Expect more mergers among hotel management companies until there are approximately 10 companies left in North America for the most competitive markets.
HHM, a hotel management and investment company, is acquiring Urgo Hotels & Resorts in a transaction that will boost HHM’s portfolio size by almost 30 percent — to about 235 full-service and select-service hotels.
Philadelphia-based HHM didn’t disclose deal terms. The acquisition of family owned Urgo is set to close before October.
The deal is less notable for its size than for the trend it represents, namely a steady stream of mergers and acquisitions among third-party hotel managers.
The deal would expand HHM’s portfolio by adding Urgo’s roughly 7,000 rooms open or in development in North America to HHM’s approximately 30,000 rooms.
“This HHM/Urgo deal is just a continuation of a trend that started with mega-mergers in the past couple of years in the management space,” said Alan Woinski, editor of Daily Lodging Report. “The smaller companies are finding it difficult to compete against these giants and are teaming up to offer more to hotel owners.”
In the U.S., HHM is a leading manager of Marriott and Hilton hotels, though it also operates more than 30 independent luxury and lifestyle hotels, too. The acquisition of Urgo will add to the company’s footprints in Montreal, Washington, D.C., and south Florida.
Earlier this year HHM closed its purchase of 25 long-term management agreements for Marriott and Hilton covering about 4,000 rooms from White Lodging. In January, HHM took over the management of The Joule, a boutique hotel in Dallas.
Boosting size enables management companies to increase their leverage and increase returns on investment in technology when dealing with hotel owners, such as public companies, private equity firms, and family office investors. Smaller management companies are having trouble competing against the majors that have already merged in the past few years.
Mergers have been gaining in popularity since 2019’s merger of Aimbridge, North America’s largest independent hotel management firm, and Interstate Hotels & Resorts, a hotel operator. Some of the largest third-party managers in North America today include Aimbridge, Alberigo, American Liberty, Arbor Lodging, Atrium Hospitality, Banyan Tree Management, and Benchmark Pyramid.
Photo credit: A guest room at The Rittenhouse Hotel in Philadelphia, which is managed by HHM. Source: The Rittenhouse Hotel.