Hilton Hotels Corp.’s recently announced plan to expand in the Caribbean and Latin America could turn out to be an important move for the company if U.S. hotel development grinds to a standstill as some expect.
At least, that’s the belief of Rick S. Kirkbride, who is chairman of the resort, restaurant and recreation practice group at law firm Paul Hastings Janofsky & Walker LLP.
“There is no question that new hotel development is going to come to a screeching halt in the United States, perhaps up to the next five years,” Kirkbride said. “However, all brands, particularly American brands, have the opportunity to expand overseas. There’s been a fair amount of product in the Caribbean and Latin America, but there is still room for more.”
Hilton of Beverly Hills announced Sept. 30 that it would add 150 hotels over the next five years in the Caribbean and Latin America. The company currently has 51 hotels in those regions, with another 42 in various stages of development. Most of its international hotels are concentrated in Europe.
Hilton plans to use a cost-effective route of establishing these new hotels through joint ventures, either through management or franchise deals. The company would manage its higher-end brands and franchise the others.
“But if we see a revenue-generating business, we won’t be shy about acquiring it,” said Daniel Hughes, Hilton’s senior vice president of operations for the Caribbean, Mexico and Latin America.
The Caribbean and Latin American moves are part of the company’s goal of adding 1,000 hotels internationally over the next 10 years. That goal was established in 2006 when Hilton acquired Hilton International, giving Hilton the right to extend its brands outside the United States.
Last year, Blackstone Group bought Hilton for $20 billion and took it private. Ted Middleton, the company’s senior vice president of development and finance for the Americas, said Blackstone is emphasizing international growth.
“Despite the downturn, the middle class in many countries continues to grow,” Middleton said in an e-mail to the Business Journal. “By the time these properties are completed and open for operation, we would expect the economy to be on the rebound.”
The company’s Hilton and Conrad brands are the most well known outside the United States. Hilton wants to bring others, from the economy brand Hampton to the upscale Doubletree, to markets overseas.
Hughes said the company hopes to get customers from within the Caribbean and Latin America, as well as from the United States and Europe.
Hilton is not the only hospitality company expanding into the Caribbean and Latin America. InterContinental Hotels Group PLC, which owns the InterContinental, Holiday Inn and Crowne Plaza brands, has 63 existing hotels and 13 projects under development in the regions.
Like Hilton Hotels, IHG sees the growing middle class, particularly in Latin America, as the basis for expansion and hopes to capitalize on intraregional travel as well, according to a company representative.
