View all newsletters
Receive our newsletter – data, insights and analysis delivered to you
  1. Comment
August 25, 2020updated 25 Apr 2022 4:17pm

Accor-IHG merger rumours hints at imminent consolidation

IHG and Accor have recently refused to comment on a flurry of rumours regarding a merger between the two hotel heavyweights. This particular rumor is not new and similar murmurs may increase in frequency in the lodging industry as COVID-19 speeds up the process of consolidation.

By GlobalData

IHG and Accor have recently refused to comment on a flurry of rumours regarding a merger between the two hotel heavyweights. This particular rumour is not new and similar murmurs may increase in frequency in the lodging industry as COVID-19 speeds up the process of consolidation.

Free Report
img

What’s missing from your IPO industry assessment?

IPO activity all but stopped in 2020, as the investment community grew wary of the effects of COVID-19 on economies. No matter how deserving a business was of flotation, momentum was halted by concerns of when a ‘new normal’ of working patterns and trade would set in. Recently, sentiment has changed. Flotations picked up again during the second half of 2021, and now in 2022 the mood is decidedly optimistic. Business leaders have their eyes on fast rebounding economies, buoyant market indices and the opportunity once again to take their businesses public. As a result, global IPOs are expected to hit back this year. With GlobalData’s new whitepaper, ‘IPOs in Consumer and Retail: 5 must-include elements for your prospectus industry report’, you can explore exactly what is needed in the essential literature. GlobalData’s focus lies in the critical areas to get right:
  • Macroeconomic and demographic environment
  • Consumer context
  • Industry environment
  • Competitive environment
  • Route to market
Interested to learn more about what to include in your IPO Industry Assessment report? Download our free whitepaper.
by GlobalData
Enter your details here to receive your free Report.

Shares in Accor and IHG rose on Friday (August 21), after reports the two had explored a merger that would unquestionably create the world’s biggest hotel group, at a combined value of US$17bn. Although this deal seems to be just speculation, the enormity of this potential merger proves that industry consolidation could be accelerated due to behemoths acquiring, merging or striking partnerships with each other to increase market share.

Reasons for a merger are strong

Many reasons for a merger between the two companies make the prospect plausible, especially during the current COVID-19 induced economic downturn, during which both companies have experienced significant losses. A major reason for this merger would be that the newly formed company could achieve savings in central costs. Companies that merge can often take advantage of a range of economies of scale, such as cost savings associated with marketing, technology advancements and workforce specialization.

The deal would also be highly beneficial from a geographical perspective. IHG boasts a strong presence in North America and China, whilst Accor is ubiquitous in Europe and operates properties in developing tourism regions such as Africa. The flagship budget brands of both companies – Ibis and Holiday Inn Express, would be likely to complement each other well and assist in maximizing market share in the midscale/budget segments. Demand for low cost accommodation will be likely to surge in the coming years due to the economic strain that COVID-19 has forced upon many travelers, meaning that the average amount of recreational expenditure per capita will be reduced across the globe. According to GlobalData’s most recent COVID-19 recovery survey, 34% of global respondents are now ‘extremely concerned’ about their personal financial situation. This response amplifies the fact that many travelers will be on a stricter budget going forward.

Stumbling blocks would occur

One of the biggest stumbling blocks for this merger, if it were to go ahead, lies with competition commissions. A combining of the two companies would create an industry titan, operating 1.6 million rooms. This kind of dominance would lead to supreme control over pricing due to a decrease in choice for travelers. If the newly merged company did increase room rates, this would be seen as anti-competitive behavior and will be a prospect that competition authorities will already be wary of.

Related Companies

Free Report
img

What’s missing from your IPO industry assessment?

IPO activity all but stopped in 2020, as the investment community grew wary of the effects of COVID-19 on economies. No matter how deserving a business was of flotation, momentum was halted by concerns of when a ‘new normal’ of working patterns and trade would set in. Recently, sentiment has changed. Flotations picked up again during the second half of 2021, and now in 2022 the mood is decidedly optimistic. Business leaders have their eyes on fast rebounding economies, buoyant market indices and the opportunity once again to take their businesses public. As a result, global IPOs are expected to hit back this year. With GlobalData’s new whitepaper, ‘IPOs in Consumer and Retail: 5 must-include elements for your prospectus industry report’, you can explore exactly what is needed in the essential literature. GlobalData’s focus lies in the critical areas to get right:
  • Macroeconomic and demographic environment
  • Consumer context
  • Industry environment
  • Competitive environment
  • Route to market
Interested to learn more about what to include in your IPO Industry Assessment report? Download our free whitepaper.
by GlobalData
Enter your details here to receive your free Report.

NEWSLETTER Sign up Tick the boxes of the newsletters you would like to receive. The top stories of the day delivered to you every weekday.
I consent to GlobalData UK Limited collecting my details provided via this form in accordance with the Privacy Policy
SUBSCRIBED

THANK YOU

Thank you for subscribing to Hotel Management Network