The global hotels and motels landscape is becoming more consolidated
Los Angeles, CA (PRWEB) December 14, 2013
The Hotels and Motels industry is finding its feet after a difficult five-year period, which included a large, recession-induced decline of 6.8% in 2009. The industry has been hit from both sides: declining inbound international visitor numbers to Canada has hurt the bottom line of hotel operators, as has slow domestic demand due to volatile consumer confidence. Still, bright spots remain within the industry, especially within the luxury and upscale segments where operators are still attracting healthy spending from affluent travellers. According to IBISWorld Industry Analyst Andy Brennan, “Over the five years to 2013, industry revenue is expected to decline 0.6% to $14.3 billion.” 2013 is expected to be a good one in the context of the past five years, as revenue jumps 1.0%.
Despite the prominence of large, well-known hotel chains, the industry has a medium level of concentration and still has a large number of small-to-medium sized independent operators. This has kept the industry highly competitive over the past five years. During the recession, most hotel and motel operators heavily discounted their room rates. According to the Hotel Association of Canada, revenue per available room (RevPAR) and occupancy rates fell heavily during the recession and have yet to bounce back to their prerecession highs. A steady increase in the supply of new hotel rooms has limited the ability of operators to bid up room prices. Still, the global hotels and motels landscape is changing and becoming more consolidated, giving larger players the ability to control parts of the industry through loyalty programs and attractive pricing structures.
The industry is expected to perform markedly better over the next five years as consumer spending and confidence improves, corporate profit surges and the decline in inbound international travel is stemmed to some degree. “However, growth will be restricted by the high Canadian dollar, making it more worthwhile for Canadians to travel abroad for their vacation and making the destination less appealing for international tourists,” says Brennan. The industry is not expected to reach its prerecession high until 2015. Industry revenue is projected to increase over the five years to 2018.
The Hotels and Motels industry is subject to a medium level of market share concentration. The four largest operators in the industry are Starwood Hotels & Resorts Worldwide Inc., Wyndham Worldwide Corporation, InterContinental Hotels Group PLC, Fairmont Raffles Hotels International. The industry is less concentrated than its US counterpart. The smaller economies of scale available in Canada limit to some degree the ability of large hotel chains to dominate any one market or one geographic segment. Also, the diversity of accommodation styles and standards means that operators tend to focus on one market segment. For example, Starwood Hotels & Resorts focuses exclusively on the luxury, upscale segment of the industry.
For more information, visit IBISWorld’s Hotels and Motels in Canada industry report page.
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IBISWorld industry Report Key Topics
The Hotels and Motels industry provides short-term lodging in facilities known as hotels, motels, motor hotels and resort hotels. These establishments may offer food and beverage services, recreational services, conference rooms and convention services, laundry services, parking and other services.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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