Marriott To Binge On Caribbean
Marriott International Inc. (NYSE:MAR) recently revealed its intention to double is presence in the Caribbean and Latin America by 2017. Currently, Marriott operates 69 hotels in 25 countries in that region. The hotelier sees significant opportunities for growth in Latin America, which is domestically under-hoteled to meet its future demand.
Presently, there are 35 Marriott hotels signed or in progress in the Caribbean and Latin America. Already, 9 of Marriott’s 18 brands are prevailing in the region, combining all types of scale like luxury, upscale, lifestyle, upper moderate and moderate.
Owing to the saturation in the U.S. market, major hoteliers are exploring growth opportunities abroad. Some international markets offer greater potential based on their higher pace of economic growth. The U.S.-based companies are targeting fast-growing emerging economies like Latin American regions and the Asia-Pacific. The operating environment in those markets enables hoteliers to grab a bigger share of the overseas pie.
Strong economic growth is driving the hotel expansion in Latin America, overruling the high rate of inflation. In 2011, RevPAR for the comparable systemwide properties increased 9.9 percentage points year over year in the Caribbean and Latin America. The stellar performance from this region is expected to continue in the near future.
The middle income population in Latin America is growing. This fraction of the population also has an inclination to spend on travel and leisure. Apart from tourism, the region is successfully emerging as a business hub. Moreover, a long-standing presence in this country allows Marriott to have a stable relationship with owners and developers across the country. All these factors testify to Marriott’s keenness to have one of the largest hotel development pipelines in Latin America.
Brazilis set to witness a surge in demand fueled by the resurgence of the middle class, and Marriott has plans to add a handsome number of environmentally green Fairfields (moderate brand) in the country over the next few years.
Additionally, a renowned consulting firm specializing in real estate, Jones Lang LaSalle (NYSE:JLL), had earlier commented that hotel investment in Brazil would be around $2.4 billion by 2014. The consulting company predicted that a large number of hotels would be constructed in the country to cash in on the FIFA World Cup scheduled in 2014 and the Olympics in 2016.
However, the market is not free of competition. Several major hoteliers like InterContinental Hotels Group (NYSE:IHG), Hyatt Hotels Corporation (H) and Starwood Hotels & Resorts Worldwide Inc. (NYSE:HOT) are poised to beef up their portfolio in that region.