By 2030, multiple changes will occur and will influence the hospitality industry due to globalisation, one of them being a shift of market power. In the first thesis of the Lausanne Report, EHL - in cooperation with hospitality experts - discuss this trend that will disrupt the industry depending on the economic stages of a market and its geographical position.
The shift in market power that will take place in the coming decades is predicted to yield the following two potential scenarios: consolidation via mergers and acquisitions or fragmentation by splitting companies into smaller entities.
Representatives of consolidated hospitality businesses, like major hotel chains, argue that, as in other sectors such as banking and aviation, size does matter: the bigger, the better. In fact, some imagine that they would then be too big to fail.
Here are some key consolidation rationales:
Hotel chains argue that horizontal integration via mergers and acquisitions will locally and globally enable the extention of their supply capacities
The same chains vertically integrate and team up with travel services partners to put considerable pressure on OTAs which are considered a "necessary evil"
Chain hotels with a separate real estate ownership may benefit from economies of scale and shareholder value
Negatiation with owners and electronic distribution channels is generally easier for global brands
A consolidated hospitality industry will result in the generation of new types of contracts to control brand standards
Fragmentation and consolidation go hand in hand and could co-exist by creating both risks and opportunities for the hospitality industry. Different situations are however encountered depending on a market's economic stage and its location. In the USA, for example, the industry is already consolidated and durably so; while in Europe, it is likely to remain fragmented.