Starwood Capital Group is in the process of opening an office in Brazil as it looks to take advantage of the country’s growing hospitality sector.
People familiar with the matter told PERE, the Greenwich, Connecticut-based firm was eyeing Brazilian hotel investments, in terms of catering to a growing and increasingly affluent middle class, and also to developing some high-end hotels in key cities.
The firm is already well-known for its international hotel acquisitions, including the 2005, $3.2 billion purchase of French conglomerate Groupe Taittinger and Société du Louvre, which owns the Baccarat brand and which Starwood founder Barry Sternlicht is hoping to expand into the Baccarat Hotels and Resorts chain.
In trying to break into the Brazil market though, Starwood has faced the challenge of many non-resident private equity real estate firms: finding the right local development partner.
“Starwood is very bullish on Brazil. Starwood is very bullish on the hotel market in Brazil,” the source said, adding that roughly 15 percent of Brazilian hotels were affiliated with chains, and just half of those were affiliated with international chains. “There is a huge opportunity, the question is how to bring that together,” the person added.
Starwood closed its $965 million Starwood Capital Hospitality Fund II earlier year, with managing director Rich Gomel telling New York University’s International Hospitality Investment Conference last week that the firm had deployed around 20 percent of the fund in the past year – with three-quarters of the equity directed at debt deals.
He added the equity had largely been invested internationally to date but that more attention would now be focused on the US. “There’s certainly anticipation that there is going to be more distressed deals coming,” Gomel said. Starwood is believed to be eyeing Brazil hotel investments through its Hospitality Fund II.