One of Europe's largest hotel groups, Meliá Hotels International, plans to expand during the next several years its presence in several U.S. gateway cities, officials said.
Despite a portfolio of more than 350 hotels totaling almost 91,000 rooms, Meliá has not been a major player in U.S. corporate travel. The largest share of its hotel portfolio is in Spain, and a significant portion lies in the Caribbean and Latin America. Given its focus on resort properties, its business tends to skew more toward leisure than that of other major hotel chains.
Excluding Puerto Rico, Meliá currently has three hotels in the United States: upscale Meliá properties in Orlando and Atlanta and its midprice Tryp brand—for which it sold franchising rights to Wyndham—in New York. Construction soon will commence on a new property in Midtown Manhattan: a 313-room under its upscale lifestyle Innside brand, with anticipated completion by the end of 2016, said Denis Ebrill, Meliá's executive vice president of product development in North America.
The Manhattan project came about via a development strategy that is somewhat rare in the hotel industry but has helped Meliá expand in European markets, according to Ebrill. Instead of using franchises or management contracts, the company partners with developers through long-term lease agreements on the properties, adding an extra layer of protection to attract developers, he said.
"It gives a level of comfort to a developer," Ebrill said. "It provides a guaranteed source of income. They will take some of the development risk, and we essentially will take all of the operating risk."
Likely through similar agreements, Meliá plans to establish a stronger presence in New York, Miami and Los Angeles, all markets with strong inbound traffic from Europe and Latin America, where the company is more of a household name, Ebrill said. Beyond the resort brands, it would include Innside hotels and its luxury lifestyle Me brand, both of which work well in urban settings, he said.
Following that, the company plans to expand further in North America through more traditional methods.
"As we grow the visibility and presence of our brands, that will grow our ability to compete in other markets that are more driven by regional traffic from within the United States," Ebrill said. "As that gets established, we will be a more attractive alternative as a pure management company."
As Meliá expands in U.S. markets, it also will "be adding to the sales force and our representation in key locations, especially feeder markets into those markets," he added.
At the same time, Meliá is complementing that expansion through more properties in non-Spanish-speaking Caribbean destinations, including new properties in the Bahamas and Jamaica, Ebrill said. Those provide "huge opportunities in terms of visibility in markets that are highly dependent on U.S. traffic," he said.