The US$2.9 billion (S$4.1 billion) buyout of FRHI Holdings by AccorHotels is the second major hotel acquisition deal in as many months, with more expected as the industry consolidates.
Marriott International agreed to buy Starwood Hotels & Resorts Worldwide for US$12 billion last month, underlining a strategy to seek market share through acquisitions.
Frasers Hospitality said such deals will force industry players to "re-evaluate their offerings and assess the need to join arms with other players" to stay competitive.
"One of the challenges is the evolving consumer landscape, which, for example, has seen the emergence of brands like Airbnb that have certainly impacted the hospitality industry," Frasers Hospitality chief executive officer Choe Peng Sum told The Straits Times yesterday.
Airbnb is an online platform where property owners can list their homes and offer them as accommodation for travellers.
"The difficulties, from online travel agents encroaching on revenue as well as the ongoing threat of Airbnb or alternative accommodation platforms, mean it is likely that this is just the beginning of consolidation," said Mr Julien Naouri, associate director of hotels, Asia-Pacific, at Savills (Singapore).
Hotelier Loh Lik Peng agreed that new players like Airbnb have the potential to be "very disruptive" for the global hotel industry.
"Airbnb - its overheads are a tiny fraction of what hotels have to put up with. The competition is pretty unfair," Mr Loh added.
Mr Choe of Frasers Hospitality said that the way technology has changed the consumer landscape has also pushed companies to "rethink their entire distribution strategy, as hotels are now looking to merge with distribution channels to improve their online distribution".
While the market players see the latest consolidation as a sign of the ongoing evolution of the industry, guests and members of FRHI's loyalty programmes were less concerned.
Ms Cho Pei Lin, a public relations professional and member of the Swissotel loyalty programme, said the deal will give her more choices among Accor's network of brands.
"I am not worried about membership benefits as it is likely that Accor will want to keep current members and brand supporters of Swissotel," Ms Cho told The Straits Times.
Ms Esther Ho, who runs the jewellery consultancy and event planner Zenith Affair at the Raffles Hotel arcade, hopes that the "physical structure and the iconic image of Raffles Hotel will remain unchanged".
Raffles, Fairmont and Swissotel are brands held by FRHI, which is jointly owned by the Qatar Investment Authority (QIA), Kingdom Holding Company of Saudi Arabia and Oxford Properties, an Ontario Municipal Employees Retirement System company. Under the buyout agreement, QIA and Kingdom Holding will each retain minority stakes in Accor.
Clarification: An earlier version of this story said Raffles Hotel will be owned by AccorHotels which had signed a deal to buy out FRHI Holdings. AccorHotels has clarified that it will manage Raffles Hotel, but not own it.