Exclusive Feature: Many may see the recent lodging Mega-Mergers and take-overs as a big threat to the smaller hotel chains; I, from the other hand, see these deals as an opportunity.

These Mega hotel chains will try to offer both owners and customers alike synergies of management, distribution, multiple branding and marketing.

However, for individual owners, or even multi-unit owners who had signed a management agreement.

For example, A Westin property that signed with Starwood in Dubai. Their prized property suddenly needs to compete directly with a JW Marriott around the block on the same reservation system. Both owners have a reason not to be happy…!

I expect that the more mergers we will see (and we are bound to see large lodging groups being taken over), the more dissatisfied and worried owners we shall have.

My writing is focused on the luxury end of the lodging industry but many of the parameters may also fit lower levels of the lodging scale.

I do believe that the higher the brand is positioned, the more exclusive the owners want to feel.
This is clearly reflected in the ‘Radius protection’ and ‘non-competition’ clauses most management and franchise agreements of top-end hotels have.

Ego is another point to be considered: Many of the owners are High-net-worth individuals. These people have egos that fit their financial and political strength. Being a part of a group of 5,000 hotels and over 2,000 owners isn’t exactly their ‘cup of tea’.

Relationships: Owners tend to base their decisions on the human factor. They want to feel that the guy ‘on the other side’ is someone that they trust and feel comfortable with. Management agreements are made to last for many years but so many of these agreements were canceled simply due to what many of us in the lodging industry describe as: “Bad chemistry”.

Changing a GM of an individual asset is a difficult process. However, changing a management company, changing regional managers and changing a company culture say for example Starwood to Marriott is a traumatic event.

Clearly, having less management companies will reduce the competition between global brands but also create an opportunity for smaller brands to try and get some of the owners that don’t want to be part of a 5,000 hotels group.

Distribution and competition: how can a Mega-Operator guarantee to a single asset owner that their other hotels which in some cases are owned or leased by the operator won’t be receiving preferential distribution status on their global reservation system?

Nowadays, at the top-end echelon, it is all about customization, individualization, consistency and experiences. Larger hotel groups will find it very difficult to fit in to those demands.

One of the finest examples I could think of is Four Seasons hotels & Resorts which in my view is the leading Global Uber Luxury hotel brand.

Their CEO Allen Smith said during the last few months, that Four Seasons has no intention to create a sub-brand or another brand. Four Seasons is leveraging on a Single-Brand focus.

I do think that for uber-luxury brands such as Four Seasons, Mandarin Oriental, Peninsula, Kempinski, Belmond as well as for other regional upper end lodging brands, these Mega-Mergers will become a huge opportunity only as long as they will stay focused and keep their brand values and brand consistency.

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Joseph - Yossi - Fischer the CEO of Vision Hospitality & Travel - international lodging & Travel Solutions