The COVID dust is still settling but a new global landscape for hospitality is already taking shape. For the hotel industry, 2020 marked a sharp break, the end of an economic cycle that began at the end of the 2008-2009 financial crisis. The time has come to step back and take a look at the decade we’ve been through. Which strategies delivered value? Which market players reaped the profits?

Our 2021 edition of the worldwide ranking of hotel groups and their latest financial rankings illustrate once again several underlying dynamics of the past few years.

The first is, of course, the rise of the Chinese players. They deserve an accolade, they have come a long way at an impressive pace: 10 years ago, some of them were only nascent; today 6 of them are in the world's Top 15. Although their rise to prominence in terms of supply −through strong organic growth and M&A deals− now dates back several years, the past few months marked their recognition by financial markets.

And we are only halfway down this road: thanks to the “natural” rise in maturity of their domestic market, just to catch up with American and Northern European standards, Chinese operators still have a full growth cycle ahead. And there is little doubt they will be able to do better than just catch up: in the long run, it seems inevitable that they will be tomorrow’s torchbearers.

But this does not mean that others failed to deliver value, quite the opposite. Many did so through asset disposals and other real estate strategies, often creating strong short-term value for shareholders. As a consequence, part of the historical value from legacy businesses has been shifted to other sectors (REITs in particular). The same holds true for share buybacks, dividends, and financial engineering: excellent for stock prices and shareholders.

For operators, what did generate growth over the past decade is first and foremost the expansion of their supply. What could be more logical for "asset light" businesses? As a result, the global leadership today belongs to those who, like Marriott with the takeover of Starwood led by Arne Sorenson, have extended their hotel portfolio the most. Even disruptors, like Oyo, are not exempt from this rule and generate value through size.

However, the real change lies elsewhere. While hoteliers were developing solidly, others were growing exponentially. As a result, in 2021, Booking and AirBnB (which went public a few months ago) are worth more than $200 billion together, as much as all the top ten hotel groups combined.

This rift is not specific to the hotel industry. You can see it in the Apple vs Epic debate that animates the industry of software platforms, with Amazon for physical goods... There is a key question being asked today, worldwide, in every industry: "what is the real value of distribution?". Is it still the 15 to 30% often practiced today in most sectors? More broadly speaking, maybe we should rethink how to share value? Distribution fees, risk and profit sharing between owners and operators... the stumbling blocks are numerous.

However, solutions do exist to exit this trap in a positive way. For service producers, such as hoteliers, there is a wide pool of opportunities to blend in new value drivers. Rather than relying solely on their growth in room supply or stock market trends, the future performance of global hospitality champions will perhaps be based as much on the growth in their F&B outlets, coworking spots, and the many additional services that are yet to be offered. And more than ever, for hoteliers now producers of Services as a Network, marketing will be the biggest lever for creating value.

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