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Hotels Braced for Competition

By on Dec 22, 2015 in Hotel-Tourism, Property News

Thai hotel management companies will face tougher competition next year after the recent mergers of big international hotel chains.

AccorHotels’ acquisitions of Canada’s luxury Fairmont, the Raffles and Swissotel brands earlier this month was the latest in a wave of mergers in the hotel sector.

Last month, Marriott International bought Starwood Hotels and Resorts Worldwide to create the world’s largest hotel company, with 1.1 million rooms in 5,500 hotels spanning 100 countries.

Erawan Group president Kamonwan Wipulakorn said competition among hotel chains would grow more intense and commission fees eventually fall.

“The mergers of big international hotel chains will lead to lower costs of marketing and IT networks,” she said.

Ms Kamonwan said Erawan’s main criteria when selecting a hotel chain were strong branding in the segment, marketing strategy and profitability, which was why the group selected Ibis to manage its economy hotels.

However, Ms Kamonwan said small and medium-sized hotel management companies would face tougher competition and must work harder to survive in the new environment.

“More mergers and acquisitions (M&A) in the hotel business will happen in the future. The number of players in the global market will be reduced,” said Chanin Donavanik, chief executive of Dusit International, another hotel management chain in Thailand.

He said Chinese investors were looking to take over big global hotel management companies after they failed to buy Starwood.

“I think one of the main reasons for the M&A activity is to boost stock prices,” Mr Chanin said.

“Apart from business growth, listed companies need to think about creating higher returns for shareholders.”

He said the hotel business would be tougher. Higher competition will continue, but tourist behaviour is changing.

The management system after the M&A will be complicated.

Clients may be confused, as brand positioning will overlap.

Youth and new-generation customers aged 20-40 prefer to make reservations online and stay at new hotels that have strong recommendations…

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Source: Bangkok Post – 21 December 2015

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