Hotels look east

Hotel property companies are looking East, particularly to China and India, for growth as traditional locations suffer from falling revenues due to holidaymakers and business travellers cutting back to save money in the global downturn...

But growth from emerging markets will take time and the new locations still only make up a small proportion of overall businesses, according to analysts.

'Worldwide, our major locations right now where most of the growth is are China, India and the Middle East,' said Ed Fuller, President and Managing Director of Marriott Lodging International.

China, the world's fastest-growing economy, is expected to expand 6.5 per cent this year, according to the International Monetary Fund, down from nine per cent growth last year but ahead of the 2.8 per cent contraction forecast for the US in 2009.

US based Marriott, which manages the Ritz Carlton and Renaissance brands, plans to open 130 hotels in the next four years outside North America, where it manages 350 hotels. Half of the openings will be in China, India and the United Arab Emirates.

France based Accor, Europe's largest hotelier, said that it plans to more than triple the number of its hotels in the Middle East. It already has 25 of its budget Ibis hotels in China and plans to open 20 more this year and about 10 per year over the next few years.

Patrick Scholes, an Analyst at US based FBR Capital Markets said many hotel groups are looking to tap into expected higher economic growth rates in emerging markets. But offsetting weak home markets with growth from China, India and the Middle East will take time.

'The exposure of companies such as Marriott to countries like India or China is growing but it still represents a small portion of their overall business,' said Scholes.

Robert O'Hanlon, tourism, hospitality and leisure Partner at consultant Deloitte Middle East said, 'There is genuine belief that markets like China and India are underserved and in terms of business tourism and hospitality tourism there are opportunities for growth.'

Source: www.propertywire.com