Tourism and Hospitality Industries: Management
Integration of Travel and Hospitality Companies
Vertical integration has been a major trend in corporate business in profit-based and consumer-based industries over the past several decades, particularly as more specialized and dynamic good and services are being offered with wider global distribution. There have been many examples of vertical integration in the travel and hospitality industry within the past several decades, although due to the volatility of industries based upon consumer activity with disposable income during the recession since 2008, it is a somewhat risky maneuver, particularly in the acquisition of transportation companies.
The general principle of vertical integration, however, leads to greater profit margins as two or more related ventures are purchased by the same entity, thus lowering overhead and eliminating external expenditure. Vertical integration is particularly of benefit for the development of travel and hospitality packages that seek to offer savings to customers in order to bolster business.
Horizontal integration is also a relatively common form of hospitality and business...
Horizontal integration is the acquisition of a business entity by another business entity with similar functions, such as the purchase of a luxury hotel chain by another luxury hotel chain. One example of this is the when budget airline Go! was bought out by EasyJet airlines, another budget airline. When horizontal acquisition occurs, the brand images may or may not merge under the parent company, depending on what marketing projections indicate will be most beneficial. On some occasions, the brand being purchased may be financially less viable than the purchasing business entity but have stronger brand recognition, meaning that the company is purchased for its brand rather than its material resources or financial assets.
In 2007, Four Seasons, a luxury hotel group, was bought out for $3.37 billion dollars by a group of investors including Kingdom Hotels International owner Prince Alwaleed of Saudi Arabia and Bill Gates. The Four Seasons Group was a massve real estate holding with immense brand recognition, with 74 properties in 31 different countries and…
