Hotel News Now’s top stories of the year include the rise of Oyo Hotels & Homes and a megamerger in the management space.
REPORT FROM THE U.S.—The U.S. hotel industry looks a bit different than it did at the start of 2019.
More than 10 new brands were announced during the year as franchising companies continued to add to their brand stables through acquisitions. Two titans in the management business, Aimbridge Hospitality and Interstate Hotels & Resorts, merged into one company in October. Several hotel companies parted ways with their executives in the C-suite level.
Here’s a look at Hotel News Now’s most-viewed stories of 2019.
1. How Oyo plans to reinvent hotel branding
Oyo Hotels & Homes is no longer a hotel and real estate startup as the India-based company stepped into the industry spotlight in 2019. Upon receiving investments from SoftBank Group and Airbnb, Oyo Founder and CEO Ritesh Agarwal told HNN contributor Chitra Balasubramaniam in April he saw an opportunity to introduce a brand to an underserved portion of the global hospitality segment.
“Globally, the majority of the chains operate properties that have over 100 rooms, while in reality nearly 80% to 90% of the assets in the hospitality industry are small or independent hotels with less than 100 rooms,” he said.
“This was an opportunity that was not realized by large chains and created a unique space for us. It is our mission to create quality living spaces. We believe hospitality and real estate are broken categories. There is a huge disconnect between demand and supply of quality living spaces, forcing travelers and city-dwellers to compromise on location, quality and price. Oyo uses technology and talent to fix this problem.”
At The Lodging Conference in September, Hospitality Investors Trust President and CEO Jon Mehlman said Oyo could be a significant player in secondary markets.
“I believe this is where Oyo can be a player to consolidate this type of (buyer) investor and take advantage of the synergistic play they have in those types of markets,” Mehlman said.
In October, Oyo announced it raised $1.5 billion to quicken its development pace in the U.S. and in Europe. But amid expansion plans abroad, Reuters reported the company doesn’t expect to turn a profit in China or India until 2022, according to internal projections.
2. The world’s largest third-party hotel management company
In an HNN exclusive, Aimbridge Hospitality and Interstate Hotels & Resorts announced their plans to merge in August, forming a management company with more than 200,000 total rooms at over 1,400 branded and independent hotels in 49 states and 20 countries. The deal closed in late October.
Dave Johnson, founder and CEO of Aimbridge, continues as CEO of the combined companies. At the announcement of the deal, he said the two companies working together will further elevate them above their peers in the management space.
“There’s great growth aspects in the future,” Johnson said. “The companies fit really well together. It’s really creating much more of a global company than two domestic companies.”
Mike Deitemeyer, former president and CEO of Interstate and now global president of Aimbridge, said what the new company will be able to do is unprecedented.
“Dave and I can bring a level of excitement to the company to help propel it forward and help our teams achieve their personal goals,” he said. “I’m very excited about it. I certainly think it will be a game-changer in this space.”
In an HNN column assessing the deal, HP Hotels Chief Development Officer Kerry Ranson said a larger Aimbridge and the possibility of more mergers and acquisitions give the hotel industry more clout in political advocacy and negotiating power with online travel agencies and credit card companies.
3. Marriott’s home-sharing platform
Although not the first hotel company to expand into the home-sharing space, Marriott International generated a lot of buzz in May with the announcement of its Homes & Villas platform. Homes & Villas will be a home-sharing marketplace formed through partnerships with property-management companies and is an expansion on the Tribute Portfolio Homes pilot Marriott tested in 2018.
“The beauty is the home managers understand the space,” said Jennifer Hsieh, VP of Homes & Villas. “They do home rentals in multiple locations. They understand how to operate the service, how to clean. They understand the regulations.”
During conference calls to discuss first-quarter earnings, chief executives from Hyatt Hotels Corporation and Hilton spoke on why their companies aren’t prioritizing home sharing at the moment. Hyatt previously invested in Onefinestay and Oasis; Hilton currently has no home-sharing initiatives in the works.
“We fundamentally think that home sharing is a different business,” said Hilton President and CEO Chris Nassetta. “What we think we’re in the business of is providing high-quality, consistent, branded experiences.”
But in September, Marriott President and CEO Arne Sorenson said in a video interview with HNN that he views his company as a hotel industry innovator and not solely a leader.
“Innovation is happening everywhere; it’s happening in our business model, it’s happening with these new ventures. … You look around and the pace of change has never been faster,” Sorenson said.
4. How La Quinta will grow under Wyndham
More than a year since its acquisition of La Quinta, Wyndham Hotels & Resorts executives unveiled the next steps for the brand, which include pushing its Del Sol prototype, ramping up new construction and dual-branding La Quinta with Hawthorn Suites by Wyndham.
Wyndham Chief Strategy and Development Officer Tom Barber said the company gained new-construction strategy and best practices through the La Quinta deal that will be applied to other Wyndham brands.
“It was an acquisition that added significant capabilities in new construction, but more specifically around development, design and construction and post-opening support,” Barber said at Wyndham’s brand conference in September. “La Quinta has a great presence—90% of the pipeline is new construction—but we intend to leverage those capabilities to layer our other brands in there.”
At the conference, Wyndham President and CEO Geoff Ballotti said Wyndham has recently grown by buying other brands, but at the time had no plans to announce further brand acquisitions. Ballotti said Wyndham would move to buy a brand that complemented its portfolio.
“We’re very dominant, powerful and strong in economy, and with the last two acquisitions they were more in the midscale and upper-midscale space, but we’d never preclude any segment out there as an acquisition (target). But to the extent that midscale and above fits better in our system and brand lineup, that would be more likely where you’d see us acquire.”
5. Famous hotel drinks
Some hotel bars have profited from having cocktails that help tell the story behind their hotels, sources told Hotel News Now in July.
For example, the original Piña Colada was created at the Caribe Hilton in Puerto Rico in 1954. Today, the drink is a draw for the hotel, and 20,805 Piña Coladas are sold at the hotel each year, said Hugo Castro, director of food and beverage at the property.
“Our famous Piña Colada is one of our main attractions here at Caribe Hilton,” he said. “People want to come try out the original recipe; it gives them a sense of island history while enjoying the delicious ice cold beverage. This tropical drink is served worldwide, so to be able to try the original recipe in its birthplace is pretty neat.”
Other drinks with a unique backstory include the world’s first most-expensive cocktail, the Ritz Paris Side Car, and the W Washington D.C.’s “The Bi-Partisan,” a drink created to celebrate crossing party lines.