InterContinental Expands in Brazil

Denham, United Kingdom-based InterContinental Hotels Group ( IHG - Snapshot Report ) recently announced the opening of a 160-room hotel under its brand Holiday Inn Express in Brazil.

The new hotel named ‘Holiday Inn Express Maceio Ponta Verde’ will be owned and managed by MC3 Imoveis Ltda. under a licensing agreement. It is located in close proximity to one of the most exotic tourist destinations in Brazil- the Ponta Verde beach in Maceio, the capital of the Alagoas state. Maceio is centrally located between the Atlantic Ocean and Mundau Lake in Northeast Brazil.

Additionally, the hotel is also well linked to Maceio’s famous tourists’ attractions like Theo Brandao Museum, the Craft Fair, Ruth Cardoso Convention Center and the EcoPark Water Maceio.

Holiday Inn Express, one of the world’s fastest growing hotel brands, currently has more than 2,100 hotels located in major urban centers, gateway cities and resort destinations across 60 countries.

Owing to the saturation in the U.S. market, major hoteliers are exploring growth opportunities in the fast-growing emerging economies of Latin America and Asia-Pacific. In 2011, RevPAR for the comparable system wide properties increased 9.9 percentage points year over year in the Caribbean and Latin America. The stellar performance in this region is expected to continue going forward.

Moreover, with the affluence of the middle class in Latin America, inclination to spend on travel and leisure has somewhat risen. Apart from tourism, the region is also successfully emerging as a business hub.

Holiday Inn Express Maceio Ponta Verde marks InterContinental’s 19th hotel under the Holiday Inn Express brand and 79th hotel under various brands in Latin American and the Caribbean region. This includes company's 13 hotels under various brands in nine cities of Brazil.

InterContinental Hotels also recently announced the launch of the ‘Holiday Inn Express Bangkok Siam’ in Thailand to expand its presence in the Asia-Pacific and plans to open 12 additional properties by 2014. Moreover, the company has five hotels in its development pipeline that are slated to open by 2014 in Brazil.

However, the market is not devoid of competition. One of the company’s peers, Hyatt Hotels Corp. ( H - Snapshot Report ) recently announced the acquisition and rebranding of a 756-room hotel under the brand Hyatt Regency Mexico City in Polanco, Mexico. Several other major hoteliers like Starwood Hotels & Resorts Worldwide Inc. ( HOT - Analyst Report ) and Marriott International Inc. ( MAR - Analyst Report ) are poised to beef up their portfolio in Latin American region.

InterContinental Hotels currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are maintaining our long-term Neutral recommendation on the stock.