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Your challenge 2017-10-04T15:00:39+00:00

Developments in the hotel industry

Factors that contribute to rising challenges for private hotel operators

The biggest part of the hotel industry in Germany, Austria and Switzerland is currently made up of privately-held hotel enterprises, however, the share of brand hotels operated by large corporations is increasing quickly. This means pressure on private hotel owners is mounting. How can single business operators survive in the long term while large corporations with enormous budgets and profound tech know-how are rapidly taking over the market?

Market share of individual hotel businesses

Brand hotels and hotel chains currently account for a minor market share, with only 13% of hotels belonging to a brand. However, hotel brands and chains already account for 46% of rooms as well as 60 to 70% of revenues on the market.

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Market share based on businesses
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Market share based on rooms
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Market share based on sales

Market share of hotel brands and chains

Hotel brands and chains account for a disproportionally large share of growth in the central European hotel industry, while independent and individual hotel businesses are visibly being pushed out of the market. In Germany, we’re currently witnessing the early days of a trend that leads to individual hotel enterprises being crowded out by major hotel brands and chains. However, across Europe and in the US in particular, market penetration of brand hotels and chains is already significantly higher.

DE 12%
Europa 25%
USA 70%

Technology and process digitization as a core element of this development

Durch hohe Budgets können Kettenhotels technologisch optimiert den Markt viel besser beherrschen. Ein wirklich professioneller Revenue Manager ist für einen privaten Betrieb in der Regel nicht finanzierbar, eine technologische Anpassung an den Markt in der Regel schon aus mangelndem Know-How und der radikalen Geschwindigkeit der Entwicklungen nicht erreichbar.

Thanks to their enormous budgets, hotel chains are able to drive tech optimization and thus easily achieve market domination. Most privately-held hotels are financially unable to maintain a truly professional Revenue Manager on their staff, while a technological adjustment to market conditions is usually impossible due to lack of expertise and the dizzying speed of ongoing innovation.

However, major chains are not the only ones that make life more difficult for private hotel businesses. The speed of technological innovation has picked up in such a way that it has become impossible for an independent business without an experienced Revenue Management department to keep up with the competition. A myriad of parameters complicate the matter: hundreds of sales channels that differ on a daily basis; booking habits of guests which are influenced by a series of fast-changing factors; expensive booking and comparison platforms taking over the market etc. These developments are not limited to dense urban areas either as the market is changing in all regions. Meanwhile, the hotel market has transformed into an online market which ruthlessly uses all technological options available to its advantage. Bigger brands and chains are able to pay for the respective know-how as they can absorb the costs for specialized staff because they operate a large number of businesses.