographical areas and might have the power to force up prices.
The reality is that such moves are in nobody's interest. Groups want to keep travellers in their 'brand universe' and are putting more and more incentives in place to encourage guests to stay within that universe. Having a company ethos on service across brands is one example and can extend to retaining and sharing guest preferences across brands, for example, having loyalty points, recognition and a single customer view to give guests memorable stays across the network.
The blended ownership situation that we are currently experiencing does not take away competition. It does however make the sourcing and pricing process much more simple and focused for buyers.
And forget thoughts of all-powerful chains striking out to approach customers directly. I can assure you that hoteliers place real value on TMCs and buyers and want to foster these relationships no matter what. Having the reassurance that there are travellers with X number of room nights every year is a major consideration for any hotel manager and they will fiercely protect that. Loyalty schemes are increasingly driven by the ambition to deliver a better guest experience and perks on the ground rather than just as direct marketing tool.
Raising standards
Another factor to consider is the growing scale of smaller groups in the marketplace. Boutique properties and smaller chains are fleet of foot and are very often driving change in our industry. It isn't a surprise that the good ones get bought up but that doesn't mean all the good ideas they have are instantly killed off. Very often these initiatives can be rolled out and become standard practice. Similarly, good hotel groups realise the things that might work in a particular local market should remain in place and will give local hotel managers the autonomy to do what they have been doing under their new corporate umbrella.
It is important to mention that the acquisition of brands in key destinations across the world is a combination of acquisition, management contract and franchise agreement against a backdrop of asset light business models. Although incorporated under the same hotel group, competition will still remain as each hotel will be competing for their share of the market against each other. Equally, groups are responsible to each and every owner to maintain competition even within groups. So therefore, the new blended ownership situation allows competition but offers a more streamlined approach and process for travel buyers while providing a competitive platform for corporate negotiations which is likely to increase growth across the vast travel marketplace.
As an aside, being able to offer a rich and diverse portfolio of hotel brands means TMCs and travel managers can avoid the irritating 'why can't we stay in an Airbnb?' question from travellers. The reassurance of having great service, food, clean rooms, guarantees on fire safety and help in times of need means you can tick duty of care off your to-do list for good. Hotels continue to offer guests all of these elements, however this does come with its own cost and therefore some consolidation is required to maintain standards.