Marriott Sees Strong Growth in Mexico as Business, Tourism Increase

By Dow Jones Business News,  April 23, 2013, 12:18:00 PM EDT

--Marriott plans to double hotels in Mexico by 2017

--Executive says growth to be spurred by increased business activity and tourism

--Marriott currently has 76 hotels in Latin America

By Ryan Dube

LIMA, Peru--Marriott International Inc ( MAR ), the U.S.-based hotel chain, said Tuesday that Mexico could provide one of the best opportunities for growth in Latin America over the next few years thanks to an increase in business activity and tourism.

Marriott currently has 22 hotels in Mexico, and it plans to double that number by 2017, said Craig Smith, the company's regional president for Latin America and the Caribbean.

"You've got a lot of great things going on in Mexico," Mr. Smith said in an interview. "A lot of factories are moving back to Mexico from parts of Asia just because labor costs in Asia have gone up and...it is closer to the United States so transport costs are down."

Mr. Smith said that Marriott is also seeing more American tourists traveling to its resorts in Mexico. "Americans are traveling again," he said. "These markets are coming back."

Mexico's economy grew 3.9% in 2012 and is expected to gain about 3.4% this year, according to a recent report by the International Monetary Fund.

Marriott has doubled its number of hotels in the region during the last 10 years. The company currently has 76 hotels in 25 countries in Latin America and the Caribbean. It plans to double the current number of hotels again by 2017.

Mr. Smith said that Marriott still sees strong growth opportunities in Brazil despite a recent slowdown in that country's economy. Brazil grew a slight 0.9% in 2012, its slowest rate of growth in three years. The IMF forecasts that Brazil's economy will expand by 3.0% this year.

"There is a good demand for international brands [in Brazil]," Mr. Smith said, who is in Peru to take part in the World Economic Forum's annual meeting on Latin America.

While Brazil will host the 2014 World Cup and the 2016 Summer Olympics, Mr. Smith said the games aren't expected to be a major boost for the country's hotel industry. Instead they will help the sector through improved infrastructure, which Mr. Smith said is one of the main challenges for hotels in Latin America.

"People always mistake that the Olympics are going to bring a lot of money to hotels but it really doesn't," he said. "After the Olympics and World Cup you have no more tourism because people have seen it on TV."

Marriott is also planning to build new hotels in other fast-growing Latin American countries. The company added its second hotel in Peru last year and plans to open up two new hotels in the country's capital of Lima in 2014, Mr. Smith said.