Dive Brief:
- Nearly half of branded hotels globally are managed by third parties, according to research from JLL obtained by Hotel Dive. Branded hotel rooms have come to comprise an increasingly large portion of the global rooms supply over the past 10 years, as brands “offer access to a wider customer base via better distribution and vast loyalty networks,” per JLL.
- As the share of branded properties has grown, hotel brands have increasingly turned to third-party management providers, JLL found, noting that it expects franchised hotels to “comprise a larger share of the branded hotel universe” in coming years.
- The third-party hospitality management space remains “extremely fragmented,” however, with the largest companies controlling less than 3% of inventory, JLL shared. As a result, the firm expects more mergers and acquisitions to occur in the industry.
Dive Insight:
Worldwide, Marriott leads in branded hotels with just under 1.6 million rooms, followed by Hilton at 1.2 million rooms and IHG Hotels & Resorts at 900,000, according to JLL.
In the Americas region, specifically, 66.4% of hotels are branded. The portion of branded hotels that are franchised is also higher in the Americas than in any other region.
Hotel brands have tapped third-party operators such as Aimbridge, Highgate and Pyramid to continue to bring in high fees while lowering risk and corporate expenses, JLL said — but even large hospitality management providers aren’t dominating the space. The firm pointed to Stonebridge’s acquisition of Real Hospitality Group as a type of M&A the space could see more of in the future.
Denver-based Stonebridge acquired Real Hospitality for $60 million in May, according to JLL, expanding its portfolio to more than 160 hotels.
Last month, hospitality management firms PM Hotel Group and Sightline Hospitality announced a strategic merger, bringing 22 open or soon-to-open properties into PM Hotel Group’s portfolio.
Guest satisfaction rose this year at hotels run by third-party management, according to a J.D. Power report released in September. The report ranked Davidson Hospitality Group highest in overall guest satisfaction, with HEI Hotels & Resorts and White Lodging ranking second and third, respectively.
The improvement was driven by guests’ satisfaction with room cleanliness, hotel maintenance and upkeep and hotel staff responsiveness, J.D. Power reported.
