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Consolidation is the current buzzword in the global hotel industry, and it is not getting old any time soon. At the end of last year, all the headlines were taken by the Marriott-Starwood deal, and the acquisition of FRHI Holdings by Accor. At the start of 2016, more merger and acquisition rumours are doing the rounds, though, as the Wall Street Journal recently reported that Carlson Cos is looking for strategic alternatives, which could include a possible sale or merger of its hotel company Carlson Rezidor Hotel Group, which includes the Radisson brand.
The Rezidor Hotel Group became a public company in 2006, when it was sold by its owner SAS Airlines. In 2010, Carlson Cos became the majority shareholder, owning 50.1% of shares. Initially, the two companies maintained multiple franchise agreements that allowed Rezidor to operate the Radisson, Park Inn and Country Inns brands in Europe, the Middle East and Africa. However, two years later the two companies launched a strategic partnership in order to focus on expansion and revenue generation, forming the Carlson Rezidor Hotel Group.
Despite its global portfolio and strong brands, Carlson has struggled to register strong organic growth, and has been at par or slightly below average market growth since 2011. This might be one of the most important reasons for the company to weigh up its options and consider a merger or acquisition to improve its performance in the future.
The backing of a strong hotel player might also provide the needed push for the Quorvus Collection and Radisson Red brands, which have seen slow pick-up after their announcements in 2014. Both brands are technology driven and cater to the Millennial traveller. With Carlson’s competitors having introduced similar concepts, including Marriott’s Moxy Hotels, Starwood’s Aloft and, most recently, Hilton’s Tru Hotels, Carlson will need to have a clear strategic direction for its youngest brands to be successful.