No sooner had I uttered the word “consolidation” then another piece of news arrived in my inbox. This time, Sabre Hospitality Solutions buying the Trust Group of companies which include Trust International, Nexus and InnLink for US$154 million.
The deal, to be finalised early next year, immediately sparked a couple of thoughts.
One, it really means a sewing up of the big chain market – Sabre and Trust are both dominant players in the global hotel brand segment.
Two, it gives Sabre through InnLink a plug-in into the independent hotel market in the US.
Three, what about Worldhotels? Why wasn’t the marketing and representation company which is also a hotel management company part of the sale? Where does that leave it now that it is a sole asset left in the hands of Battery Ventures which bought it as a package with Trust and Nexus from IHS Group in July 2013? Did Sabre not want it? Or does Battery Ventures have other plans for it?
If Sabre had bought Worldhotels, it would have gained a foothold in the independent hotel segment, the next piece of the treasure mountain that everyone’s after. But perhaps it wasn’t just that attractive a technology play as its siblings because a core part of Worldhotels’ business and success is built on human-powered sales teams.
Technology is clearly the star appeal today. At the WIT Conference two years ago, chairman and CEO of IHS Group, Steve Rowley, who came in through Battery Ventures, said hospitality was at the tipping point of tech disruption and to expect more landgrabs as companies position themselves for the future.
And what a consolidated future it promises to be.
This week, Trivago announced its Trivago Direct Connect, a B2B solution for independent hotels, going after the same market that Booking.com is after with its Booking Suite. It has invited independent hotels to a beta campaign.
There is a growing band of travellers who will resist and reject commoditisation. Differentiate and go after them. Photo credit; iStock
Thus far, Trivago has been successful in building a B2C brand in hotel metasearch with its TV advertisements which are popping up just about everywhere in Asia. Now it is offering hotels customisable booking engines (at no additional cost) to improve website conversion and direct sales, as well as analytics and input from Trivago experts to improve their cost-per click campaigns on Trivago.
These B2C giants getting into the B2B space is of course concerning to hoteliers who already fear their growing dominance in distribution. Dan Wacksman, senior vice president, global distribution at Outrigger Hotels, at the WIT Conference in Singapore, expressed his concern that meta searches were driving up customer acquisition costs.
Exactly the same business that Fastbooking, acquired by Accor Hotels, is also in. Fastbooking is Accor’s weapon to build up its inventory of independent hotels to place on its Accor Marketplace platform.
Now with Expedia buying HomeAway, Accor’s got to be thinking of how else it can extend its reach into the alternative accommodation market if it is to seriously compete as a platform for accommodation.
This consolidation of technology players may be bad news for regional chains – prices are going to get higher for solutions from the big boys – but the silver lining is, more specialists are entering the fray with new, more cost-competitive solutions and companies like Fastbooking have also got to be thinking of cracking the local chains and regional brands of which there are plenty in Asia.
This week, Fastbooking announced a multi-year partnership with Santika Indonesia Hotels & Resorts. Established in 1981 and managed by PT Grahawita Santika, it owns and operates 80 hotels in 38 cities across Indonesia and Singapore including the Santika, Santika Premiere, Amaris and The Royal Collection.
It is one of the biggest local chains operating in Asia and this is where Asia gets interesting to hotel technology companies – this middle layer, between the global brands and the strictly independents, is thick and juicy in markets with huge domestic travel.
My other thought is that as we enter into the land of giants, well, actually there is more opportunity for differentiation which means more room for creativity. As more of the big brands get together, further commoditisation will set in and there are travellers who will resist and reject that.
They’re the travellers at the fringe – a big and growing fringe, mind you. If, according to this report in Skift, Airbnb can claim transactions of $2.2 billion in gross bookings during the third quarter, generating $340m in revenue, and room nights sold during that quarter grew 110.6% to 23.8 million, well then it shows there are lots of folks who want something different when they travel.
And who in their right minds wouldn’t want a piece of that? So specialists, go forth and differentiate. That way, you won’t be trampled by the giants.
Note: By the way, you can watch the video of “The Future of Hotel Distribution panel” at WIT 2015 here.
