What Are the Consequences of Hotels and DMCs Consolidating?

By Cindy Lo, DMCP, October 19, 2018

Business is evolving at such a fast pace that any boutique firm wishing to grow into what is considered the big leagues can only do so through consolidation. Therefore, if you find yourself with an opportunity to be purchased, company leadership must ask: What does our five-year or 10-year growth plan look like? Can consolidation opportunities in our market help us achieve these goals?

Aaron Kaufman, CSEP, president of Toronto-based Fifth Element Group, says there are disadvantages to having competitors acquired. “I think the live-experience industry is in for a big wake-up call in the next 24 months,” says Kaufman. “The ability of marketing, advertising and public relations firms to add live experience to their agent of record agreements puts firms like mine in jeopardy simply because the large-scale clients become unattainable, and larger agencies will acquire smaller event firms to manage those accounts.”

However, this does not scare Kaufman from considering being acquired if the right partnership is presented. In fact, he admits to having one eye toward a merger. “I think anyone who isn’t working on at least making their business attractive to potential suitors is going to regret that decision,” he says. “I, of course, approach any acquisition conversation with an open mind understanding that I am in a large, attractive market and am still in the growth stages of my firm. Yes, I do consider everything that comes my way.”

If you find yourself in the conversation of possibly being acquired and trying to figure out if the future “marriage” will work, ask yourself if the acquiring business has a strategy aligned with your goals. Says Lorenz, it’s not likely to be worth your time invested in building the firm “if the acquiring business does not have a solid and proven strategy or rationale in place, or the financial backing to handle the responsibility of the combined businesses.”

No matter what side you fall on, it is an exciting time as we watch recent hotel and DMC mergers and acquisitions unfold, and discover just how they will change the future of the industry.

Cindy Lo, Red Velvet EventsCindy Y. Lo, DMCP, is founder of Red Velvet Events Inc., a full-service creative events agency, and has earned multiple international event management/planning awards. Lo is a recent author of “Behind the Red Velvet Curtain,” which is available on Amazon and BookPeople in Austin, Texas. Connect with RVE on all the major social media channels (@redvelvetevents). She lives in Austin with her husband of 13 years and their two children.

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