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The Global Hotel Industry: Big, Beautiful and Branded? Part One

An analysis of over 2,100 hotel groups representing over 60,000 hotels in over 180 countries globally

by Warwick Clifton
March 2013

Warwick Clifton, Research Director, presents a summary of hotel group activity from The Global Hotel Group and Brand Analyses, which analyses over 2,100 hotel groups representing over 60,000 hotels in over 180 countries globally. www.globalhoteldata.com


This short article considers the relative impact of the hotel groups versus independents within a global context and analyses the extent to which the hotel groups have penetrated various hotel markets with regard to their relative market share.


The article outlines some initial thoughts that have emerged in the first year of an exciting and comprehensive global research project, The Global Hotel Group and Brand Analyses.

We, along with most other industry commentators of the 1990’s, predicted the end of the road for independent hotel operators as they suffered at the hands of the growth hungry hotel groups.

Whilst the nature of the hotel industries globally cannot be considered as a homogenous mass, with different regions and countries being at differing stages of industry maturity and therefore having distinctly different industry structures. The general consensus was that the more mature markets of North America and the UK would lead the route to domination by the hotel groups at the expense of the independents.

Indeed, if global hotel supply as provided by the hotel groups in 1992 is compared with the provision in 2012, a picture is painted of the global hotel industry that is increasingly concentrated. See Table One.

Table One, The Global Players....1992

Name

Hotels

Rooms

Av. Hotel Size

Bass plc

           1,624

             229,948

142

Manor Care, Inc

           2,101

             201,019

96

Marriott

               646

             150,252

233

Tollman Hundley Hotels

           1,274

             145,699

114

ITT

               416

             137,813

331

Accor

               675

               82,671

122

Pritzker Family Trust

               161

               76,386

474

          Forte Hotels

               721

               70,029

97

Hospitality Franchise Systems

               469

               58,164

124

Saisons Group

               162

               56,572

349

Carlson

               218

               51,086

234

Super 8 Enterprises

               814

               50,982

63

Ladbroke Group

               118

               43,811

371

Grupo Sol

               127

               34,331

270

Wagon Lits

               280

               33,863

121

New World Development

               119

               33,640

283

Aoki

                 56

               32,175

575

Queens Moat Houses

                 69

               19,410

281

Air France

                 53

               18,183

343

Forvaltnings AB Ratos

               112

               16,636

149

Top 20 sub total

         10,215

         1,542,670

151


Compare this ‘top twenty’ with that in Table Two: The Global Players....2012.    Whilst many of the ‘names’ have changed the entities of the majority generally remain in existence despite ownership of them having changed hands and the groups themselves having consolidated through M&A activity.

Table Two, The Global Players....2012

Group

Hotels

Rooms

Hotels  % sub-total

Rooms %  sub-total

Av.  Hotel Size

InterContinental Hotels Group

4,665

666,162

11.4

13.1

143

Hilton Worldwide

3,900

633,000

9.4

12.4

165

Wyndham Hotel Group/International (Formerly Cendant)

7,152

617,536

17.4

12.1

86

Marriott International

3,513

617,000

8.6

12.1

176

Accor

4,430

531,000

10.8

10.4

120

Choice Hotels International

6,200

502,000

15.1

9.9

81

Starwood Hotels & Resorts Worldwide

1,080

316,000

2.6

6.2

292

Carlson Hospitality Worldwide

1,105

166,656

2.7

3.3

151

Home Inns

1,733

150,000

4.2

2.9

87

Hyatt International Hotels & Resorts

496

135,942

1.2

2.7

274

7 Days Group**

1,199

110,000

2.9

2.2

92

Melia Hotels International

350

89,000

0.9

1.7

254

China Lodging Group

884

86,600

2.2

1.7

98

LQ Management, LLC.

803

82,062

2.0

1.6

102

Extended Stay Hotels

676

76,000

1.6

1.5

112

Interstate Hotels & Resorts *

373

70,000

0.9

1.4

188

Rezidor Hotel Group *

328

69,071

0.8

1.4

211

Vantage Hospitality Group

1,002

59,000

2.4

1.2

59

Louvre Hotels  Group

865

57,903

2.1

1.1

67

NH Hotels

381

56,676

0.9

1.1

149

Top 20 sub total

41,135

5,091,608

100.0

100.0

124


*There is some degree of ‘double counting’ in this table, as the majority of these two companies’ portfolios are already listed as branded units of other groups also listed in this table. As managed units in the case of Interstate, and a mix of managed units and those they are responsible for on a master franchisor basis in Rezidor’s case (Carlson brands).

** As this article was being written, Carlyle Group led a consortium of investors to buy the 7 Days Group and take it private.


The two tables when analysed, demonstrate dramatic consolidation and concentration of hotel supply globally. These ‘top 20’ groups represented an increase of circa 31,000 hotels (300%) over the 20 year period.


“the top 6 groups represent approximately 46% group hotel supply globally”

The big are getting bigger. Indeed, these top 20 represent over 66% of total group hotel supply globally. This is emphasised by the top 6 groups representing approximately 51% group hotel supply globally, a situation which compounds the paradox that is global hotel supply. At one extreme, the more developed markets of North America are epitomised by ‘hard’ branding and extreme levels of market concentration.  The other extreme is illustrated by the emerging, less developed markets where brand and group affiliation is in the minority. Where it  does exist, it is generally through domestic affiliations or upper-tier hotels being  affiliated to ‘International’ groups in primary ‘key’ locations, with the majority of hotels being ‘independent’ in the truest sense of the word.  The European situation is somewhere in the middle. Although once again, it should not be seen as a homogenous mass, with each country having distinct market traits, features and patterns. Indeed, the industry ‘prophets’ of the early to  mid Nineties beckoned the onslaught of a branded and highly concentrated hotel supply revolution in the UK and France, but to date, this has not materialised to the extent anticipated.

The Changing Nature of the Groups

Over the decades  the groups have changed in character and structure as well as in name. There are less ‘diversified conglomerates’ in the rankings. As the global economies have changed considerably and the industry has matured, resulting in the changing appeal of the industry to investors. The industry has without doubt become more specialised and professional, with ‘Hotel Divisions’ within larger corporate entities being separated and often ‘floated’ as standalone entities ( E.g. the separation of Rezidor from its airline parent SAS).

As the ‘independent’ hoteliers have been put under increasing pressure to adapt or die, many have sought the benefits of becoming franchisees of established brands to facilitate them achieving  ‘group’ related benefits (brand perception, advertising etc) via the relatively low cost of franchise fees. This demand for ‘membership’ from hoards of independent hoteliers has resulted in the increasing domination of Franchisors in terms of numbers and their influence on hotel supply activities. These Franchisors, whilst seeking global penetration have encouraged and essentially created the emergence of ‘true’ master franchisors.

In parallel, it is primariIy these same franchisors that have been fundamental in increasing the number of standardised ‘budget’ offerings through franchise activity. These have been the main reason for the lowering of the average hotel size over the last two decades. They have appealed to both consumers and investors as a ‘value’ segment of the industry, which has experienced amazing growth through its standardised, low cost development model facilitating it to expand rapidly in tertiary locations, which historically had been the domain of the ‘independents’.

The maturity of the industry and its specialisation and separation from its 1980’s persona as a real estate investment vehicle has resulted in an increased separation of Bricks/Brain. Many of the major groups now operate primarily as Franchise Model businesses (Carlson), as Management Contractors and Lessees of hotels rather than the traditional model of ‘Owner Operators’. Only the future will tell if this trend to ‘Asset Light’ is ‘Asset Right’. Despite this trend, there remains an element of ‘Owner Operator’ in the majority of the groups with most selecting a multi-strategy approach to the hotel business. This is highlighted by the fact that there is only one pure management company in 2012’s top 20 (Interstate do actually own a handful of hotels but they are essentially a management contracting company) .

The entrance of three Chinese groups into the top 20, shows how the Chinese industry is developing. All three groups’ portfolios are essentially domestic in nature with a focus on the budget and economy sectors. However, their enormous growth and continued potential growth both domestically and internationally make them of great interest.

Table Three, Key Global Supply Features 2012 (Total group affiliated stock)

No. Hotels

58,639

No. Bedrooms

7,676,279

No. Groups

2,205

No. Hotel Operator Groups

1,441

No. Brands

1,308

No. Hotel Owners

1,616

Average No. Bedrooms per Hotel

131

No. Hotels in development

2,428

No. Rooms in development

442,424


As previously discussed, despite referring to a  ‘Global Industry’, the industry varies drastically from country to country, and equally from continent to continent. See Table Four.

Table Four, Supply by Continent 2012


Hotels

Rooms

Average Rooms per Hotel

No. Countries

Hotels % Total

Rooms % Total

North America

32,201

3,984,867

124

31

54.9

51.9

Europe

14,240

1,818,385

128

49

24.3

23.7

Asia

9,218

1,422,297

154

40

15.7

18.5

Africa

1,057

186,919

177

41

1.8

2.4

Oceania

1,230

149,029

121

10

2.1

1.9

South America

693

114,782

166

12

1.2

1.5

Totals

58,639

7,676,279


181 countries

100.0

100.0


Table Four demonstrates the dominance of North America in representing group hotel supply, with circa 52% of supply occurring in this continent. Therefore it’s importance in terms of hotel supply features and it’s indigenous players are over-represented when ‘averaging’ out the figures on a global basis.

However, the Americans are not having it all their own way, the Increasing importance of Europe is evident having developed from circa 10,000 group hotels in 1994. Europe as a host has become a major battle ground in global developments in the last two decades, resulting in an  increase in its group hotel supply by 30% in this period.

These continental  developments of the ‘old’ and ‘new’ worlds, however, could potentially be surpassed by the dramatic ‘entrance’ of Asia as both a major host and player. Despite numerous fluctuations in fortune over the period, the countries of central and eastern Asia in conjunction with the Middle East, have developed at a pace with enormous growth in not only the hotel groups normal ‘hunting grounds’ of business/hub destinations but also in resort destinations.

The differing changes across the continents can be highlighted by a cursory glance at the principal host countries. See Table Five.

Table Five, Top Host Countries


Hotels

Rooms

Hotels %

Rooms %

USA

29,555

3,518,779

50.4

45.9

China

6,036

781,284

10.3

10.2

Spain

2,080

339,701

3.5

4.4

UK

3,224

308,464

5.5

4.0

France

3,369

283,664

5.7

3.7

Germany

1,400

220,381

2.4

2.9

Canada

1,540

201,777

2.6

2.6

Japan

781

176,353

1.3

2.3

Mexico

586

123,442

1.0

1.6

Australia

962

114,401

1.6

1.5

Italy

584

84,490

1.0

1.1

Brazil

399

72,367

0.7

0.9

Egypt

256

69,814

0.4

0.9

India

574

66,356

1.0

0.9

Thailand

300

62,167

0.5

0.8

United Arab Emirates

233

53,402

0.4

0.7

Malaysia

162

52,430

0.3

0.7

Greece

210

51,116

0.4

0.7

Indonesia

273

43,648

0.5

0.6

South Africa

371

43,152

0.6

0.6


The dominance of USA is evident with circa 50% of group hotel supply. The top 5 host countries represent 66.4% group hotel supply, with China joining the ‘traditional’ developed domains of North America and Western Europe. China is the real news story as indigenous groups look to rapidly develop their chain networks internally which has resulted in the budget and economy sectors being dominated by indigenous brands despite the best efforts of the ‘globals’. The ‘globals’ have however been relatively successful in the mid to up markets, where their management expertise and attractiveness to international travellers has been pro-actively leveraged to attain management contracts.

Middle East still ‘in planning’ despite furore


The other major emergence in terms of exposure and excitement has been the Middle East countries, predominantly the United Arab Emirates. However, despite phenomenal levels of investment, it remains relatively small on the global stage as a host, but is becoming increasingly important as the country of origin of hotel groups, both as operators and owners.
 
Drilling down further, the relative importance of individual host cities and towns are analysed in Table Six.

Table Six, Top Host Cities/Towns

Country

Region

Town/City

Hotels

Rooms

Hotels %

Rooms %

China


Shanghai

639

92634

1.09

1.21

China


Beijing

579

87566

0.99

1.14

UK

England

London

407

78561

0.69

1.02

USA

FL

Orlando

216

78363

0.37

1.02

USA

NV

Las Vegas

114

66677

0.19

0.87

France


Paris

469

61392

0.80

0.80

USA

NY

New York

177

53577

0.30

0.70

USA

TX

Houston

310

44400

0.53

0.58

USA

GA

Atlanta

170

38701

0.29

0.50

USA

IL

Chicago

105

37033

0.18

0.48

United Arab Emirates


Dubai

144

35481

0.25

0.46

USA

TX

San Antonio

248

34701

0.42

0.45

Thailand


Bangkok

128

32523

0.22

0.42

USA

CA

San Diego

159

31751

0.27

0.41

Japan


Tokyo

94

31600

0.16

0.41

Spain


Madrid

214

30289

0.36

0.40

Germany


Berlin

145

29110

0.25

0.38

USA

TX

Dallas

138

29083

0.24

0.38

USA

CA

San Francisco

115

27791

0.20

0.36

Spain


Barcelona

210

26365

0.36

0.34


China hits the headlines once again due to its enormous number of indigenous budget and economy sector rooms in the key cities of Beijing and Shanghai. Once again the relative importance of the USA as hotel hosts is emphasised with half of the top 20 locations being in the USA. Globally the top host cities are ‘hubs’ with the possible exception of Las Vegas, which despite having relatively few group hotels, is in third position due to the immense average size of its hotels. Florida’s Orlando is a shock number four, but this in part is due to the Disney Resort hotels contribution to the total room stock. The European hubs play an important role in the top 20, with all the key economies, with the exception of Italy, having an entry.

The importance of ‘tourist destinations’ is highlighted by Orlando and Dubai, but  London, Paris, New York, Barcelona, Las Vegas and Bangkok  also benefit from their dual roles as both business and Tourist destinations.

Part two of this article will be published next week and will concentrate on the extent of market penetration the hotel groups have achieved globally.

Data taken from The Global Hotel Group & Brand Analyses
A Joint venture between Global Hotel Research Limited & Centre for Hospitality & Retailing, Leeds Metropolitan University.
  • On-line database and analyses
  • Subscription service
  • Published findings
  • The source of supply data & analysis
A significant new research Project analysing The Global Hotel Industry, then and now, resulting in usable, comprehensive and reliable market analysis primarily concentrating on:
  • The Players
  • The Products
  • The Brands
What is it?
  • An independent and unbiased source of timely, accurate and detailed analyses
  • Hotel Market analysis and data by Hotel, Hotel Group and Hotel Brand
  • A bespoke information service..... Not a one size fits all solution:
    • You choose your desired format
    • Report or
    • On-line, searchable, fully interactive database
    • You choose the level of detail you require
    • You choose your geographical region/s of interest e.g. An individual country or continent or the world
The analyses provide the most accurate mapping of this often fragmented and complex industry to date.

Innovative approach to the collection, collation, categorisation and analysis of the markets to produce this suite of comprehensive analyses.


For more information, contact:

Warwick Clifton, Research Director
Global Hotel Research Limited
00 44 (0)750 161 1543
globalhotelresearch@orange.fr
www.globalhoteldata.com

 

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