LONDON (Bloomberg) — Bulgari SpA, the Italian company known for its jewelry, and U.S. hotel operator Marriott International Inc. said they will invest about $140 million to develop a luxury hotel chain.
Bulgari Hotels & Resorts, a joint venture with the largest U.S. hotel company's luxury unit, is considering possible hotel and resort sites in London, Rome, Paris, New York, Miami and Southern California. The companies will invest about $70 million each in equity and debt over a seven-year period, Marriott said.
Marriott will manage the hotels through its luxury division, which also runs its Ritz-Carlton hotel chain. The hotels will feature Italian design, furnishings and food. The first two hotels will open in 2003, the companies said.
"We bring to it the hotel expertise, and they bring to it the expertise of designing their brand," said Arne Sorenson, Marriott's chief financial officer.
The Italian company said it would provide 65 percent of the equity in the venture and Marriott 35 percent. Marriott will provide 65 percent of the loans and Bulgari the rest. Who would eventually buy the hotels will be decided on a "case by case basis," Sorenson said.
Analyst Gian-Luca Manca of HSBC in London said the venture could drag down Bulgari's shares as the company expands its brand beyond boutiques and other retail outlets. Before today, they had risen 27 percent in a year.
Bethesda, Maryland-based Marriott said the new hotels would appeal to a different level of customer than its namesake hotels and other chains such as Fairfield Inn.
Like its Ritz-Carlton chain, the Bulgari hotels won't be marketed through the Marriott Rewards loyalty program. Most of the Bulgari hotels will have 100 to 200 rooms, smaller than the Ritz-Carltons, which can have as many as 350 rooms, Sorenson said.
"This is a very top of the market luxury chain, with a different style than anything in our portfolio," said Sorenson.
The hotel portfolio will be worth about $800 million in five years, Bulgari said.
The board of Bulgari Hotels will have "an equal mix of senior Bulgari and Marriott representatives," the statement said.