ITT 2018: hotel sector to see further consolidation

The hotel industry should brace itself for significant consolidation in future years.

Hospitality veteran Sir David Michels, who was formerly chief executive of the Ladbrokes-Hilton group for 20 years, told ITT delegates that further consolidation is inevitable.

"The top five hotel brands between them have less than 12% of the worlds hotel beds," he said. "Some form of consolidation will happen, as it has in every other industry known to man."

In giving predictions for the future of the hotel industry, he highlighted rapid expansion growth as another area of concern.

"Hundreds and thousands of hotels open every year and very few ever close. There could be social and environmental issues that force local governments to restrict this currently unrestricted growth," he suggested.

Michels also claimed the increasing influence of the major online travel agents threatens to disrupt the traditional loyalty scheme model used by hotel groups.

"The smallest of the big five OTAs has a market capacity larger than the biggest hotel brand," he pointed out. "I can foresee a time when the loyalty clubs of the OTAs become a real threat, if they can become that big."

However, sharing economy platforms such as Airbnb pose less of a threat, he argued. "Airbnb operates in a primarily untaxed and unsafe environment; guests mostly dont pay VAT and hosts dont pay taxes. Governments will not allow an untaxed business to grow without taking their share. It will either be seriously curtailed or it will have to change."

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