This week’s announcement of Marriott’s massive purchase of Starwood to create, by far, the world’s largest lodging company, is generating unprecedented conversation from Wall Street to Main Street and from tradeshow floors to Heavenly Beds.
While not a disruptive force on travel or destination marketing per se, it has all the potential to be a transformative event. Its sheer scale and scope will have a significant impact on many aspects of the travel and destination marketing ecosystem.
Lyle Hall from HLT Advisory in Toronto does a fabulous summary of the various considerations for investors, travelers and communities.
From the standpoint of destination marketers and DMOs, there are several things that are likely to rock those worlds:
- The creation of a dominant hotel enterprise-cartel that manages a significant proportion of a given destination’s lodging strata (e.g. convention room block or beach resort location) could have significant implications on the type and timing of business that DMO leaders are able to attract to the city…and even possibly impact a destination’s brand.
- With meeting planners already citing escalating costs of WIFI, rooms and F&B as barriers to future event growth and attendance, will the possibility of continued price escalation resulting from the buyout raise the bar for destinations to provide even greater community-supplied incentives/subsidies that mitigate costs in order to attract event organizers?
- Will this combination further elevate the appeal of the world’s second largest lodging supplier – Airbnb – positioning sharing economy tourism enterprises as increasingly important destination marketing partners? (See my posting on the Rise of Evolutionary Partnerships.)
While it is still early days in how this will all unfold, the speculation and uncertainty amongst all stakeholders is significant. Suffice it to say that destination marketing leadership will be an essential element in transforming the anxiety around the Marriott takeover into opportunity for many destinations.
I wonder whether the fact that Marriott is the senior partner in the deal will have any impact on how it all plays out? As a legacy hospitality company perhaps we can hope that the underlying values of hospitality as opposed to Wall Street will prevail – or is this a vain hope and am I totally naive?
As always, Bruce, you raise some great questions here which will certainly have huge implications in destinations where Marriott and Starwood are the dominant players. That said I’ve always been astounded by the inability of global hotel enterprises to leverage the obvious synergies that come into play across a brand or family of brands. They are actually crap at doing this, at least on a sales level. Ultimately I think this relates to the ownership structure behind hotels. They might be painted in the same colours and raise flags that look the same but that doesn’t mean they are actually aligned!