And the Last Shall Be First.

Can Marriott dominate the region with a catch-up strategy?

MARRIOTT INERNATIONAL USED TO play it safe in Latin America.

For decades the world's fourth-largest hotel group allowed competitors like Inter-Continental, Sol Melia, Hilton and Hyatt to blaze through the region. As they did, Marriott watched them ride out devaluations, economic crises, political upheaval and plunges in tourism traffic. In recent years, it has also watched them open a rush of new hotels amid strong sales growth.

Gone are the days of caution.

The hotel chain that tiptoed into Mexico in 1990 with its CasaMagna resorts in Cancun and Puerto Vallarta is now off and running. By the close of 2002, some 25 properties in Mexico, Central and South America will bear the Marriott standard or its other brand names: Renaissance, Courtyard, Residence Inn and Ramada.

Even so, it's a catch-up game. British competitor Bass Hotel & Resorts, the region's leader, boasts 20 Inter-Continental hotels in Central and South America, as well as five bearing its Crowne Plaza name and 20 Holiday Inns. Last year; 10 Holiday Inns--worth US$150 million in investment--opened in the region and 11 more are planned, mostly for Argentina and Chile, by 2005.

Spanish hotel group Sol Melia, meanwhile, has 42 properties in Latin America, including one unveiled in Lima in August.

Marriott also added a Lima hotel to its roster last year, along with a property in Santiago. Construction on five more hotels in Rio de Janeiro, Costa do Sauipe, Cancun and Mexico City will be completed this year. In the first three quarters of 2000, Latin American sales were up nearly 16%, to $6.9 billion, with net income of $330 million. That compares to sales of $5.9 billion and income of $310 million during the same period of 1999.

"To open something like 15 hotels in Latin America in less than 10 years is nothing less than a miracle. They really have been aggressive," says Scott Berman, a partner in the hospitality and leisure consulting group of PricewaterhouseCoopers.

In the 1990s, Marriott entered Latin America as business travelers flooded the region in response to new trade and investment--fueled by privatizations, trade agreements like Nafta and Mercosur and a burst of airline start-ups that made it easier to fly to such countries as Brazil, Argentina, Chile and Peru. As the demand for first class hotels has increased, so has the availability of investment funds.

"We see tremendous opportunity throughout Latin America and are actively looking for the right partners and investors," Ed Fuller, president and managing director of international lodging for Marriott, said in announcing fast-track expansion in 2000. Marriott manages, rather than owns, most of the properties carrying its name, reducing its risk. Still, while competitors years earlier embraced Latin America like a marriage, for better or for worse, Marriott had waited.

Chuck Kelley, Marriott's senior vice president for the Latin America and Caribbean region, says the 74-year-old company simply was concentrating on other parts of the world. "We formed the Latin America and Caribbean region and put some regional management into it in 1994. At that point we had five hotels. Then we opened in Argentina" (in 1994), he says. "That was the beginning of a focused effort."

Adds analyst Berman: "The development of a hotel in Latin America takes as long as three years. When you see a hotel opening in 1998, that may mean that discussions began in 1995. Marriott's interest began well into the early '90s."

Marriott is a smart company. It subscribed early to the value of Internet procurement systems and, last May, teamed with rivals--including Bass and Hyatt--to set up a hotel supply company. It has embraced partnerships in other ways, too. Marriott hotel stays earn points for both the Mexicana Airlines frequent flier program and for Latin Pass.

Should Marriott be worried about casting caution to the wind in Latin America?

"This region was so supply-starved that there's room for competition," Berman says. "Marriott's not going to have any difficulty at all."

MARRIOTT IN LATIN AMERICA                                    YEAR
Argentina                 Mendoza Marriott                   2002
                          Courtyard by Marriott Buenos Aires 1999
                          Marriott Buenos Aires Plaza        1994
Brazil                    Rio de Janeiro Marriott            2001
                          Costa do Sauipe Marriott           2001
                          Renaissance Costa do Sauipe        2001
                          Renaissance Sao Paulo              1997
Chile                     Santiago Marriott                  2000
Costa Rica                Los Suenos Marriott                1999
                          Costa Rica Marriott                1996
Ecuador                   JW Marriott Quito                  1999
El Salvador               San Salvador Marriott              1999
Guatemala                 Guatemala City Marriott            1998
                          Ramada Hotel Conquistador          1992
Mexico                    JW Marriott Cancun                 2001
                          Renaissance Mexico City            2001
                          Courtyard by Marriott Monterrey    1999
                          Mexico City International Airport  1996
                          JW Marriott Mexico City            1996
                          Residence Inn Real del Mar         1995
                          CasaMagna Marriott Cancun          1990
                          CasaMagna Marriott Puerto Vallarta 1990
Panama                    Panama City Marriott               1999
Peru                      Lima Marriott                      2000
Venezuela                 JW Marriott Caracas                2002