LOS ANGELES (Reuters) - U.S. hotel operators and online travel agencies have set their sights on Europe as opportunities for domestic growth begin to slow.
"Europe is a big opportunity because it is the biggest lodging market in the world," Arne Sorenson, chief financial officer at Marriott International Inc. (MAR.N: Quote, Profile, Research, Stock Buzz), said at the Reuters Hotels and Casinos Summit.
"We are much less penetrated in Europe than we are in the U.S.," he said, adding that Marriott's growth in the region this year will run at roughly 7 percent to 8 percent, compared with a projected 5 percent worldwide.
The challenges are that Western European economies tend to be slow and there are relatively few new hotels being built.
As a result, the greatest opportunity for a company like Marriott comes from the rebranding of existing, often old, European hotels, most of which are owned independently, Sorenson said.
"Some of these properties may not brand well -- they have been owned by one family for a 100 years, or have no air conditioning or safety standards," he said.
Matthew Hart, president and chief operating officer at competitor Hilton Hotels Corp. HLT.N, also said there is good opportunity in continental Europe for hotel brand conversions.
"I just don't think that if you are a small chain or an individual you can compete. In the lodging business, bigger really is better," he said.
Hilton expects to close this month its $5.7 acquisition of British namesake Hilton Group Plc HG.L, which will open the door to overseas expansion of its successful U.S.-based brands like Embassy Suites and Hampton Inn.
"The timing is good. Business in the U.K. and Scandinavian countries is strong and it is picking up in other parts of Europe," Hart said.
Sorenson said he expected little immediate impact from the Hilton deal. "As far as customers are concerned. the (Hilton) brand was already merged ... the launch of brands like Embassy Suites and Hampton Inns will take time to have much of an impact," the Marriott CFO said.
Sorenson said Marriott's focus is on its Marriott, Ritz-Carlton, Renaissance and Courtyard brands for Europe.
Hilton plans to hold a meeting in Paris during the first week of March to talk about international opportunities.
"We are not just getting started from scratch here," Hart said, noting that Hilton Group has already been working with companies that could be likely candidates.
Online travel agencies, which have seen their share of U.S. hotel room sales drop sharply as hotel operators act to drive most of that business to their own Web sites, are also looking to expand in Europe. Continued...
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