The hotel industry could see some consolidation: A report says France's Accor chain has examined a potential merger with British rival InterContinental Hotels (IHG) - Get Report in a move that would create the world's largest hotel group.
French news service Le Figaro reported that while the companies kicked the tires on a potential merger, no formal approach has been made by Accor, whose biggest brands include Ibis and Movenpick.
Le Figaro also reported, without citing sources, that Accor's management board favors the deal, Reuters reported.
The combined companies could have a market value of about $17 billion, based on current stock prices,
American depositary receipts of InterContinental, whose biggest brands include Holiday Inn, were rising 4.75% to $55.50 on the news.
Accor shares traded on Euronext Paris closed Friday up 4.2% at 24.67 euros, or $29.06, according to The Wall Street Journal. The U.S. shares ACRFF closed Thursday at $28.25, up 1%.
A merger between InterContinental and Accor would give them about 1.6 million rooms combined.
The global coronavirus pandemic has wreaked havoc on the hospitality industry as travel restrictions and consumer reluctance to travel has left hotel rooms vacant.
Both InterContinental and Accor have cut jobs amid the downturn.
IHG said 10 days ago that it was cutting 10% of its corporate workforce after the company, which employs more than 400,000 globally, reported revenue that more than halved and profit that fell 82% in the first half of 2020.
Meanwhile, Accor in early August reported first-half revenue fell 52%, leading to a decision to cut 1,000 jobs as part of a plan to save $235.5 million by 2022.