Independent hoteliers could struggle post-pandemic says analyst
GlobalData’s Ralph Hollister has reiterated that smaller and boutique hoteliers face an uncertain future in the wake of COVID-19
Due to the impact of COVID-19, major hotel chains such as Wyndham, Marriott, Choice, Hilton, IHG and Accor are set to expand at an even quicker rate when travel resumes, creating even more uncertainty for independent hoteliers. These companies accounted for more than half of global branded hotel properties in 2018 (50.55%).
The number of independent hotels has been shrinking in recent decades. By adopting an asset-light business model and introducing soft brands, major hotel chains have been constantly expanding their global network through affiliating with independent hotels that align with their brand strategy. The impact created by COVID-19 may accelerate this trend, forcing independent hoteliers to make critical decisions regarding their future sooner than they would have wanted.
Post pandemic, independent hotels may not be able to compete with major players in the industry that will already be battling it out with each other for returning travel demand. If independent hotels do not wish to become affiliates of major chains – or major chains do not want to work with them – they may have to further rely on online travel agents (OTA) for their distribution. This would increase a hotels’ visibility but limits the revenue they can yield during their recovery period, as they have to give a percentage back to the chosen OTA.
Independent hotels are already falling behind in the adoption of best practices in areas such as brand marketing and technology applications.
These elements are crucial when targeting tech-savvy consumers such as Millennials and Gen Z. Large-scale hotel chains have the capital available to invest in these areas, which can often make joining up with larger chains an attractive proposition for independent or small-scale hotel companies.
Independent hotels will now need to prove and outline new hygiene protocols and sanitation standards to prospective guests. Large, multi-national chains have the brand and marketing power to outline new hygiene standards to vast amounts of potential guests. This may create a new pull factor that could be likely to help large chains consume even more of the global market share post-pandemic.
Ralph Hollister is an analyst in the travel and tourism division at GlobalData. He specialises in the creation of thematic reports, mainly in relation to major technology themes in the tourism industry. Additionally, he produces PR insight in regards to breaking stories in travel & tourism and outlines key trends in travel, especially in niche/emerging forms of tourism.