INNOVATOR’S INSIGHT: Mergers and Acquisitions: If Comp Sets become Obsolete for Revenue Evaluation, What’s Next? by Cindy Estis Green
The hotel world is awash in mergers, not the least of which is the largest one between Marriott and Starwood. In an attempt to gain scale, Carlson, NH, Kimpton/IHG, Commune and many other companies have been caught up in recent M&A activity.
The wave of mergers and acquisitions between hotel companies has affected more than just the companies involved. It is affecting the way many hotels evaluate their own revenue performance. Benchmarking has traditionally depended on creating performance targets based on average occupancies and rates of a set of comparable hotels—called competitive sets. National antitrust guidelines in many countries, including the U.S. require that at least five different hotels are aggregated when comparing average rates. Mergers have challenged this approach when there are too many hotels from one company in a market.
What is the alternative? It could be that in today’s world of big data that predictive algorithms can be tapped to more effectively set these targets without crossing federal antitrust guidelines. This session will explore some options that turn the traditional methodology of comp sets upside down.