Who's the biggest?

SSTH Editorial Team | 31 Aug, 2017

Hotels magazine has just published its annual ranking of hotel companies worldwide, which is based on the number of branded rooms.

For the first time in history, a hotel group – Marriott International – has a portfolio of more than one million rooms, following their acquisition of Starwood Hotels & Resorts in late 2016.

Another chain, BTG Homeinns Hotels Group, also grew in a spectacular fashion, through acquisition, leapfrogging from 38th-ranked place in 2015 to 8th place in 2016, as a result of its purchase of Homeinns, one of China's leading budget hotel chains.

AccorHotels' growth has also been boosted by its purchase of the luxury chain, FRHI (Fairmont Raffles Hotels International), which added 155 hotels to the group's portfolio in 2016.

Biggest hotel chains in the world


China to the fore

What's striking in the rankings is the surge in Chinese-based hotel groups. Whereas a decade ago there were no Chinese hotel chains in the top-10, now they outnumber European-based chains.

Even though Chinese investors have acquired hotel assets left and right around the world, most of the capacity of the three biggest groups listed below is firmly rooted in the home market serving the rapidly expanding domestic tourism market.

Given the growth still to come in the world's largest travel market, it can be predicted that the Chinese groups will move up in the rankings and that more will join the top-10.

Figure 1: The biggest hotel chains in the world ranked by rooms, 2015-2016

Rank

Hotel group

Headquarters location

2016

2015

2016

2015

Rooms*

Hotels*

Rooms*

Hotels*

1

1

Marriott International

Bethesda, MD US

1'164'668

5'952

759'330

4'424

2

2

Hilton

McLean, VA US

796'440

4'875

753'777

4'556

3

3

IHG (InterContinental Hotels Group)

Denham, UK

767'135

5'174

744'368

5'032

4

4

Wyndham Hotel Group

Parsippany, NJ US

697'607

8'035

678'042

7'812

5

5

Jin Jiang International Hotel Group

Shanghai, China

602'350

5'977

565'558

5'408

6

6

AccorHotels

Paris, France

583'161

4'144

511'517

3'873

7

7

Choice Hotels International Inc.

Rockville, MD US

516'122

6'514

507'484

6'423

8

38

BTG Homeinns Hotels Group

Beijing, China

373'560

3'402

35'428

170

9

10

China Lodging Group

Shanghai, China

331'347

3'269

278'843

2'763

10

9

Best Western Hotels & Resorts

Phoenix, AZ US

293'059

3'677

293'589

3'745

Note: *Capacity as of 31 December
Source: Hotels July-August 2017

Washington, capital of the hotel industry

Besides being the capital of the US, Washington DC has also become the leading centre of the international hotel industry.

Indeed, three of the 10 biggest chains worldwide are headquartered in the Washington suburbs, including Marriott, Hilton and Choice.

There are other important hotel groups in the area like Host, the biggest hotel REIT (real estate investment trust), which is actually headquartered in the same premises as Marriott, from which it was spun off back in 1993, and Interstate Hotels & Resorts in Arlington, Virginia, which is the world's largest white label hotel management company.

Biggest hotel chains in the world

An available pool of talent

As explained by an executive at Hilton's McLean Virginia headquarters, the centralisation of major hotel companies in the Washington area facilitates the hiring of talent who don't have to move or be offered relocation packages when they change employer.

Hilton took the decision to move to the Washington area in 2009 following its merger with Hilton International of the UK.

When considering such factors as an East Coast time zone (advantageous for conducting international business), lower costs and quality of life, the Washington area and other short-listed locations, such as Atlanta and Dallas, were judged to be more or less equal, but Washington came first because of its proximity to a deep pool of hospitality talent, according to Hilton's CEO, Chris Nassetta.


Is bigger better?

In recent years, mergers and acquisitions in the hotel sector have constituted a mega-trend, as the major chains have rushed to bulk up so as to remain competitive.

Biggest hotel chains in the world

So what are the advantages of size?

First of all, the chains have an interest to extend their global reach.

For instance, now Marriott has a presence in 122 different countries worldwide and is followed by: Hilton (104 countries), Best Western (101 countries) and IHG (InterContinental Hotels Group) (100 countries).

This makes a hotel group more attractive for corporate agreements with large multinationals and also raises the value of a chain's loyalty scheme through being able to offer accommodation in more places worldwide.

Secondly, large hotel groups have more leverage when negotiating with suppliers and distribution partners.

This is particularly important concerning agreements with OTAs (online travel agents). The bigger the hotel group the more likely it is to be able to extract favourable commission rates and room availability requirements from distribution intermediaries.

Finally mergers can yield economies of scale, especially at the head office level.

For example, newly merged chains need only one CEO, one director of marketing, one head of human resources, etc.

Also, big hotel groups have more resources to devote to market research, notably for the creation of new brands, which serve to tap into a broader range of guest segments.


 

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