Although branded hotel companies continue to target Brazil, Russia, India, and China (the BRIC nations) for expansion, new markets are catching their eye, according to Jones Lang LaSalle Hotels. Indonesia, Malaysia, Nigeria, Turkey, and Vietnam are among the countries showing well-developed commercial real estate, strengthening domestic corporate base, and stable financial markets, leading to attractive hotel development prospects.
“Hotels in the United States and Western Europe are heavily weighted towards global brands, with nearly 70 percent of all properties bearing globally recognized names. The situation in much of the rest of the world is almost the inverse in the aggregate,” says Clay Dickinson, EVP for Jones Lang LaSalle Hotels. “The need to be in markets in which their customers are increasingly traveling, limited competition from local hotel brands, and the potential to capitalize on the rapidly growing middle class incentivizes international companies to continue expanding abroad, ideally until the size of their presence abroad more closely reflects that in their home markets.”
While the future of high growth markets outside the U.S. looks appealing, successful expansion and integration in these countries can be difficult. “Most global brands have come to prefer an ‘asset light’ model based primarily on growth via management contracts or franchising, which is often incompatible with the demands of high growth markets-both from a practical and investor requirements standpoint,” says Jalil Mekouar, Americas COO and managing director of strategic advisory & asset management for Jones Lang LaSalle Hotels. “In many of these countries there is still an expectation that the brands will invest in new hotel projects. Moreover, there tends to be a limited number of independent management companies capable of meeting the standards required to grow brands via franchising.”
