Rumors Suggest Accor and IHG Considering Merger
Joe Cortez August 20, 2020
Insiders at Accor Hotels say they are considering a merger with InterContinental Hotel Group, as the trend of hotel consolidation continues. Although neither company has put forward an offer, Accor’s board is reported to be bullish on the idea as it would help them compete with Marriott.
As hotels struggle to stay afloat during the COVID-19 pandemic, two giants are rumored to be considering a merger that would put them in the same league as Marriott International. Reuters reports Accor could be in very early research to merge with InterContinental Hotel Group.
Accor’s Board Could Back Deal, While Executives Remain Cautious
The news was first published by French newspaper Le Figaro, citing executives inside the Paris-based company. Accor has reportedly setup an internal team to examine what it would take to move forward with a merger with IHG.
Although the sources say Accor’s board is behind merging with the British hotelier, company chief executive is “more cautious” about bringing the two companies together. Accor has not made a formal proposition to IHG, and spokespersons for both declined comments to Reuters.
If the two were to move ahead with a merger, it is estimated their market value could exceed $17 billion. In addition, experts say a combination of both brands would compliment their footprints. After spinning off their Motel 6 brand, Accor is focused on Europe and the Middle East, while IHG has an expanding portfolio across the United States and China.
Despite the novel Coronavirus outbreak, both have been carefully expanding their respective portfolios. In August 2020, IHG opened two new Holiday Inn properties in India, while Accor agreed to expand their footprint in Saudi Arabia with a new Banyan Tree resort.
Merger Comes as Hotels Struggle in COVID-19 Pandemic
If the two were to come together, it would be the latest merger in a period of consolidation. The last mega-merger between hotels was in 2016, when Marriott International agreed to purchase Starwood Hotels and Resorts for $13.6 billion.
It would also happen at what is possibly the worst economic period in history for hospitality, because of the COVID-19 pandemic. An August 2020 analysis showed the industry may not recover to pre-Coronavirus occupancy rates until 2024, while an analysis by Trapp suggests nearly one in four hotels are delinquent in their mortgage payments.
“ But of course the most likely result would be some completely redesigned franken-programme that’s a devaluation and downgrade for both tribes.” A page from the McMarriott playbook
Not sure how to feel about this, if indeed it ever becomes more than a rumination. Accor's portfolio with IHG's loyalty benefits would be amazing. All of IHG converting to Accor's lacklustre loyalty programme would be a disaster. But of course the most likely result would be some completely redesigned franken-programme that's a devaluation and downgrade for both tribes.
Not so sure it's a long shot only to the fact that consolidation maybe the only route to survival for the "smaller" chains left. The rapid "hell bent for more rooms" expansion of recent times is coming home to bite a lot of the big flags. In todays world we have too many hotels, planes etc the travel industry is undergoing a fundamental change to what extent I am not sure but it is.
Accor's loyalty program is appalling. Points constantly expire. Apart from Sofitel, the high end is pretty well ignored. A merger with IHG would be a disaster if Accor prevails. It'll be a 1,000 times worse than the devaluation we saw when Marriott took over Starwood.
So someone at Accor has said they're talking about it, and no-one at IHG has confirmed they are considering it? Sounds a bit of a long shot. Surely these things are 'considered' all the time at board level, but few actually happen. Though if it did... I just hope that it's IHG's loyalty scheme that is carried forward. Accor's is poor.