A glut in the supply of hotel rooms that has outpaced demand will lead to more mergers and acquisitions in the increasingly competitive industry, according to the head of the Best Western Hotels and Resorts Group. “In the last 10 years, an astonishing number of hotels has been added, and in some countries the demand hasn’t kept up with supply. So you increase the supply by 10 per cent, but has demand grown by 10 per cent? It has not, so it’s far more competitive today,” said David Kong, CEO of the international chain. “Everyone is worried about falling behind, and it’s a simple thing to consider. Basically if you have scale, that means you can spread the cost of 300 more hotels and if you can do that you basically have the resources to spend more money, you can invest more because you have more hotels to support. “As scale brings compelling competitive advantages, there will be more M&A activity and alliances. Scale brings synergy, efficiency and also leverage with vendors.” According to market research company Euromonitor International, the number of hotels worldwide rose by 2.5 per cent to 578,065 in 2018 from 563,939 in 2017, with the number of rooms increasing 3.3 per cent to 31.94 million. Data provider Refinitiv said announced deals with hotels and lodgings as targets or buyers worldwide amounted to about US$255 billion between 2014 and 2018. Last year, there were 811 announced deals, valued at US$56.3 billion, up by more than half from US$37.1 billion the previous year. Headquartered in Phoenix, Arizona, in the US, Best Western last month acquired WorldHotels, adding about 300 upmarket hotels and resorts and 60,000 rooms to its portfolio of more than 4,200 hotels worldwide. WorldHotels, which offers sales and marketing services to independent hotels, is expected to benefit from the wide reach of Best Western’s digital platform. Hong Kong hotel market still has enough room for growth, says Magnificent Hotel chairman Roland Jegge, president of Asia-Pacific at WorldHotels, said the needs and preferences of modern travellers have been changing at lightning speed, and the hotel industry is trying to keep pace by offering them more choices. It is this trend that is boosting supply. “There is an abundance of choices with new destinations and connections, new airlines as well as the evolving needs of the modern travellers changing at an ever-faster pace,” Jegge said. The biggest deal in the hotel industry worldwide since 2014 was Marriott International’s acquisition of Starwood Hotels and Resorts Worldwide, another US brand. Completed in 2015, the deal was worth US$14.8 billion. The purchase by China’s HNA Tourism Group of US-headquartered Hilton World Holdings was the fourth largest deal, worth US$6.5 billion. HNA has since divested its stake in Hilton. Property consultancy JLL said despite global uncertainty, hotel investments are expected to hold steady this year at about US$67.2 billion.