One of the world`s most renowned hotel chains aims to invest heavily in Brazil.
The CEO of the Hilton’s operations in Brazil and Latin America, Fabian Suarez, has announced the intention to expand the presence of the chain in the largest country in South America. The Hilton group has 4,900 hotels around the world, but only 100 in Latin America, with three located in Brazil
“Brazil and Mexico are the largest economies in Latin America, and our chain should reflect that. Mexico has grown in recent years, but Brazil is our biggest challenge,” said Fabian. “We are going to speed up our expansion through the acquisition of hotels from other brands. We are in talks with many hotels across the country”, he added.
The delay for the expansion of Hilton in Brazil can be attributed to the financing model used in the hotel industry of the country, which is based on the condo-hotel system. In this model, companies build the hotel and sell fractions of the building to smaller investors.
This is a method used to overcome the lack of credit specific for the hotel industry and this format corresponds to approximately 90% of the market in the country. The Hilton Group had avoided this strategy, in order to avoid problems with the investors.
This reasoning has changed; however, because the branch of the Hilton Group that built the hotels was the same one that managed them, but as of late 2016, the group separated both in different entities. With the change in management, Hilton has opened its doors to different approaches, including the condo-hotel system.
Hilton Hotels & Resorts has already started its expansion in Brazil through the purchase of Hotel Windsor Atlantica in Copacabana Beach, Rio de Janeiro. The law firms TozziniFreire Advogados and Akerman LLP worked as the consel for Hilton in the deal.
The estimative is that the hotel will receive the Hilton name in May. The building has 545 rooms in 39 floors and was renovated in 2011, ahead of the World Cup and the Olympics
Apart from the Hilton Group purchasing hotels from other brands, it is also investigating the possibility of opening franchises, under the banner of Hamptom by Hilton and Hilton Garden Inn, which Suarez calls “soft branding”.
As per the consultancy of JLL, Hilton ranks 45th in the Brazilian hotel market, while the French group Accord leads the rank, which was built based on surveys sent to over 500 hotels in the country. According to the report develop by JLL, these rankings “provide a performance analysis of hotels and condo hotels in Brazil, highlighting average operating revenues and expenses.”
In 2016, Hilton hit a revenue of $11.3 billion, with over 500 thousand hotel rooms in 104 countries.