ABSTRACT
As capital asset-light fee-based business in this vertically disintegrated industry, it is argued that hotel chains require scale. For this there needs to be industry consolidation with the largest hotel chains gaining higher levels of global market share. Scale also enables some form of retaliation against technology entrants.
This chapter evaluates the issue of industry consolidation and the moves by the largest chains to attempt to gain large scale advantages. It firstly examines the expansion of global hotel chains in terms of growing scale and their capabilities as acquisitive firms. It then questions just how far consolidation has occurred. It also argues that more substantial consolidation may be as the result of Chinese sourced FDI rather than capital from Western firms
At the same time as moves towards consolidation, the industry boundaries are broadening with the entry of alternative accommodation suppliers, arguably further restricting the achievement of market share gains (albeit it in some markets) by the largest global chains.
The second part of the chapter therefore assesses the competitive impact of substitute product firms, the most powerful of which is Airbnb, predicted to become the world’s second largest hospitality company. It also evaluates the reprisal responses of hotel chains.
