Rumors spark about an upcoming Marriott and InterContinental hotels merger

It is the job of financial analysts to spark rumors, and after the big bang talks of US Airways/American Airlines being one entity, here is another analyst looking into the crystal ball. According to analysts at Numis, which is an independent investment banking firm, IHG and Marriott could room together at some point of time because their expansion plans look similar. IHG runs over 4,500 hotels globally while Marriott operates 3,700 properties and the analysts estimate that the combination will lead to 9pc of global room supply.

As per a report in the Daily Telegraph yesterday,

Asking whether the two could “room together”, analysts at Numis thought that “hotel industry consolidation is inevitable at some stage” and considered a merger between the British and American pair to be “just one of the potential tie-ups”.

They argued that with InterContinental trading “at an apparently perpetual discount to its US peers”, it looks like a possible target and that a merger with Marriott would “create a dominant player in the global hotel market” with over 9pc of global room supply.

The broker calculated that such a deal could be worth $8.7bn (£5.5bn) in total.

“The strategic rationale for a merger between InterContinental and Marriott is compelling,” said Numis. “First of all the strategic growth plans for the two businesses are remarkably similar. Both, for example, have had a long-standing focus on reducing hotel ownership and pursuing management and franchise contracts.

“Secondly, both companies are pursing global growth opportunities by establishing a strong presence in key gateway cities, continuing to develop in large established markets and looking to expand in emerging markets, notably China.”

Do you think this is good news? For the frequent traveller, the benefits at both the hotel chains are anyways minimal, if you count out the Ambassador benefits of the InterContinental branded properties. This is one more of those newsbites to keep a watch on going forward…

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Ajay Awtaney is the Founder and Editor of Live From A Lounge (LFAL), a pioneering digital platform renowned for publishing news and views about aviation, hotels, passenger experience, loyalty programs, travel trends and frequent travel tips for the Global Indian. He is considered the Indian authority on business travel, luxury travel, frequent flyer miles, loyalty credit cards and travel for Indians around the globe. Ajay is a frequent contributor and commentator on the media as well, including ET Now, BBC, CNBC TV18, NDTV, Conde Nast Traveller and many other outlets.

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  1. But why just Marriott and IHG?

    All top ten hotel chains are pursuing a similar growth pattern of developing their brands in BRIC countries: Brazil, Russia, India and China while divesting real estate assets for a hotel management focus.

    • @Ric, I don’t think there was rocket science to the analysts’ approach, but rumors such as these do get people talking even if there is nothing on the table. Hoping IHG/Marriott can clarify…

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