Hilton will form three major development alliances with the intention to introduce more than 15 new hotels in the Caribbean and Central America, 25 hotels in Russia and at least 15 hotels in the U.K. throughout the next five years. HHC has agreed to work with Caribbean Property Group for development within Central America & the Caribbean; London & Regional Properties Limited in Russia; and Shiva Hotels Limited in the U.K. and Ireland.
The three development alliances follow the partnership deals recently announced in India and China, which are expected to result in 100 new hotels in those markets throughout the next five to seven years.
“These important alliances will reinforce our position as the premier global hotel company and underscore our strategy to sign large deals with major investors to develop a significant number of hotels in key growth markets around the world,” said Matthew J. Hart, president and chief operating officer, Hilton Hotels Corporation. “We are well on our way to achieving our stated goal of at least 1,000 hotels outside of North America over the next 10 years.”
Caribbean & Central America
Through a strategic alliance agreement with Caribbean Property Group (CPG), a New York-based, major property investment group, HHC will work actively with CPG to develop focused-service, franchised hotels within certain defined markets in Central America and the Caribbean. Initially, targeted markets include major cities and destinations in Puerto Rico, Costa Rica, Panama, the Dominican Republic and Trinidad. CPG will receive certain preferred development rights in return for meeting certain goals and timetables.
“This agreement ideally supports our international development strategy to bolster the Hilton Family of Hotels presence in growing markets where our brands are either underrepresented or absent,” said Tom Keltner, Chief Executive Officer - Americas & Global Brands, Hilton Hotels Corporation. “CPG is a well respected developer with invaluable insight in these markets, and we are confident that they will help us achieve these goals.”
The company initially will focus on the Hilton Garden Inn brand, with plans to develop additional projects under the Hampton by Hilton and Homewood Suites by Hilton flags, eventually.
HHC began its business relationship with CPG with the recent signing of management agreements for two existing full-service hotels in Costa Rica owned by a joint venture in which CPG holds an 85 percent ownership interest. Currently undergoing major renovations, the hotels will be re-branded and re-opened in the 2008 first quarter as the Hilton Papagayo and the Doubletree by Hilton Puntarenas, in Guanacaste and Puntarenas, Costa Rica, respectively.
“The region is ripe for focused service hotel development,” said Barry Breeman, vice chairman, Caribbean Properties Group. “The economies have strengthened in the region over the past five years. Today, there is a good base of first-class, full-service hotels and resorts, but a very limited number of mid-market, focused service hotels, especially in the premium branded sector. In addition to these markets and this segment being significantly underserved, we believe developing under the established Hilton Family of Hotels will give instant credibility to the projects. And as these projects succeed, we believe they will act as catalysts to help further strengthen local economies and development of other real estate classes.”
In Russia, which is a priority international development market for the company, HHC will enter into a ‘Preferred Development Alliance’ with London & Regional Properties Limited (L&R). This agreement is expected to result in the development of at least 25 new hotels in an initial period of five years, encompassing selected brands within the Hilton Family of Hotels, including Conrad, Hilton, Doubletree by Hilton, Hilton Garden Inn and Hampton by Hilton hotels, all of which HHC will manage.
“Russia is an outstanding market in which to pursue hotel development given the powerful combination of improving economics and favourable demographics,” said Ian Carter, chief executive of Hilton’s International Operations. “There is almost a total absence of internationally branded properties throughout the regional cities of Russia.
In London & Regional, we have a blue-chip owner; Hilton has enjoyed a long-standing trading relationship with this company that is comprised of highly experienced developers with a strong appetite for growth. With their support, we aim to become the market leading international hotel company in Russia.”
“The Hilton name is a powerfully strong brand and Russia offers tremendous potential as there are 11 major cities with a population of more than 1 million people,” said Ian Livingston of London & Regional. “With the multi-brand approach that Hilton Hotels Corporation now has, the company is able to offer solutions in all travel sectors.”
The development focus in Russia will be in Moscow and St. Petersburg as well as key regional cities. The first hotel expected to be included in the deal will be in the centre of Novosibirsk (Russia’s third largest city) where L&R currently is developing a mixed-use hotel and office project that features a 186-room Doubletree by Hilton. This hotel is expected to open in the second quarter of 2008.
In addition, and separate from this deal, HHC’s first Hilton hotel in Russia will be the 275-room Hilton Moscow Leningradskaya, which opens later this year.
U.K. & Ireland
In the U.K. and Ireland, also is a priority development market for HHC, the company will enter into a preferred development alliance with Shiva Hotels Limited, representing its first U.K. hotel franchise deal with a major property partner. The agreement is expected to result in the addition of at least 15 new hotels and will focus on the following Hilton Family of Hotels: Hilton, Doubletree by Hilton, Hilton Garden Inn and Hampton by Hilton.
Shiva, a privately owned company, is looking to expand its existing interests in the hotel sector and has four hotel sites under development that are expected to be included in this agreement. Two of the new sites will be Hampton by Hilton hotels, representing the brand’s first introduction in the U.K.
Rishi Sachdev, managing director of Shiva hotels, said “I am excited by the opportunity to develop and grow the business in partnership with Hilton, which has a strong, international presence and an excellent reputation. I believe that combining the Hilton family of brands with our development experience and operational expertise is a winning formula.”
The four sites under development are a 350-room Hilton near Heathrow Terminal 5, a 200-room Hilton and a 120-room Hampton Inn by Hilton in Leeds, and a 120-room Hampton by Hilton in Derby.
“The U.K. & Ireland is a very important market for Hilton, given the strength of the economy and our already strong presence with 75 properties,” said Carter. “The introduction of additional brands within the Hilton Family of Hotels for the first time gives us the ability to attract new owners and operate across a number of market segments from luxury to mid-price, appealing to guests at different price points.
“These significant alliances are indicative of how we would like to grow internationally. We aim to make a big impact in each of our core development markets and achieve market leadership across major hotel segments through ventures with large ownership groups.”