March 8, 2017 / 5:09 PM / 3 years ago

Best Western considers M&A, partnerships to take on rivals: CEO

BERLIN (Reuters) - Hotels group Best Western is considering options including mergers and acquisitions to keep pace with rival Marriott International (MAR.O), the world’s largest hotel chain, the group’s chief executive said on Wednesday.

View of the logo of a Best Western Hotel in Paris, France, March 3, 2016. REUTERS/Jacky Naegelen

“We are thinking about how we can dramatically increase our scale,” Best Western CEO David Kong told Reuters in an interview on the sidelines of the ITB travel fair in Berlin.

He said the privately owned group, which includes around 4,000 hotels, was considering mergers and acquisitions, as well as partnerships.

“There are ways, and some of them we are pursuing. I can’t elaborate on that any more at the moment,” he said.

He also wants to look at alternative lodging, such as homestays, in a nod to rising competition from online marketplace Airbnb.

“Airbnb has 8 to 12 percent of the demand share. They are taking away business,” Kong said.

Industry experts expect more consolidation in the fragmented hotel market following the Marriott deal.

Marriott completed its acquisition of rival Starwood in September to create the world’s largest hotel chain with more than 6,000 properties in 122 countries.

Accor (ACCP.PA) has also been on a buying spree, acquiring FRHI Holdings, the owner of London’s Savoy and New York’s Plaza hotels, and taking stakes in boutique brands Mamma Shelter and 25 Hours Hotels.

Dirk Bakker, head of EMEA hotels at real estate company Colliers International, said he expected more consolidation.

He said Steigenberger was a potential target and a tie-up between NH Notels and Carlson was possible thanks to their joint shareholder HNA. InterContinental Hotels Group (IHG.L) was vulnerable too.

However, IHG’s CEO said he saw no need to bulk up just to keep pace with acquisitive rivals.

“We have the scale that we need. We don’t want to be bigger just for the sake of being bigger,” Richard Solomons told Reuters on the sidelines of the IHIF hotels conference this week.

Solomons said, though, that IHG was not ruling out adding more brands. “We would add brands again, but with 1,500 hotels in our pipeline we’ve got significant organic growth,” he said.

Reporting by Victoria Bryan and Maria Sheahan; editing by Susan Thomas

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