Hotel average daily room rates (ADRs) will rise on the back of increased consolidation in the industry, HRS chief executive Tobias Ragge has warned.
He said the “whole market structure” had changed on the back of a “consolidation drive” following the recent Starwood-Marriot and HNA-Hilton deals.
Ragge told the ACTE/CAPA conference in Amsterdam: “Consolidation will be driven by the Asian and Middle East market, this will lead to higher ADRs as higher consolidation means more market power.”
He spoke about the “huge fragmentation” in the market but the “huge wave of consolidation” was only happening in 24 per cent of the chains.
The HRS boss also said that direct connect will “become the new norm”. He added the industry had been in “harmony” for a number of years but there’s a “huge change” in how it operates - driven by what travellers are now demanding from corporates.
Ragge was speaking on the opening morning of the conference. He was followed by KLM chief executive Pieter Elbers and a panel discussion on the future of the airline industry, which included Qatar Airways CEO Akbar Al Baker and Air Asia CEO Tony Fernandes, and was moderated by CAPA’s executive chairman, Peter Harbison.
Elbers talked through his airline’s digital developments and about designing a “mobile only, not mobile first strategy”. He said: “Increasingly whatever people do, it should fit onto a small screen, everything developed is going to mobile.”
Qatar’s Al Baker talked about the “returning days of protectionism” in the airline industry. He applauded talks between Qatar and the European Union, but wants fifth freedom rights and is concerned about “fair competition” clauses.
Over the past few years Gulf carriers, including Qatar and Emirates have been involved in a row over the Open Skies agreement with US carriers and the EU. US airlines argue that state subsidies to carriers based in oil-rich countries result in unfair competition, something denied by those in the Middle East.
Al Baker said: “We believe market access should be tied to the convergence of regulations and policies… access should not be held hostage to harmonisation. Our markets should be open to each other at least to third and fourth freedom rights with eventual fifth freedom beyond. As the EU and Qatar relationship grows I expect harmonisation to accelerate.”
He added the one key issue holding up the discussions is around fair competition. “We welcome fair competition but we also believe we have what the customer wants, shown by our average 25 per cent growth since 1997.
“We want fair access to the market, products and services, as this is what the customer demands. I predict talks will take time as we want to make sure it’s not bias or cornering the Middle East market.”
Al Baker spoke briefly about the future of distribution and predicted a different industry in the next decade to the current one. “In the next 10 years the whole distribution landscape will change, the GDSs won’t win and people will hardly use them,” he added.
Air Asia’s Tony Fernandes echoed Qatar’s stance on Open Skies and ‘protectionism”. “We operate in a bizarre industry, as it’s one of the most regulated in business. There are growing threats of protectionism… the only way some of the old school players know is to block competition which is unfortunate and sad.”