Branching out: companies extend brands' development throughout the world

Hotel companies are using their brands' distribution in the United States as a springboard for increased development throughout the world.

Steven Rudnitsky, chairman and c.e.o. of Cendant Corp.'s hotel division, said there's a lack of hotel franchising abroad and the value to a Cendant-franchised hotel abroad is the company's penetration in the United States.

"We've been actively seeking opportunities in all parts of the world," he said.

The number of hotels developed internationally represents about 5 percent of the total business of Cendant's hotel group.

"International growth plays a part and parcel to what we've been working on domestically," Rudnitsky said. "It's all part of driving more consumers to our properties."

Suzi Yoder-MacDonald, v.p. of international operations for Best Western International, said the brand works with 22 affiliate partners outside of North America.

"The development strategy isn't managed by Best Western, but by the affiliate partners," Yoder-MacDonald said. "The [membership] structure in the United States is replicated all over the world. The affiliates' obligation is to grow the brand within the territory and report on that."

Best Western also develops directly in Asia and parts of South America.

Carlson Hotels Worldwide divides its global development into three areas: the Americas, Asia Pacific and Europe/Middle East/Africa. Sam Winterbottom, executive v.p. of development for Carlson, said 50 percent of the company's development comes from the Americas, 40 percent comes from Europe/Middle East/Africa and 10 percent comes from Asia Pacific.

Winterbottom said that when working with a strategic partner, a company has to make sure the partner has the same vision and culture as the main company. He cited Rezidor SAS, which has grown Carlson's Radisson brand through Europe. "They have demonstrated to us [that] they do the job and they do it properly," he said. "Now they are developing Park Inn. There should be 30 Park Inns throughout Europe by the end of the year."

Winterbottom said competition overseas is just as fierce as in the United States because other brands, such as Holiday Inn, Marriott and Hilton, are developing globally as well.

Who's developing where

InterContinental Hotels Group recently signed an agreement with Midland Iberia, a Spanish investment company, to build 20 Express by Holiday Inn hotels in Spain within the next six years. Midland Iberia will invest more than $166 million to roll out the brand in key cities. Currently, there are five Express by Holiday Inn hotels in Spain.

Days Inn is being developed overseas more than some of the other Cendant brands because Days is the biggest Cendant brand in the United States and overseas customers see value in that, according to Rudnitsky. He said the city-center destinations the Wingate brand targets allow it to extend into first-class markets. He also said developing Super 8 in Asia is a possibility.

Cendant signed a master license agreement with Singapore-based Frontier Group Pte Ltd. to develop more than 40 Days Inn hotels in China during the next five years. Currently, there are two Days Inn hotels in China.

The company also signed two 10-year development agreements with Dublin-based Premier Hotel Management Ltd. to convert and develop 18 Days Inn hotels and 12 Wingate hotels in Ireland during the next five years. Five Wingate properties and four Days hotels are expected to open in Ireland this year.

Rudnitsky said there will be more than 70 Days Inn properties in the United Kingdom by the end of the year. "We have a concerted focus in Europe," he said.

In China, Rudnitsky said the company will grow via the master franchising model because of various political and economic factors. He said there's a boom of highway construction in the country that will lead to a need for more roadside hotels.

Cendant has 519 international properties comprising 43,511 guestrooms; 441 of those hotels comprising 37,342 rooms are in Canada.

Winterbottom said the Country Inn brand is the most difficult to grow internationally because it's so well defined in the United States. He said brands will have to adapt to local markets without losing brand identity. As an example, in India, there's no need for a fireplace, which is common at Country Inn & Suites hotels, so a waterfall is used instead. Winterbottom said Park Inn and Park Plaza will be the most successful Carlson brands developed overseas because they can go into the most markets. He said Canada is easy to develop in, but Latin America, especially Colombia and Ecuador, poses challenges. The company is concentrating on countries that are more stable, such as Chile, Argentina and Brazil. Currently, Carlson has 59 hotels in development outside the United States and expects to open 34 hotels outside the United States this year. Three Radisson hotels are expected to open in Mexico City this year, and Regent is expected to grow in large cities in Asia.

David Kong, senior v.p. of marketing and development for Best Western, said most of the brand's growth is occurring outside the United States. The brand is targeting 100 hotels in Asia by 2005.

Kong said there are tremendous opportunities in China because the country's economy is growing 8 percent to 10 percent per year, it's gearing up for the 2008 Olympics, and the government has eased travel restrictions. He said the government owns much of the land, so the construction cost difference between a three- and-five star hotels isn't much. Because of that, many five-star hotels are being developed, he said.

There are 10 BW properties in Brazil, and another 10 are planned for 2004. There are four properties in Chile, and the brand plans to add two more this year. BW plans to add four in Argentina and two hotels in Panama. It also has entered the Paraguay market.

Yoder-MacDonald said growth in the Netherlands has taken off. She said the brand had about 29 properties there about 18 months ago and now has 52.

At the end of 2003, Best Western had 1,926 hotels comprising 12,690 guestrooms outside of the United States.

Where: Hotel InterContinental in Berlin

When: March 16-18

Conference chairman: David Michels, chief executive, Hilton Group plc

Web site: www.berlinconference.com

jwalsh@advanstar.com

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