Hotel CEOs Think Big Mergers are Just Too Complicated

Given a report that InterContinental Hotels Group recently rejected a $10.1 billion takeover offer, some might surmise that an era of hotel industry consolidation might be forthcoming, but the CEOs of Marriott, InterContinental and Four Seasons dismiss the notion.

In a press conference at the 36th Annual New York University International Hospitality Industry Investment Conference in Manhattan June 2, InterContinental Hotels Group CEO Richard Solomons declined to elaborate on what he characterized as a speculative report about a takeover bid, but said the chain plans on focusing on organic growth by growing demand and giving consumers “what they want.”

Marriott CEO Arne Sorenson, who participated in the session along with Solomons, Four Seasons CEO J. Allen Smith and Loews Hotels chairman Jonathan Tisch, said it isn’t likely that the big players would merge.

Sorenson said it would be too complicated for the big chains to combine their massive rewards programs in the event of a merger, and owners and franchisees “have their own ideas,” presumably adverse ones, when it comes to mergers.

The hotel industry is creating new brands “faster than ever,” Sorenson said, noting that Marriott developed the Autograph Collection, and acquired Gaylord Hotels and AC Hotels.

Sorenson said these sorts of deals are important, but “not cataclysmic” in scope.

“We will continue to play in that kind of space,” Sorenson said, agreeing with Solomons that the focus should be on growing existing brands and organic growth.

Organic growth “provides us with the best opportunity,” Smith said.

Smith of Four Seasons said maintaining the company’s culture is of prime concern and his ability to maintain it was a critical issue during his hiring process as CEO.

Like the others, Starwood is focused on growth, of course, but in an earlier session at the conference CEO Frits van Paasschen said Starwood “is fairly reluctant to launch new brands.”

Van Paasschen said Starwood instead if concentrating on making its brands distinct and successful.