Traditionally, Marriott is a business driven by franchise and management company contracts. It is known for its branding, service and operational expertise. Starwood in recent years is placing additional emphasis on a similar path and shedding owned hotels as part of its “asset light” strategy.
The resulting combined company sells franchise and management contracts while providing numerous services that effectively provide marketing and management capabilities to its hoteliers.
Therefore, these specific brands and their parent companies are less driven by the real estate markets and more driven by consumer and business demand for their branded hotels.
Multiple industry participants view the recent spurt of hotel consolidation as a trend that fuels a rivalry against the major OTAs. While there are other overarching factors, this is certainly a facet to consider.
While each chain and brand has defined a specific set of tactics for distributing rooms within the OTAs, Marriott and Starwood continue to aggressively steer consumers toward their brand sites even to the extent of foregoing top search placement within the OTAs.
It appears these two brands view the major OTAs as expensive alternatives and want to control terms of distribution while providing lower cost distribution solutions to their branded properties.
However, from a property perspective, owners and management companies may have different interests. If they are able to generate reservations at a reasonable cost, all things considered, then they may not have as much preference as to where the booking originates.
That said, distribution costs do vary across channels and sites and consolidating two major hotel players could deepen the competitive divide between these particular Brands and the OTAs.
This consolidation will also continue to affect other segments of hotel distribution, such as managed travel and group bookings. Most major hotel companies are responsible for a significant portion of a branded property’s marketing.
Corporate negotiated rates play a role in this since the chain will have more control over inventory and pricing for any market where they have a significant share of inventory.