Hotel Brands Look Beyond BRICS
UK-based market research company Jones Lang LaSalle Hotels has suggested that 2012 will see a cut-throat race between international hotel chains to expand beyond BRICS (Brazil, Russia, India, China and South Africa) in a search for the next big high-growth markets.
Its 2012 International Hotel Services Global Insight report suggests that the next destinations hotel chains will target are Indonesia, Malaysia, Nigeria, Turkey and Vietnam. According to LaSalle Hotels, these countries have so far attracted few ‘Western’ brands.
In the US, there are about 11 branded hotels per 1,000 citizens, compared to one per 1,000 citizens in Malaysia, and even less in Turkey, Indonesia, Vietnam and Nigeria. But there is already evidence of growth in these countries. International hotel conglomerate Starwood has opened an outpost of its mid-range brand Le Meridien in Istanbul in March 2012.
However, hotel brands face some challenges opening in these relatively underdeveloped countries. Western hotel brands would normally seek another party to finance a new-build hotel, and then find a local company to manage it. Not only is local finance unavailable in these countries, but local management companies often fail to meet Western standards, proving a significant barrier to entry.