The hotel industry has seen a recent wave of mergers and acquisitions among hotel management companies. Putting these types of deals together takes a considerable amount of work and thoughtfulness, and stakeholders need to be aware of the challenges, said one hotel executive with experience navigating those deals.
W. Chris Green spent roughly two decades with Chesapeake Hospitality, rising to the level of CEO, before that company was bought by Remington Hospitality in 2022. After spending nearly two years with the combined company and serving as president, he retired in 2024.
Green said there are various reasons why mergers and acquisitions are increasingly popular among third-party hotel operators, including needing to find avenues for growth at a time when hotel real estate isn't transacting, and an ongoing "war for talent" fueled by post-recession cuts after the Great Recession and the COVID-19 pandemic.
He said the bench of talent at Chesapeake Hospitality was one big pro "we brought to the table" in the company's merger with Remington.
"It's hard to find 30 really great hoteliers at once," he said.
He added most hotel companies have cut out the middle levels of management needed to nurture future leaders.
"There were assistant general managers in 2007, and that was one of the levels we got rid of, and all of a sudden there's a talent drain," he said.
Hotel operator merger and acquisition activity announced this month so far includes KSL Capital's sale of Davidson Hospitality to Nautic Partners, PM Hotel Group's merger with Sightline Hospitality, Pyramid Hotel Group's European division Hamilton Pyramid Europe merging with Axiom Hospitality, and Peachtree Group's management division partnering with Group 10 Management.
Green said strategic partnerships such as Peachtree's latest deal are an intriguing option for companies to cut down on corporate-level costs while companies maintain independent cultures. But strategic partnerships still require some level of coordination, though.
"The only risk I could see would be having too much siloing," he said. "One company can't run completely differently than the other company because you would have real issues."
For all of HNN's discussion with Green, which touched on the pros and cons of different merger, acquisition and partnership deal structures, listen to the podcast above.