BHG, Operadora hoteleira brasileira, planeja abrir um sistema de franquias

By Luciana Magalhaes

Of DOW JONES NEWSWIRES

SAO PAULO (Dow Jones)–Hotel operator BHG SA-Brazil Hospitality Group (BHGR3.BR, BZHGY), the third-largest hotel chain in Brazil, plans to diversify by expanding into neighboring countries and by starting a franchising system for local investors.

According to the company‘s Chief Executive Pieter van Voorst Vader, the franchising model is currently under development and should require initial investments of between 8 million Brazilian reais ($4.65 million) and BRL12 million per hotel franchise, according to preliminary studies. “This is a way to expand to a growing number of cities in Brazil,” he said in an interview.

BHG is Brazil‘s only publicly traded hotel operator, and is controlled by GP Investments, a leading private equity firm in Latin America.

So far, it has been growing through a mix of acquisitions and new projects. The company currently has 45 hotels with 8,306 rooms throughout Brazil, including 21 hotels it owns and 24 it manages. It operates under the brands Tulip Inn, Golden Tulip, Royal Tulip and others.

The company has not yet decided which brand will be used under the franchise system.

BHG is seeking to become the leading hotel company in Latin America, a task that requires large investments to surpass bigger rivals Accor SA (AC.FR) and Atlantica Hotels, Vader said. The company is actively looking for acquisitions and plans to expand operations throughout the region, but mainly in Argentina, Chile and Colombia, he said.

Vader said that one of BHG‘s biggest challenges is the cost of capital in Brazil. So far it has financed growth with its own capital and through structured-finance products based on accounts receivable, designed for the real-estate industry. It has also been using its access to BNDES, Brazil‘s government-run development bank, to finance up to 60% of new projects and renovations.

The hotel market in Brazil is fragmented, Vader said, but assets can be expensive, he added. Among other acquisitions, in 2010 BHG bought Rio de Janeiro‘s Hotel Intercontinental for an undisclosed amount, and in 2011 it bought the Rio Palace Hotel under the Sofitel brand name.

The company‘s planned capital expenditures for 2012 are around BRL50 million, but half of that will go to renovations at the Intercontinental. Vader did not disclose the amount set aside for acquisitions.

While the company should benefit from upcoming events such as the 2014 World Soccer Cup and the Rio de Janeiro Olympic Games in 2016, its expansion strategy is not targeting events like these. BHG focuses mainly on business tourism and 80% to 90% of its clients are Brazilians.

BHG currently aims to add around 1,500 hotel rooms every year to its chain, between fully and partially owned and third-party properties.

According to estimates by Espirito Santo Investment Bank, released in November, BHG‘s net revenue in 2011 should be about BRL168.7 million, up from BRL123.7 million in 2010.

-By Luciana Magalhaes, Dow Jones Newswires; 55-11-3544-7072; luciana.magalhaes@dowjones.com

(END) Dow Jones Newswires February 16, 2012 14:12 ET (19:12 GMT) Copyright (c) 2012 Dow Jones & Company, Inc.