The hotel industry saw a series of deals last year, with Marriott announcing plans to purchase Starwood and France's AccorHotels agreeing a deal for FRHI, the owner of luxury hotels such as London's Savoy.

This year, Accor has already denied that it is in talks over Carlson Rezidor's hotels division, which includes brands such as Radisson and Park Inn hotels. Intercontinental Hotels has also expressed interest in smaller deals.

Before announcing the Starwood deal, Marriott was the world's biggest hotel company but had only a 5 percent share of global room sales by value, according to Euromonitor data.

Euromonitor travel analyst Wouter Geerts said hotel companies have realised they need to be present in all markets to offset economic weakness in one region and he wouldn't be surprised to see some more big deals this year.

"Marriott and Hilton are very U.S. focused, it's clear they need to invest in China, Asia, Latin America," he said on the sidelines of the ITB travel fair in Berlin.

Growing competition from online apartment-sharing startups including Airbnb is another factor driving hoteliers into deals.

Size also counts in negotiations with online travel agents, such as Priceline's Booking.com and Expedia, which demand a commission, often as high as 18 percent of the room price, to feature hotels on their websites.

"In terms of how you're dealing with intermediary partners, consolidation gives you strength that a company half or a quarter of the size doesn't have," Marriott Europe head Amy McPherson told Reuters.

David Kong, chief executive of privately-held Best Western, said he expected a combined Marriott-Starwood would be able to drive down commission fees and that it could force the online agents to try to recoup lost earnings from smaller hoteliers.

"So if you consider that, you're going to see more of mergers and acquisitions and alliances, because everyone needs to put himself in a better bargaining position."

He said Best Western was looking at its options and that it had seen interest from smaller companies in joining forces, although it was too early to announce anything concrete.

"We are obviously strategising different approaches. Airlines have airline alliances, why can't hotels have hotel alliances?," he said.

When asked about the impact of hotel consolidation, Priceline and Booking.com CEO Darren Huston said only 10-15 percent of its business was with hotel chains and it was becoming more active in signing up independent hotels and apartments.

"There may be some consolidation at the high end. But there is increasing fragmentation at the other end. More and more apartments are coming online and we are very active in that trend," he told Reuters.

(Additional reporting by Maria Sheahan)

By Victoria Bryan