“A major reason for this merger would be that the newly formed company could achieve savings in central costs.
“Companies that merge can often take advantage of a range of economies of scale such as cost savings associated with marketing, technology advancements and workforce specialisation.”
Both InterContinental Hotels Group and Accor have recently seen dips in revenue this year due to Covid-19, which saw a worldwide closing of hotels. However both InterContinental Hotels Group and Accor suggest that the worst of the global pandemic are in the past.
Hollister added: “The flagship budget brands of both companies – Ibis and Holiday Inn Express – would be likely to complement each other well and assist in maximising market share in the midscale/budget segments.
“Demand for low-cost accommodation will be likely to surge in the coming years due to the economic strain that Covid-19 has forced upon many travellers, meaning that the average amount of recreational expenditure per capita will be reduced across the globe.
“According to our most recent Covid-19 recovery survey, 34 per cent of global respondents are now ‘extremely concerned’ about their personal financial situation.
“This response amplifies the fact that many travellers will be on a stricter budget going forward.”
However, competition concerns in the United States or Europe could stand in the way of a deal.
Hollister concluded: “A combining of the two companies would create an industry titan, operating 1.6 million rooms.
“This kind of dominance would lead to supreme control over pricing due to a decrease in choice for travellers.
“If the newly merged company did increase room rates, this would be seen as anti-competitive behaviour and will be a prospect that competition authorities will already be wary of.”