What ever happened to airline/hotel chain alliances?

SSTH Editorial Team | 2 Nov, 2017

It would seem like a natural fit, combining hotels and airlines.

But strangely enough, almost all of these alliances have fallen apart over the years and decades, often due to the financial problems of the airlines.

How many people know that InterContinental Hotels was originally founded by the former US flag carrier, Pan American Airways, in 1946?

The idea was to provide appropriate destination hotels in Latin America for Pan Am crews and passengers.

The chain's first property was the Grande Hotel in Belém, Brazil which was followed by hotels in Caracas, Buenos Aires and Rio di Janeiro.

Pan Am sold InterContinental to UK-based Grand Metropolitan in 1981, well before the airline collapsed a decade later in 1991.

Most airline/hotel chain alliances have been dismantled


Le Méridien used to fly with Air France

Another example is Le Méridien, now part of Marriott's stable of brands, which was, at one time, majority-owned by Air France.

Founded in 1972, Le Méridien had 58 luxury hotels when Air France was obliged to sell it 57% stake in the chain in 1994, following mounting operating losses. The acquirer was Forte Hotels of the UK which, at the time, owned the iconic Savoy Hotel in London, amongst other properties.

Likewise, Golden Tulip (now the property of Louvre Hotel Group which is owned by the biggest integrated Chinese hotel chain, Jin Jiang) was once part of the Dutch flag carrier, KLM (now merged with Air France).

Originally founded by six hoteliers in the Netherlands in 1962, Golden Tulip became a division of KLM in 1975, but was subsequently sold in 1998 to the Krasnapolsky Group, which, in turn, merged with NH Hoteles, Spain's second-ranked hotel chain, in 2000. (). 

Swissôtel a victim of the grounding of Swissair

Here in Switzerland, Swissôtel, used to belong to the country's erstwhile flag carrier, Swissair, which ceased operations in 2002 due to financial losses.

Founded in 1980 as a joint venture between Swissair and Nestlé, Swissôtel was launched with the acquisition of Hotel Le Président in Geneva.

Following the bankruptcy of Swissair, the chain was sold to Raffles, that later combined with Fairmont to form FRHI (Fairmont Raffles Hotels International), which, in turn, was acquired by AccorHotels in 2016.

Swissôtel in Zurich

Westin once cruised the "friendly skies of United"

Yet another example is Westin Hotels, a former Starwood Hotels & Resorts brand which is now part of Marriott.

Founded in 1930 in Seattle, Washington as Western Hotels, the chain was acquired by United Airlines (UAL) in 1970 and in 1981 the name was changed to Westin.

In 1987, UAL Chairman Richard Ferris announced a plan to transform UAL into Allegis, a travel conglomerate based around the airline, Hertz Rent-a-Car, Hilton Hotels, and Westin and linked by Apollo, the GDS (global distribution system).

This plan failed, however, and Westin was sold in 1988 to Aoki Corporation of Japan and in 1998 Starwood Hotels & Resorts took over 100% ownership of the chain.

Westin claims to have been the first hotel chain to accept credit cards (in 1946), to offer 24-hour room service (1969), and personal voice mail in each room (1991).

JAL/Nikko one of the last to break down

Flag carrier, Japan Airlines (JAL), got into the hotel business in 1970 when JAL Hotels was established as the hotel management subsidiary of Japan Airlines.

In 1999, JAL Hotels merged with Japan Airlines Hotel Co. Ltd., which resulted in the company’s management of the Ginza Nikko Hotel and Kawasaki Nikko Hotel.

However, in 2010, JAL went into receivership and was obliged to unload its 79.6% stake in JAL Hotels to Okura, another Japanese hotel group. JAL International retains 11.1% of JAL Hotels’ shares, and the remaining 9.3% is held by several major banks, institutional and individual investors.

Airline/Hotel business Combinations


So what's left?

At the present time, one of the few still-existing airline/hotel tie-ups is between Air Asia, the continent's leading LCC, and Tune Hotels.

While most airline/hotel business combinations worldwide have been dismantled due to lack of synergies, this did not deter AirAsia’s founder and CEO, Tony Fernandes, from founding Tune Hotels.com, an Asian budget hotel concept in 2007.

The Malaysian budget hotel operator made its debut in Thailand at year-end 2009 and now has 17 operating hotels (12 in Malaysia, two in Indonesia, two in the UK and one in India).

In fact, Tune has not at all met expectations in terms of its originally planned expansion which had called for "100 hotels by 2014". And, at the end of January 2017, the chain's five London hotels, at Canary Wharf, Liverpool Street, Westminster, Kings Cross and Paddington, were rebranded as Point A Hotels.

Combining hotels and airlines

There is another Asian example: HNA, a sprawling Chinese conglomerate active in tourism, logistics, financial services and retailing.

Founded in 2000, the company operates 13 airlines, including:  Air Chang'an, Beijing Capital Airlines, Fuzhou Airlines,Grand China Air, GX Airlines, Hainan Airlines, HK Express, Hong Kong Airlines, Lucky Air, Tianjin Airlines, Urumqi Air, West Air and Suparna Airlines.

Notably, HNA purchased Minnesota-based Carlson Hotels, the owner of the Radisson brand, in late 2016 and also holds a minority stake in the abovementioned Spanish hotel group, NH Hoteles.

Otherwise, the world's two biggest tour operators, TUI and Thomas Cook remain important examples of hotels and airlines operating within one corporate structure.


 

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