Euromonitor Comment: Marriott’s European expansion

The unstable economic environment in Europe was not sufficient to make Marriott abandon its plans to double its hotels portfolio in the region and increase its total number of rooms from 40,000 back in 2010 to 80,000 by 2015. Instead, it was perceived as an opportunity to enter into strategic partnerships with independent hotels.

Lisandra Minussi, travel and tourism analyst, explores Marriott’s performance in Europe.

"Thus far, Marriott is almost halfway towards its goal, having added a total of 17,000 new rooms to its portfolio in 2011. Aside from expanding its portfolio of traditional brands like Marriott Hotels & Resorts and Renaissance Hotels, Marriott introduced four new brands to the region in 2011: Autograph Collection; Residence Inn; Edition Hotels; and AC Hotels by Marriott.

Dynamic pipeline development
With 257 hotels and 11 brands in Europe in 2011, Marriott plans to mainly strengthen its presence in the UK, Ireland and Continental Europe. According to company sources, the first two are central to pipeline development in Europe, given they are key source markets for Marriott worldwide.

As a result, earlier in 2011, Marriott opened the St Pancras Renaissance Hotel in London. Later that year, it inaugurated the first Residence Inn property in the UK, in Edinburgh. For 2012, it has announced plans to open a new Bvlgari Hotel in central London and a London Edition Hotel. The first Edition hotel in Europe opened in late 2010, in Istanbul.

Nothing compares, however, to the strong volume growth achieved as a result of the joint venture between Marriott and AC Hotels formed in 2010. Overall, the deal allowed Marriott to boost its presence in Europe fairly quickly, adding more than 90 properties to its European portfolio and significantly strengthening Marriott’s presence in Spain.

The Autograph Collection is also central to Marriott’s pipeline development strategy, mainly as it focuses on hotel conversions throughout Europe. According to Euromonitor International, there are over 122,000 independent hotels in Western Europe, thus representing a huge opportunity for the Autograph Collection consortia.

As of 2011, Autograph Collection had eight hotels in Europe: four in Spain; two in Italy; one in the Czech Republic; and one in Hungary. Two additional properties are set to open in Italy during 2012.

Regional opportunities for Marriott
Although Western Europe is likely to remain the largest hotels market in value sales terms during 2011-2016, it is expected to record the slowest annual growth amongst all regions, at only 1%.

This is not very concerning for Marriott, however, given its main goal is to increase its presence in the market at a low cost and steal share from competitors. However, Marriott faces strong competition from the leading companies in Western Europe: Accor Group and InterContinental Hotels Group. Accor Group accounted for 5% of hotel room sales in 2011 in Western Europe, while InterContinental Hotels Group was responsible for 2%.

Marriott is also investing aggressively in Asia Pacific, the fastest growing hotels market between 2011 and 2016, and Latin America. In Asia Pacific, for example, it has announced the construction of 60 more hotels by 2015, to total 191, up from 131 back in 2010. Exposure in these regions will allow Marriott to benefit from strong organic growth in their booming hotels markets."