The M&A season got off to a very hip start indeed, with the merger of Hamilton Hotel Partners and Pyramid Hotel Group, to create a third-party operator which will span the globe. And yes, you may not see much to claim under the banner of hipness, but this is the hotel sector and we take what we can. The third-party operators have been growing in stature in recent years, coming over from the US with their fancy investor-aiding ways and it was only a matter of time before they started consolidating. The deal came only months after the merger of Aimbridge Hospitality and Interstate Hotels & Resorts, marking a definite trend. And trends mean hip.
Adding to the hipness was the confirmation to us from Frank Croston, partner & co-founder, Hamilton Hotel Partners, that the group would continue to pursue a strategy started a couple of years ago of co-investing, giving the TPOs extra skin in the game. This was something we saw most-recently with the Freo/M&T deal and marks an interesting evolution for the groups in terms of alignment of interest. More rigour all around and, for the brands, a move ever-further away from the hotels themselves. The shifting stack in your local hotel means that the global flags are moving closer to becoming pure brands. So how much should they be getting into IT? Distribution? Procurement?
The point seemed to be very much made this week by Hilton, which reported growth in its collection hotels, the very essence of the non branded, which choose to access that else which the brands offer - their access to the market. While it would err on the bizarre to welcome a downturn, it will be interesting to see whether straightened times see a flight to collection brands or pure brands, and what becomes of the disruptors, OYO and Airbnb.
In the case of OYO, it continues to disrupt itself, streamlining in the US after racing in headlong. Whether this is streamlining to go faster or streamlining to fall through the cracks remains to be seen, but the company needs to make its case if it wants to attract those hotels looking for a safe haven.
Also facing a branding moment is Airbnb, with Prague the latest city to look to limit the platform to properties which involve actual sharing with the owner, as opposed to staying in an empty investment property. But wait, you say, isn’t Airbnb’s brand promise all about sharing and living like a local? The group could see legislation forcing it to meet its own brand promise. You can bet hotels won’t want to see that coming their way. Sharing well avoided on this occasion.