Marriott International Inc. (MAR), the largest publicly traded U.S. hotel chain, plans to double its operations in Latin America and the Caribbean by 2017 to take advantage of growing demand, Chief Executive Officer Arne Sorenson said.
The expansion will focus largely on the Fairfield Inn & Suites brand and will probably double the company’s sales and employees in the region, Sorenson said in an interview at the CEO Summit of the Americas in the resort city of Cartagena, Colombia. Marriott will add 12 hotels in Brazil, where it currently operates five, and five hotels in Colombia, where it now has two, he said.
Demand for hotel rooms in emerging markets such as Brazil has been fueled by a growing middle class, according to an August report by Jones Lang LaSalle Hotels, part of Chicago- based Jones Lang LaSalle Inc. (JLL) Rio de Janeiro, Brazil’s second- biggest city, will host the 2016 Summer Olympics and is home to the Maracana soccer stadium, where the closing ceremony of the 2014 World Cup will be held.
“The opportunity is enormous,” Sorenson said. “The much higher rates of growth in places like Latin America and Asia will cause us more and more to shift to a global mix of revenues and travelers. People as they build wealth want to travel. As their economies grow, they need to travel to do business.”
Marriott currently has 69 hotels in Latin America with 17,500 rooms, Sorenson said.
The biggest challenges to expansion in Brazil (BZGDGDP4) have been scarce financing and developers choosing to use land for other types of properties, he said.
“We’re getting to a point where debt markets are starting to open up, I think equity is starting to open up, and we’ll see the financing really get solved,” Sorenson said. “There are compelling opportunities in residential, office, retail. We have to make sure the hotel opportunity competes well.”
Competitor Starwood Hotels & Resorts Worldwide Inc. (HOT), owner of the luxury St. Regis and W brands, plans to combine its operations in North America and Latin America “to match a changing marketplace,” President and Chief Executive Officer Frits Van Paasschen said in a statement yesterday.
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