If you’ve been a bit bewildered by what’s happening with Spanish hotel company NH Hotel Group, and its two suitors — Thai conglomerate, Minor International, and U.S.-based Hyatt Hotels & Resorts — you’re not alone.

And although it appears that Hyatt has backed off of its pursuit of NH Hotel Group for now, its moves in this particular fray seem to hint at the company’s future strategy.

Here, we take a look at what’s transpired thus far, and what it all means for Hyatt, Minor, and NH Hotel Group.

A Brief Recap of What’s Transpired

Hyatt Hotels & Resorts took some folks in the hospitality industry by surprise last Thursday when CEO Mark Hoplamazian sent a letter to the board of Spanish hotel company, NH Hotel Group, expressing Hyatt’s interest in acquiring the company.

Hyatt’s letter led to a series of interesting moves both by Hyatt and the other company vying to buy NH, Minor International.

NH would give either company a bigger footprint in the European market, where most of its 380 hotels are located.

Minor International was already well on its way to taking over NH Hotel Group, having purchased HNA Group’s portion in the company earlier this year. And a few hours following the announcement of Hyatt’s intentions, Minor International also revealed that it expects to own approximately 44 percent of NH Hotel Group by August 9, pending NH Hotel Group board approval. Minor also contacted the NH Hotel Group board, telling them to be skeptical of Hyatt’s overtures.

Minor’s disclosure has since prompted Hyatt Hotels to issue another letter to the NH Hotel Board, this time stating that Hyatt is retreating from its initial offer, but also adding that Hyatt thinks Minor’s current tender offer “does not reflect the full value of NH” and stressing that Hyatt is eager to work with NH “under the correct circumstances.”

For now, it seems, Hyatt wants to steer clear of any potential bidding war for NH Hotel Group with Minor International.

What’s Hyatt’s Next Move?

One thing seems certain: Hyatt is in the mood to buy, and although NH Hotel Group didn’t work out in Hyatt’s favor, we can expect the company to make more moves to grow through acquisition in the future.

Hyatt, which has a healthy balance sheet and a relatively asset-heavier portfolio than its U.S. peers, has previously noted a willingness to expand, particularly in Western Europe and in Asia. With its recent overture to NH Hotel Group, we now know what kinds of deals Hyatt might potentially looking for: namely, for established hotel brands that aren’t tied down in real estate.

One London-based equity analyst from the Bernstein Research team led by Richard Clarke told Skift that he and his team found Hyatt’s move initially “very interesting.”

“Hyatt is, at the moment, very luxury focused and U.S. focused,” he said. “We found it quite interesting that they were looking to move into a European focused company, and one that’s lower down in the chain scale, with relatively more upper midscale, midscale, and select-service hotels.”

However, it does seem like its future plans for expanding its portfolio both inside and outside of the U.S. may very well lie in more select-service hotel models.

In March, Hyatt’s chief financial officer, Patrick Grismer, told investors at the JP Morgan Gaming, Lodging, Restaurant, and Leisure Management Access Forum, “Our select-service business … is our fastest-growing business globally.”

In May, CEO Mark Hoplamazian spoke about the company’s plans for growth in China, specifically through a number of Hyatt’s select-service brands.

So, looking ahead, it’s likely that Hyatt will be a player in other brand acquisitions it can make, either in Europe or in Asia, for businesses that aren’t tied down in real estate and that may have strength in the select-service sector.

What Minor International Stands to Gain from Buying NH Hotel Group

Buying NH Hotel Group is a plus for Minor, especially as it continues to grow its brands beyond the Asia-Pacific region. In addition to owning, operating, and investing in 160 hotels under a variety of brands, Minor also owns one of Asia’s largest restaurant companies and is one of the largest distributors of lifestyle and retail brands in Thailand, among them Gap, Brooks Brothers, Esprit, Charles & Keith, and more.

Minor’s intentions for growing, particularly in Europe, have been well documented. First, with its 2016 acquisition of Tivoli Hotels & Resorts and most recently with its majority stake in London-based restaurant group Corbin & King.

NH has approximately 382 hotels representing 59,350 rooms throughout Europe, the Americas, and Africa. If Minor succeeds in purchasing all of NH Hotel Group, it will have a combined hotel portfolio of more than 540 hotels throughout Asia, Australia/New Zealand, the Middle East, Africa, and Europe.

Adding NH Hotels’ nearly 400 hotels to Minor’s portfolio will certainly boost Minor’s hotels business, and the complementary nature of Minor’s investments in the restaurant, lifestyle, and retail spaces makes it a formidable global competitor on par with the likes of other brands, AccorHotels included. Together, the two companies would form the 19th largest hotel company by number of rooms worldwide.

Bernstein Research noted that Minor’s exposure to the Asian travel market, particularly outbound tourism from Asia, would give NH access to that market, which is widely thought to be a “massive growth driver of tourism in the years to come.”

Minor’s plans for NH Hotel Group also “sounds more like a partnership in terms of how they want to operate it,” noted Bernstein Research. If Minor is successful in taking over NH, it would let the company remain as its own listed and independently managed entity. It also does not, unlike Hyatt, want to necessarily separate NH Hotel Group’s real estate from its hotel management operations.

“The actual real estate value of a [NH Hotel Group] property in the middle of Barcelona or Madrid is different from the value of a Holiday Inn Express off the side of the highway,” noted Bernstein Research. “There’s value in NH’s real estate that is higher than some of the asset-light companies where most of the value is in the operations of the hotel.”

What Happens to NH Hotel Group?

Judging from the Spanish stock market’s reaction, it appears that investors might have preferred an NH-Hyatt tie up.

Shares of NH Hotel Group rose immediately following news of Hyatt’s offer, but then fell in trading on July 30 by 6.37 percent from approximately $7.90 (€6.75) a share to $7.40 (€6.32) a share.

Had Hyatt succeeded in its pursuit of NH Hotel Group, the combined company would be the 12th largest hotel company by number of rooms, far exceeding the combined number of rooms resulting from a merger between Minor and NH.

Minor and Hyatt aren’t the only companies who have attempted to acquire NH Hotel Group in recent months, either. Another Spanish hotel group, Barcelo, unsuccessfully attempted to merge with the company earlier this year.

NH Hotel Group became an acquisition target earlier this year when it was reported that its largest stakeholder at the time, Chinese conglomerate HNA Group, would sell its shares. Those shares went to Minor. Minor’s current offer to acquire NH Hotels Group values NH’s shares at €6.40 a share, or €6.30 after payment of the company’s announced dividend.

NH Hotel Group, meanwhile, reported a positive second quarter, with a revenue per available room (RevPAR) increase of 2.2 percent and a net profit of €64.3 million, or $75.2 million.

Whatever eventually happens with NH Hotel Group, Minor International, and Hyatt, it’s clear that consolidation in the hospitality industry isn’t slowing down anytime soon.

“Consolidation in hotels has been driven by the fact that, as we’ve moved into this asset-light distribution model, you need scale and loyalty programs to compete,” Bernstein Research noted. “NH Hotel Group, with 59,350 rooms doesn’t have anywhere near the same scale as any of the larger U.S. or European operations. The general move toward consolidation in hotels will carry on, and it probably does necessitate NH to do something.”

Photo Credit: Pictured here is the NH Collection Palazzo Barocci. Parent company NH Hotel Group has been wooed by multiple companies this year, all of whom are hoping to acquire the Spanish hotel chain. NH Hotel Group