Owing to the saturated U.S. market, major hoteliers are exploring growth opportunities in the fast-growing emerging Latin American markets. Following the trend, leading hotelier, InterContinental Hotels Group plc (IHG - Snapshot Report), is also strengthening its portfolio in the region through expansion.
Among the Latin American countries, Brazil is expected to lead the growth trajectory driven by decent economic growth. A large number of hotels are being built in the country to cash in on the 2014 FIFA World Cup and the 2016 Summer Olympics.
Keeping these factors in mind, the hotelier is set to unveil two properties — Holiday Inn Porto Maravilha and Holiday Inn Express Porto Maravilha — in Rio de Janeiro, Brazil in association with Odebrecht Realizaçöes Imobiliárias and FII PM Caixa Fundo de Investimento Imobiliário Porto Maravilha. The properties, slated for a Jul 2016 opening, will mark the company’s reentry into the city of Rio de Janeiro.
The hotels will be unveiled in downtown Rio de Janeiro at the center of the port area, Porto Maravilha. InterContinental has initiated a $1 billion program to revitalize the Holiday Inn brand portfolio. These properties will be developed under the global brand re-launch program. We expect the strategic position, wide range of amenities as well as the contemporary ambience of both the hotels will create a strong guest base.
InterContinental introduced its economy brand, Holiday Inn in the U.S. in 1952. The brand, previously renowned as a motel chain, belongs to the upper-moderate tier and comprises small-to-mid sized full-scale properties. Since its opening, the brand has been gaining strong momentum.
Holiday Inn Express is a smaller prototype of the Holiday Inn brand, primarily designed to serve business travelers. InterContinental currently owns 1,200 and 2,200 properties worldwide under Holiday Inn and Holiday Inn Express brands, respectively.
InterContinental has been operating in Latin America for the past 65 years. The affluent middle-class population and greater footfall impelled this Zacks Rank #3 (Hold) company to grow further in this region. We believe the new properties will strengthen its brands’ presence in the region as well as align with its growth strategy.
Another hotelier, Starwood Hotels & Resorts Worldwide Inc. (HOT - Analyst Report), also plans to expand its operations in Latin America by 50% over the next five years.
InterContinental currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the hotel industry include Extended Stay America, Inc. (STAY - Snapshot Report) Marriott International, Inc. (MAR - Analyst Report). Both the stocks carry a Zacks Rank #2 (Buy).