- The Washington Times - Wednesday, February 14, 2001

Marriott International Inc. has joined forces with Italian jeweler Bulgari SpA to build a new luxury hotel brand called Bvlgari Hotel & Resorts.

The joint-venture company announced yesterday it is already considering sites in Rome, London, Paris, New York, Southern California and island resort destinations.

The first two hotels targeting an elite market are expected to open in 2003. After five years the hotel portfolio, including real estate, will be worth an estimated $800 million.

"This is clearly a niche," said Mike Jannini, executive vice president of brand management for Marriott International. "Bulgari's brand is really the leader here. Marriott's [management] brings it to life."

The Italian jeweler, which has ritzy boutiques in select markets around the world, is now extending its well-established brand into a line of hotels hoping to attract the same clientele that buys its jewelry. And the company is banking on Bethesda, Md.-based Marriott's hotel expertise to make it happen.

"Marriott is good at brand management," said Jim Sullivan, managing director and senior real estate analyst at Prudential Securities Inc. in New York.

Bvlgari Hotels & Resorts joins a handful of brands under Marriott's lodging umbrella that already includes such names as Renaissance, Courtyard, Fairfield Inn, Residence Inn and Ramada International, to name a few.

The Bvlgari chain will be managed by Marriott's newly formed Luxury Group division, which is also handling its Ritz-Carlton brand. The two chains, however, won't be in competition because Ritz-Carlton serves a much broader upscale customer.

Ritz-Carlton also has a different expansion strategy with 38 properties already opened and more on the way. Bvlgari Hotels & Resorts has no intention of growing to a massive size. It will remain a small chain with only about a dozen locations, Mr. Jannini said.

The luxury high-end hotel industry has only a few major players like Ritz-Carlton, Four Seasons and St. Regis, as well as some independent hotels in Europe.

"The marketplace for high-end hotels is limited," Mr. Sullivan said. "You can't go everywhere with these brands."

Bvlgari Hotels, with its contemporary Italian flair, will have about 200 rooms. That's much smaller than Marriott's Ritz-Carlton hotels, which can have as many as 400 rooms. Bvlgari's room rates will depend on the market, but will hit the top tier in pricing. Other luxury hotel rooms can charge about $300 and more for a room.

Marriott and Bulgari will equally contribute to the new venture both shelling out $3 million in startup costs. The companies have agreed to invest as much as $140 million in equity and debt over seven years.

"Our relationship with Bulgari creates fresh opportunities for Marriott International to grow strategically," J.W. Marriott Jr., chairman and chief executive, said in a statement. "We believe hotel investors will also find the brand appealing and will seek to add it to their growth portfolio."

For now, Marriott's Luxury Group will focus on its Atlanta-based Ritz-Carlton brand and the start of the new Bvlgari hotels, but the company is willing to explore other luxury brands, Mr. Jannini said.

"We're open to more opportunities if they fit our strategy," he said. "But we're not on the hunt."

Marriott currently operates or franchises more than 2,200 hotels and resorts worldwide with sales of $19.8 billion last year.

Marriott shares, trading on the New York Stock Exchange, were up 23 cents yesterday, closing at $44.75.

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