The combination of two storied hotel brands announced this week creates the world’s largest lodging company, with more than a million rooms. But the $12.2 billion agreement by Marriott International (MAR) to acquire Starwood International (HOT) isn’t a mark of hotel industry triumph.
It’s more of an anti-Airbnb defensive maneuver. If you listen closely, you can hear the ominous hoof beats of online competition closing in on the traditional hospitality business. Hotels want to bulk up against threats from the likes of Airbnb, a digital service that allows travelers to book private homes for stays.
The hotel industry is doing well, for now. Since the recession, business has been great, and mergers also give it scale to take advantage of that. Revenue per available room (the sector’s main metric) will grow a health 6.8 percent this year, research firm STR estimates, followed by a similar expansion next year.