Meeting Industry Consolidation: Friend or Foe?

Recent headlines for our industry:

From ATWOnline.com

* Delta president says consolidation enabling US airline profits.

From HotelManagement.net

* $174M Sonesta International Hotels sale raises eyebrows

* Media Consolidation: The Illusion of Choice (Infographic) – from www.frugaldad.com, 6 media giants control 90% of what we see, watch, or listen to.

All of these articles deal with consolidation that has happened in our industry and others. In my time in the hospitality industry:

* Starwood resulted out of the combination of Sheraton and Westin and others.

* Stouffer Hotels became Renaissance and became part of Marriott, along with Ritz Carlton.

* Doubletree, Embassy Suites, and Hampton Inns were acquired and became part of the full range of lodging options provided by Hilton.

Now we see airlines merging, more hotel companies merging, and in the past several months, Freeman has acquired Champion Exposition and George Fern in the general service contractor space.

Is this good for your organization?

Pros:
1. I like getting points into one account when I stay at different brands or fly different airlines. It helps me see the advantages of consolidating my spend.

2. There is less clutter in the brand space. I know by going to Marriott, Hilton, or Starwood (or Delta/United) websites I can avail myself of an almost endless number of flights, hotel types and price ranges.

3. The companies that have done this have found “economies of scale” and been able to be stronger, more profitable, and invest in innovations and resources that smaller companies might not be able to afford. It allows them to reinvest in my business.

Cons:
1. I don’t like putting all my eggs in one basket. There is a fear that, if I do that, I will get taken advantage of somewhere down the road.

2. It reduces competition and increases prices.

3. There is no diversity of ideas and these large corporations become more vanilla as these brands get consolidated. I’m just another customer to a big, faceless corporation.

What do you think the effect of consolidation has been on your business, your spending, and the customer service you receive?

(Disclaimer: The author has worked for Hilton, Wyndham, and now Freeman in his career)

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