The US hotel industry continues to be dominated by locally based groups, completely made-up of household and locally developed brands. According to latest research conducted by industry experts MKG Hospitality, Hilton Hotels remains the number one group in the US with over 486,000 rooms. Making up the top three groups is Marriott International with over 480,000 rooms and Wyndham Hotel Group with over 455,000. The number one hotel brand in the US is yet again Hampton Inn with almost 171,000 rooms, followed by Best Western with over 165,000 and then Comfort Inns & Comfort Suites with over 160,000.
“The US hotel industry is very much controlled by locally based companies. Indeed, the corporate chain hotel structure was born and perfected in the US, so it is logical that local names have such a strong presence in their own market,” states Director of Development, MKG Hospitality, Vanguelis Panayotis. “However, the US hotel market is fast approaching saturation. Thus, groups are seeking expansion in international markets, exporting their products and concepts.”
In fact, almost two thirds of room stock among the top 12 hotel groups is found right here in the US. Of the top 20 hotel brands, almost three quarters of stock is based here in the US – many brands having little or no presence outside the country. The only exceptions are purely due to acquisitions (and again of US manufactured brands), with InterContinental Hotels Group taking over Holiday Inn and Express by Holiday Inn and Accor purchasing Motel 6 (Redd Roof being sold in 2007). After this, you have to go way down the list to find another foreign brand, namely Canadian based Fairmont Raffles and Four Seasons Hotels & Resorts in 25th and 26th position, respectively.
Looking at pipeline growth, US brands are now very much focused abroad. Europe is a prime choice due to being the second most mature hotel market after the US, as well as having ideological and cultural similarities therefore better suited to product concepts. Meanwhile, Asia and the Middle East are also hot development markets. There are however many challenges to overcome for US hotel groups seeking expansion to other worldwide markets. For starters, adapting their structure to fit local laws and regulations, as well as consistency with real estate values, hence investment strategies. Then there is existing competition from domestic players that are well represented, especially in Europe.
“The key to success will be how quickly they can reach a critical network size even somewhat similar to what they have in the US. This is especially true for economy and budget brands where such factors are crucial in order to make business sense,” adds Panayotis.
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