Skift Take

Hilton’s growth milestone shows M&A isn’t the only way to be a major player. Here's why big deals matter less at the hotel giant.

The global hotel industry continues to expand its footprint, even in the worst year on record for travel demand.

Hilton’s pace of construction and development put the company over one million rooms in its global portfolio sometime during the fourth quarter, the company announced Tuesday. The growth stems from construction activity well underway before the pandemic began earlier this year.

But Hilton’s growth milestone stands out for being accomplished through building out its own brands rather than via mergers and acquisitions like some of its competitors.

“(Last year) was such a momentous year for Hilton, with us seeing continued net unit growth and of course celebrating our 100th anniversary. Not that we knew it at the time, but it was the precursor to one of the most challenging years in our company’s history,” Hilton CEO Christopher Nassetta said in a statement to Skift. “Even as the hospitality industry faces the challenges of a global pandemic, Hilton’s organic growth strategy has continued to deliver, helping us achieve the milestone of one million rooms globally.”

Hilton called out the fourth quarter openings of the Hilton Garden Inn Umhlanga Arch in South Africa; the Tru by Hilton, Savannah Airport, in Georgia; and the Hilton Garden Inn Guizhou Maotai Town in China as the driving force in clearing the 1 million-room mark.

While Hilton and other hotel companies continue to add more rooms to their respective portfolios, general industry sentiment expects construction to eventually taper off once projects that already broke ground pre-pandemic complete.

Hilton’s growth achievement puts it somewhere between Marriott — the world’s largest hotel company that had more than 1.4 million rooms at the end of the third quarter — and Paris-based Accor — which had nearly 748,000 rooms at the end of June, according to the firm’s global development summary.

But Marriott and Accor’s respective portfolios are also partially fueled through prior M&A activity. Marriott’s 2018 merger with Starwood Hotels & Resorts added more than 1,270 properties to its ledger.

Accor similarly grew through acquisitions. Its FRHI Holdings — the former parent company of the Raffles, Fairmont, and Swissôtel brands — acquisition was announced shortly after Marriott announced its plans for Starwood. Accor also added lifestyle brands through its SBE partnership in recent years before merging those into a combined entity with Ennismore, owner of hotel brands like the Hoxton.

There are even perpetual rumors that Accor and IHG would join forces to create a new world’s largest hotel company, something leaders at both companies downplayed earlier this year.

“Well, the only thing that comes up more is are Jen and Brad getting back together,” IHG CEO Keith Barr joked at Skift Global Forum in September.

Hilton appears to be taking a different path from its competitors, and Nassetta even promised in 2016, amid the Marriott and Starwood union, that his company didn’t need a mega-merger to remain competitive.

Hilton has a little more than 400,000 rooms across 2,640 rooms in its current development pipeline. Marriott has roughly 500,000.

“Although the celebrations may not reach the heights of our 100th year, thanks to the grit and determination of our owners and team members, we have a fresh reminder of our industry’s potential to deliver long term growth and economic opportunity,” Nassetta said.

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Tags: accor, coronavirus, coronavirus recovery, hilton, marriott

Photo credit: Hilton reached the 1 million-room portfolio milestone sometime in the fourth quarter (pictured: Waldorf Astoria Monarch Beach Resort). Hilton

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