Which Tour Operator is a just behind Number One? From London-based Brand Finance®—it is an independent branded business valuation consultancy—we learned this month just which hotel brands and leisure-tourism brands are the most valuable: Hilton and Royal Caribbean, respectively. Hilton edged out Marriott, while Royal Caribbean had the German tour operator TUI close behind. In determining its selections and ratings, Brand Finance takes a number of metrics into consideration. (To read a thorough explanation of the process, click here.)

Hotels—Highlights:

The annual report on the most valuable and strongest hotel brands showed the following.

—Hilton remains world’s most valuable individual hotel brand with 17 percent growth.

—Marriott’s portfolio drops to second place as the value of its brands in the Brand Finance Hotels 50 ranking decreases by 30 percent, giving way to Hilton.

—World’s fastest-growing hotel brands come from Hilton’s portfolio: Homewood Suites, Double Tree, and Hampton.

The report said: “Hilton’s strategic approach to brand growth has allowed it to extend its lead as the world’s most valuable hotel brand. At the same time, endorsement from the flagship brand has rendered benefits across the portfolio as Homewood Suites, Double Tree, and Hampton have seen their brand values sore. In its centennial year, Hilton is well-positioned for another hundred years of success.”

Alongside analyzing the world’s biggest hotel brands, Brand Finance also ranked the top 10 most valuable brands in the wider leisure and tourism industry. Royal Caribbean International has narrowly retained its position as the world’s most valuable leisure and tourism brand, with its brand value remaining steady at $3.8 billion. The brand reported strong financial results in 2018, and with demand high in the cruise industry, Royal Caribbean are on course for future growth. Meanwhile, second-ranked TUI (brand value up 4 percent to $3.7 billion) substantially closed the gap to the ranking’s leader, only just falling short of overtaking Royal Caribbean.

 

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(INBOUND is a service of Connect Travel, which will be at booth 2235 at IPW in Anaheim. Stop by and pay us a visit!)

For the first time since TUI sold off its Hotelbeds unit three years ago to the London-based private equity firm Cinven and the Canada Pension Plan Investment Board followed by Hotelbeds’ subsequent acquisition of Tourico and GTA the following year, one got the sense last week at the company’s annual MarketHub Americas conference (this year in Cancún) that something really big is finally, really happening with a company that is, by far, the largest bedbank in the world and that its other components (including the tours, attractions and entertainment sector) are ready to grow. This was, in effect, the first MarketHub since the nearly complete integration of Tourico and GTA into the company.

One detected, as did INBOUND’s editor, that the pain felt by the reorganization, realignment and head-rolling that took place across and within the Palma de Mallorca-headquartered company throughout much of 2018 has ended—one delegate told us during a golf-car shuttle to our rooms, “The first nine months were really hard; then it got better.”—  and that a new, more muscular organization was and is poised to maximize yield through its market dominance.

The MarketHub event also showed that the realigned company has a lot of companions facing forward: there were some 80 partners and sponsors in Cancún for the event, including a number of major hotel brands and some key destinations and attractions (Disney and Universal), as well as some other marquee names, such as Amazon and Google (Sorry, every slide from the Google presentation was marked “proprietary” and “confidential,” so we don’t have much to report on what its representative said), with about 300 or so official delegates on hand at the small convention center of the new Grand Palladium Costa Mujeres Resort & Spa. Its boutique ballroom feel helped foster an intimate rock-concert-type vibe which had people hooting and whooping whenever a favorite supplier or destination was mentioned.

“The last 12 months have been a bit of a challenge” declared Sam Turner, wholesale sales and sourcing director, his voice shifting to reflect relief, adding, “Thank you for your patience.” He then announced that, “after market acquisitions, we have become the clear market leader in the bedbank arena.” Cheers.

 

An oft-quoted veteran of the tour and travel industry whose career goes back more than 20 years, beginning with a tenure at Brittania Airways before it became a part of TUI AG, Turner then went on to discuss the near-term future for both Hotelbeds and the tour and travel industry in the context of the global economy and current industry trends, posting and commenting on information slides and key numbers as he did.

INBOUND also had the opportunity to speak with Turner one-on-one. That’s where he told us that the realignment is 95 percent complete. It has taken a while, he said, because the structure of Hotelbeds after its acquisitions of Tourico and GTA left it with unnecessary duplication. “There was no need to making three of everything—tour operators, loyalty players and so on,” he said.

Asked what’s left to do, he explained that, among other things, there are some contracts outstanding in several areas. Also, the company has to bring order to those who are engaged in the re-selling of Hotelbeds’ product.

 

Trends in a Nutshell:

—The macro trend suggests that (1) travel and tourism growth is likely to continue beyond that of the economy as a whole; (2) an overall economic slowdown is likely; and (3) a strong U.S. dollar is weakening demand.

— Travel distribution trends highlight: (1) there will be increased dominance on the part of leading OTAs; (2) there will be an increased focus on parity; and (3) maturity.

The first of the following three tables shows one basis for the company’s projection for its projected hotel industry trend:

And now, there is an increased focus by hotels on protecting rate parity, as 52 percent of people review hotel websites as a part of the search process, and 72 percent always, or mostly always, consider price comparison in booking. In the meantime, well prior to the MarketHub, Hotelbeds was creating a balanced mix of markets that it serves.

Some Key Talking Points Numbers for Hotelbeds:

 —It now has 180,000 hotels and plans to add 10,000 a year—4,000 annually in the Americas.

—110,000 hotels own contracts.

—There are 3,500 hotels in its Guarantee program.

—It now has 18,000 activities (attractions, tours, entertainment, etc.).

—It has more than 1,000 contractors, over 600 engineers, 400-plus account managers, more than 800 call center staff, and more than 100 data and analytics specialists.

— Hotelbeds is now 7 times bigger than all of its competitors.

What’s Hot and Going to Get Hotter?

—Turner said that China will be the largest driver of change in the next 10 years. Already, right now, the China-to-USA corridor accounts for 3 percent of total volume.

—Hotelbeds now has 400 people in China.

—China has moved up to number 4 source market (the cluster of the UK, Germany and the USA comprising the Top 3) up from the number 5 spot a year ago. It was number 20 five years ago

 Instant Poll Results: One feature of the morning presentations on the first day of the event was a pair of instant polls. Attendees were shown a flash poll on the big screen behind the conference room stage and asked to make their choice at that moment. Following are the poll result numbers as INBOUND was able to tally them. There were approximately 250 votes cast in a matter of seconds.

 

 

 

Consolidation in the global hotel sector will continue: In a fairly comprehensive dispatch from Hotelbeds, Sam Turner, the company’s global director of sales and sourcing, discussed the top issues that the tour and travel industry and, in particular, the accommodations sector dealt with in 2018, and what we can expect in 2019 and, in some cases, beyond. Following are the key points made by Turner.

—The intermediary market for hotel sales strengthened in 2018 and the trend will continue. This has been yet another year where growth in the intermediary market for hotel sales has outstripped the growth in the direct channel for the hotels. This is in part because the three largest OTAs globally–Expedia, Booking.com and Ctrip are growing at double the rate of the direct channel

—The trend for intermediaries growing their share of hotel sales versus the direct channel will continue into 2019 and beyond. It shows that consumers are generally more comfortable–for a range of reasons– with buying from intermediaries and on balance favor that over going to a hotel dot com.

—Consolidation has been a key part of the accommodation sector over the last twelve months and will continue in 2019. Both investors and owners have recognized that the sector is just way too fragmented. How many other industries can you name where the top 10 brands generate less than a quarter of revenues?

—This explains not just the mega deals of recent years, but also the medium sized chain deals of this year such as Minor Group acquiring NH and Accor acquiring Mövenpick– as well as the constant acquisition of smaller brands and start-ups by Accor and other major chains.

— “The bedbank sector too remains highly fragmented and this explains the rationale behind our acquisition of both Tourico Holidays and GTA last year

 

Other points of note:

• Last year everyone was still assuming that the alternative accommodation sector would just keep growing exponentially. But this year has seen a massive slowdown in growth and we expect that to continue.
• The Chinese outbound market remains largely untapped.
• Strong increase in hotel distributors offering re-seller content is unsustainable and bad for consumers
• Over the last few years we’ve seen a trend for airlines approaching us to start selling hotel accommodations on their website. In 2018 this has increased, but we predict that in 2019 it really will begin to snowball.
• Service will slowly become the key differentiator for hotels, not price – helped by technological innovation
• Trend for greater price transparency driven by metasearch is leading to a technological arms race