Recently I had the privilege of presenting to the American Hotel & Lodging Association (AHLA) General Managers (GM) Roundtable about Mergers & Acquisitions (M&A) in the industry.
The GM Roundtable is comprised of leading hotel General Managers across the U.S. and provides a forum to discuss current issues including the impact of federal and state legislation and regulations affecting those at the frontline of the hotel industry.
M&A, while often used interchangeably, have distinct meanings. Mergers involve the consensual joining of two entities, whereas acquisitions occur when one company purchases another and transfers ownership.
Opportunities presented by M&A are many, including geographic expansion, entry into new markets, enhanced competitive edge through diversification, operational synergies that improve financial performance, business model transformation, elimination of competition, and access to cutting-edge technology and new talent.
However, these opportunities come with challenges including potential job losses, regulatory and antitrust hurdles, financial uncertainties, potential culture and management clashes, and while the goal is value creation there is a risk of erosion and in some cases destruction.
The lodging industry requires significant capital investment in fixed assets and human capital.
Brand awareness is highly important in the lodging industry as trade identities ideally represent perceptions of the qualities that distinguish services and products amongst competitors.
Growth patterns of the travel and leisure time industries are correlated with the evolution of hotel companies.
-----Increasing international travel motivates domestic and foreign hotel brand companies to launch cross-border mergers and acquisitions.
----------i.e. AccorHotels purchase of 21c Museum Hotels and Marriott International takeover of AC Hoteles C. A.
-----Hotel brand companies typically operate on an asset-light and fee-oriented strategy.
Over the years many M&A deals have occurred in the lodging sector including property ownership companies as well as management and brand platforms.
A link to my presentation appears below.
#hotelindustry #hospitalitytrends #mergersandacquisitions