A Discussion of the Effect of Consolidations on Hotels, Cruise Ships, Car Rentals, Online Travel Agencies

¨Every industry has consolidation as it comes to a certain level of maturity. In that consolidation, some fall, but the men will always be there. It is the boys that get sloughed, I would say.¨
Arundhati Bhattacharya

Online Travel Agencies Consolidations            

This post is the second part of a two-part blog on travel industry consolidations. The first part talks about airline consolidations.

This blog was written before the COVID Pandemic. The COVID epidemics played havoc on the travel business. In 2022, Fifty Plus Nomad decided to focus on traveling and living in Mexico and language learning posts. We will only update these long-term travel-related posts on a time-permitting basis. We would appreciate your comments and updates on these posts.

If you are lucky enough, like most Fifty Plus Nomads, to travel or live abroad, chances are you’ll see the effects of travel industry consolidations on the travel experience.

Expedia has been gobbling up other online travel agencies for 15 years now. Today about 80% of the US online travel agency business is held by just two major players: Expedia and the Priceline Group.

Online travel agencies are not as plentiful as they appear. Expedia owns 12 travel brands, including Travelocity, Hotwire, Hotels.com, Carrentals.com, Orbitz, and Egencia. Priceline owns Priceline, Kayak, and Booking.com. (Expedia bought HomeAway, probably best known for its VRBO-Vacation Rentals by Owners- the largest vacation rental online site after Airbnb).

Car Rentals Consolidations

Just three corporations own nine major car rental firms:

  • Avis budget group operates Avis, Budget, and Payless (and Zipcar).
  • Enterprise Holdings runs Alamo, Enterprise, and National.
  • Hertz Global Holdings operate Dollar, Hertz, and Thrifty.

These three companies alone have approximately 90% of the car rental market in the US (up from 65% in 2005). They also

  • Operate over 30,000 worldwide locations in almost every country on earth.
  • Have increased their market share outside of the US by acquiring several rental car companies outside of the US in the past ten years.

Interestingly, there is little evidence that this lack of competition has substantially increased consumer costs. There are two reasons for this:

  • The three companies have developed price-sensitive brands for leisure travel markets in the last several years.
  • Car rental companies are facing some competition from the car-sharing market, such as Uber and Lyft. (Some travelers, particularly business customers, rather than renting a car, now use car-sharing services to go between meetings and their hotels).

Cruise Lines Consolidations

The following three corporations control approximately 80% of the cruise market:

  • Carnival Cruises owns nine lines, including Carnival, Costa, Cunard, Holland America, P&O, Princess, and Seabourne. (Carnival Corporation alone controls around half of the market and owns over 100 ships).
  • Norwegian Cruise Holdings own Norwegian, Oceania, and Regent Seven Seas.
  • Royal Caribbean Cruises own six lines, including Celebrity and Royal Caribbean.

Several different corporations own the remaining 20% of the market. The most significant other players are MSC and Disney cruises.

While Caribbean cruises still make up about half of the industry, the last ten years have witnessed an incredible increase in routes in the rest of the world, mainly the Mediterranean.

In addition, the number of cruisers has increased markedly over the past ten years. Nonetheless, there still appears to be considerable room for growth as more and more travelers discover cruising and the number of avid cruisers increases.

Hotel Consolidations

Seven companies own more than 80 major brands. (In many cases, the sister companies are not direct competitors; but in some cases, they are):

  • Carlson Rezidor operates eight brands, including Country Inns, Park Plaza, and Radisson.
  • Choice Hotels operate 11 brands, including Clarion, Comfort Inn, Econo Lodge, Quality, and Rodeway Inn.
  • Hilton operates 11 brands, including Conrad, Doubletree, Embassy Suites, Hampton, Hilton, Homewood Suites, and Waldorf Astoria.
  • Intercontinental Hotels operates 11 brands, including Candlewood, Crowne Plaza, Holiday Inn, and Staybridge.
  • Marriott/Starwood operates 27 brands, including Courtyard, Fairfield Inn, Marriott, Renaissance, Residence Inn, Ritz-Carlton, Springhill, Le Meridien, Sheraton, St. Regis, W Hotels, and Westin.
  • Wyndham operates 14 brands, including Baymont Inn, Days Inn, Hawthorn, Howard Johnson, Knights Inn, Ramada, Super 8, Travelodge, and Wyndham.
  • Accor, the most significant player in the hotel industry outside of the US, has 26 brands, including Raffles, Fairmont, Sofitel, Novotel and Pullman, Ibis, Formule 1, and Swissôtel, Mercure, and Adagio.

Lodging is the largest segment of the travel industry. As such, there are many players in the industry. (Many small, individually owned hotels, B&Bs, motels, etc.).

The above-noted chains hold most of the lodging market in a few markets. However, as a whole, the industry is not nearly as dominated by a few companies as other parts of the travel industry.

Possible Future Lodging Consolidations

That said, consolidation is more active in the lodging market than in most other parts of the industry.

The 2016 merger of Marriott and Starwood left it as the dominant player in several large markets, such as Minneapolis and Mexico City, particularly in North America.

We should expect to see more and more consolidation mainly since there are still many chains and individual hotels left for the dominant players to acquire. That said, hotel chains will probably not dominate the lodging industry because:

  • They will face increasing competition from the sharing economy, especially Airbnb, and
  • The smaller, individual hotel and chains will be able to stem pressure from more significant players in the industry by:
    • Concentrating on improved customer service (meaning good reviews on sites like Trip Advisor).
    • Providing specialized consumer experiences.

What are the Effects of Travel Industry Consolidations on Consumers?

Some travel experts support consolidation. They believe mergers create:

  • Financially more powerful corporations with more purchasing power.
  • Comprehensive loyalty programs that can benefit travelers.

However, other experts caution that there’s a long history of consumers not benefitting from mergers and acquisitions. In most industries, customers benefit when competitors fight fiercely to please consumers, not conspire against consumers’ interests. Consolidation may help a company’s bottom line, but it does not benefit consumers more often than not.

It appears that travel industry consolidation after Covid will become more and more a fact of life.

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Paul Heller has been a lifelong avid traveler and language learner and teacher, Even as a child, he told Santa Claus that he wanted to visit all the children worldwide. At seven years old, Paul wanted to retire to Mexico. At eight, he memorized the name, capital, location, and some facts about every country worldwide. At twelve, he found a book "Lonely Planet: Southeast Asia on a Shoestring" and started developing his own itinerary for a future round-the-world trip. He remained obsessed with travel; after getting a Master’s Degree in Public Administration from the University of Southern California and working as an administrator, He spent his vacations going to different countries around the globe studying language, touring, and volunteering. In 1994, he quit his job and lived in Russia as a volunteer English instructor. He discovered that he loved teaching languages. In 2004, he decided to make a living out of his travels and founded a community of people who love to travel just like him. He developed 5 three-hour classes about living and traveling long-term worldwide which he taught in over 50 adult education programs throughout the US. After his parents passed, he realized his dream of traveling around the world; cruising and touring some of the most remote places like the North Atlantic, Patagonia, and Oceania; and learning new languages (he knows Spanish, Italian, French, and Russian). Paul encourages everyone to learn foreign languages. He knows that it can be frustrating and slow but that anyone can learn a language if they put in the work and, most importantly, learning a language is well worth the time and effort because it opens up a whole new set of people, ideas, and cultures. He is currently spending the next chapter of his life in Mérida, México. He is excited about using this blog and his classes and workshops to inspire and equip fellow Fifty Plus Nomads with the language, cultural, and psychological skills necessary to be successful and happy long-term travelers and expats over 50.

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