Some top hotel chains remain focused on increasing their global presence, with expansion planned for Africa, Asia and parts of Europe and Latin America. Such growth provides corporate buyers with more choices in more booking channels--including new middle-tier properties that generally are cheaper than luxury hotels--and familiar, brand-name lodging experiences for travelers.
But many new properties and conversions are not in markets where cheaper rates and greater availability are most needed for corporate travel programs, according to some. Moscow, for example, for five years running has been the most expensive market in the world for corporate lodging, according to Hogg Robinson Group, but the city's development pipeline is a trickle compared to some Asian and Middle Eastern markets.
"There were a couple of new openings but it's very difficult to open a hotel in Moscow with all the regulations," according to HRG director of global hotel relations Margaret Bowler. "The bulk of the product in Moscow is five star and last year was really the only year that corporates saw hotels come back and reduce the price. It is still the most expensive city in the world."
According to Smith Travel Research, China's active pipeline--the number of rooms being built or planned--as of February totaled 126,798 rooms (including 13,954 in Shanghai and 6,594 in Beijing). India's pipeline stood at 43,258 rooms. In the Middle East, Dubai development stood at 30,139 and Abu Dhabi at 14,171. Moscow's development pipeline was 4,357 rooms.
Starwood Hotels & Resorts this year plans to open 30 hotels in China, and a total of 80 to 100 around the world. Across Asia-Pacific at year-end 2009, InterContinental Hotels Group had 97 properties and 29,136 rooms in its total pipeline; Marriott International had 53 in its pipeline, in addition to 14 slated for India by 2014; and Hyatt Hotels Corp. has 19 properties in its pipeline, on top of 60 current properties.
When big-chain hotels open in new destinations, they generally bring their accessibility in global distribution systems, thereby providing corporate travelers access to rates and inventory in self-booking tools and through travel agents, and therefore lower travel agency servicing costs. Currently, "most of the local hotels [in Asia-Pacific and India] aren't loaded in the GDS and don't have any relationship with the GDSs," requiring agents to book directly with those hotels on behalf of corporate clients, according to Carlson Wagonlit Solutions Group project manager Monica Eiden.
"The most difficult areas are Asia-Pacific and then in Africa," Eiden continued. "What gets corporates most excited is the fact that they are going to have known chains going into the locations where they are traveling. Clients do look at pipeline and where hotel chains are planning to build." But for now in Africa, "there isn't a huge chainwide presence. Travel mangers need to go out to the individual mom and pop hotels to get negotiated rates. Their biggest challenge is communicating with some of them. [Hoteliers] just don't understand the whole request for proposal process."
According to HRG, "Africa continued to be the target of investment from multinational organizations engaged in sectors such as oil and gas, banking and finance, and telecoms." The travel management company's latest hotel report found that Africa in 2009 had the highest annual growth in corporate room rate of any region, 11 percent.
While room supply in Africa may not be growing as quickly as in other parts of the world, some chains are planning to increase their presence in the region. Marriott by 2015 aims to add to its portfolio with hotels in Algeria, Egypt, Ghana and Morocco. By 2012, Starwood plans to add Four Points by Sheraton properties in Lagos and Tripoli, in addition to a Le Meridien hotel and convention center in Oran, Alergia. InterContinental is preparing to open two hotels in Johannesburg and a Crowne Plaza in Nairobi.
Finding Middle Ground
One of the "key focuses" for CWT clients, according to Eiden, is using newly opened mid-tier properties in certain destinations rather than higher-priced upscale and luxury hotels. "Clients are sitting there waiting for those moderate-type properties that aren't typically available in Latin America and India to open," she said.
In Mexico, Marriott is working to meet that need with plans to add 36 Fairfield Inn & Suites locations during the next 10 years.
Meanwhile in Europe, some chains have focused on conversions rather than new builds to accommodate growth. Marriott, for example, by 2015 plans to double its European room count to 80,000--mainly through conversions.
"We expect the Autograph Collection will be a very popular conversion brand in Europe given the region's variety of iconic, independent and small hotel groups," according to Carlton Ervin, Marriott's chief development officer in Europe. Ervin noted that hotel owners in Europe would be enticed to convert because of Marriott's sales and technology platforms.
Starwood's newest moderate-tier brand Aloft will debut this year in Brussels.