IFC Hotel Industry

1. DEVELOPING TOURISM
AND BUSINESS
INFRASTRUCTURE
ENHANCING ECONOMIC GROWTH
IN EMERGING MARKETS

2. What We Offer
IFC, a member of the World Bank Group, is the
largest multilateral source of loans and equity
finance for private enterprises in emerging
markets.
We offer clients the strength of our $11 billion
net worth, global focus, local presence, and
industry expertise.
• Long-term financing that might not be
available in local markets, tailored to meet
the client’s cash flow needs on commercially
reasonable terms:
– Equity and quasi-equity investments in
individual hotels or hotel companies to
support expansion plans or strengthen
balance sheets
– Long-term debt with tenors of up to 15
years, from IFC’s own account or through
loan participations
– Local currency financing, either directly or
through partial credit guarantees in selected
markets
• Advisory services that encourage best practice
in such areas as HIV/AIDS, energy efficiency,
local supply chain development, and
environmental protection
– Assistance in developing local supply
chains that benefit our clients and local
entrepreneurs
– Leadership in sustainability to help raise
environmental and social standards, enhance
the client’s brand, and mitigate risks such as
fire and life safety for employees and
customers
HOTELS: ENHANCING ECONOMIC GROWTH IN EMERGING MARKETS
HOTELS: ENHANCING ECONOMIC GROWTH IN
EMERGING MARKETS
Since 1956, IFC has invested over $2 billion in 220 hotel
projects in more than 80 countries. Hotels play an important
role in the development of many IFC client countries, as
they catalyze tourism and business infrastructure.
Hotels bring great potential for job creation, growth in tax revenues, improvements
in foreign exchange earnings, and opportunities for related smaller businesses.
This ability to facilitate local, regional, and national economic growth, thus helping
reduce poverty, is the reason IFC is deeply committed to the industry. Our commitment
extends to environmental protection and cultural preservation, with investments in
hotels that complement unique natural habitats and enhance the attractiveness of
historically significant sites.

3. IFC’s Track Record
Our investments in the hotel sector span the
globe, supporting city center and airport hotels
that contribute to business infrastructure, as
well as tourist hotels and resorts, including
eco-tourism and all-inclusive properties. We also
support historic and environmental preservation
tourism projects that encourage redevelopment
of historic buildings and preservation of historic
sites. In addition, we invest in mixed-use facilities,
such as hotels combined with shopping centers,
office towers, and residences. Our partners
include leading domestic and international
investors and companies, such as Occidental,
Orient Express Hotels, TPS Serena, Shangri-La,
the Marriott Group, Starwood, and the
Inter-Continental Group.
Impact on the Ground
As a development bank, with a mission to
promote private sector growth and job creation
in the developing world, IFC helps clients
understand the business case for social and
environmental responsibility: lower costs, less
political risk, better community relations, higher
productivity, and brand enhancement.
IFC’s hotel investments:
• Create thousands of jobs, directly and indirectly
• Generate government revenue, contributing
funds for critical infrastructure and
improvements to health, social welfare, and
education
• Support the market for business travel:
more hotel, retail, and conference capacity
attracts business meetings, increasing business
opportunities in a country and revenue for
local small businesses
• Improve economic opportunity for small local
suppliers, such as farmers, through supply chain
linkages
• Generate foreign exchange
• Improve sustainable access to natural and
cultural heritage sites
TOURISM AND
POVERTY REDUCTION
The latest research from the
World Travel and Tourism Council
suggests that the travel and
tourism industry generates
234 million direct and indirect
jobs worldwide, contributes
over 10 percent of global GDP,
and accounts for a third of all
international trade in services.
International visitors spend close
to $900 billion on goods and
services annually, with tourism-
related inflows often the primary
source of foreign exchange in
many developing countries.
Tourists spend more than $200
billion annually in emerging
market nations.
No other sector spreads wealth
and jobs across poor countries in
the same way as tourism: statistics
indicate that 1 in 12 jobs globally
is related to travel and tourism.

4. IFC’S EXPERTISE
IFC’s hotel sector
expertise, local and
regional knowledge,
and leadership in
sustainability offer
significant value to our
clients in addition to
our full suite of financial
products.
Through a network of industry contacts,
we facilitate hotel investments in our
client countries, including investments
between emerging market nations
and in countries where the business
environment can be challenging.
Creating Long-Term Partnerships with
Global and Regional Players
IFC works with both emerging and well-
established hotel chains and hospitality firms with
strong track records. We focus on investments
that help such firms grow more broadly, and that
encourage more activity in emerging markets.
Grupo Posadas –
An Emerging Hotel Chain
IFC first invested in Grupo Posadas in 1992 when
the chain operated 31 hotels and was seeking to
expand rapidly to meet market demand. Over the
years, IFC has provided a total of $155 million in
three separate investments, including $80 million
in loan participations. Posadas is now one of the
largest hotel chains in Mexico and has expanded
into South America. IFC’s investments covered
construction of new properties, refurbishment
of existing hotels, and the group’s acquisition of
the Caesar Park Group, operating in Argentina
and Brazil. In addition to providing financing,
IFC helped the company adopt improved fire
and life safety standards. IFC’s early participation
also increased the profile of the company and
allowed it to secure long-term funds from U.S.
institutional investors. The chain now operates
98 hotels.
IFC Role/Additionality
• Long-term financing to expand operations in
Mexico and South America
• Better access to international capital markets
• Adoption of improved life and fire safety
standards
HOTELS: ENHANCING ECONOMIC GROWTH IN EMERGING MARKETS
CEASAR PARK IPANEMA, BRAZIL

5. TPS – Hotels as a Foundation for
Economic Growth
Tourism Promotion Services, an organisation of
the Aga Khan Fund for Economic Development,
manages a franchise of 28 hotels under the
Serena brand name, located in Afghanistan,
Kenya, Mozambique, Pakistan, Rwanda,
Tanzania, and Uganda. In its efforts to develop
tourism potential, particularly in regions with
poor supply of accommodations, TPS first began
working with IFC in the 1970s with investments in
Kenya, and in the 1990s in Tanzania.
In 2005, IFC supported the restructuring and
listing of the TPS companies in East Africa into a
consolidated entity, TPS Eastern Africa Limited,
by converting our equity and subordinated loans
in individual projects into common equity in the
newly created company. In 2004, IFC provided
a quasi-equity instrument to TPS Afghanistan
Limited to help renovate and expand the historic
Kabul Hotel.
In 2007, IFC invested equity in TPS Pakistan
Limited (TPSP), which owns and operates hotels
across Pakistan. TPSP is expanding its hotel
operations and entering the commercial real
estate business to take advantage of higher
demand and limited availability of hotel rooms
and office space. IFC’s investment is helping the
company expand its Serena Islamabad hotel
and develop an office tower on adjacent land,
doubling the capacity of the existing hotel and
raising standards for office space in the city.
IFC Role/Additionality
• Provision of long-term capital to support hotel
expansion and office development
• Advice to enhance the Corporate Governance
practices as the company prepares to go public
• Compliance with World Bank Group
environmental and social guidelines, including
fire and life safety standards
Orient Express Hotels –
Moving into Emerging Markets
IFC first invested with OEH in a joint venture in
Peru in 2000. That investment supported the
refurbishment of the Machu Picchu Sanctuary
Lodge and Hotel Monasterio, a 16th century
converted Spanish monastery in Cusco.
To strengthen the community benefits from this
investment, IFC subsequently provided advisory
services, continuing the work started by
Orient-Express with local food producers and
service providers, to improve quality and
production methods so that they could become
a key supplier for the hotel. The results of this
pilot project prompted the company to design
a more comprehensive project to forge additional
local partnerships.
In 2004, IFC established a $50 million debt facility
to help Orient Express Hotels expand strategically
in emerging markets. Resulting investments
include the Miraflores Park Hotel in Lima, Peru;
the acquisition of the Grand Hotel Europa
in St. Petersburg, Russia; and acquisition and
renovation of the Casa Sierra Nevada Hotel in San
Miguel de Allende, Mexico. In 2007, IFC approved
another investment in Peru Orient Express
Hotels (POEH) joint venture company to support
further expansion and the development of new
destinations in Peru.
IFC Role/Additionality
• Long-term financing to support expansion into
emerging markets
• Assistance in developing supply chains.
MONASTERIO HOTEL, PERU
SERENA ISLAMABAD HOTEL, PAKISTAN

6. Occidental Hotels and Resorts:
A Long-Term Commitment
Occidental Hotels and Resorts is a midsize Spanish
hotel company with most of its operations in
Mexico, Central America, and the Caribbean.
IFC first began working with the company in
1993, providing a $6.7 million loan to a subsidiary
to finance expansion and renovation of the
Flamenco Playa resort in Puerto Plata, Dominican
Republic. This was followed by a $35.7 million
investment package in 1998, which included
loan participations, for Occidental’s 877-room
Flamenco Bavaro Hotel in Punta Cana, Dominican
Republic.
Following the slowdown in the tourism industry
in 2001, IFC provided $10 million in equity
and $70 million in long-term loans (including
loan participations) for Occidental’s Mexican
subsidiaries to support the company’s financial
restructuring plan. This support was extended to
three hotels in the Dominican Republic in 2005,
with IFC providing $70 million in long-term loans,
including $30 million from IFC’s own account to
better match anticipated cash flows with debt
repayments.
IFC Role/Additionality
• Long-term financing to develop new
destinations and to support financial
restructuring efforts
• Complementary infrastructure investments to
support tourism development in the country
HOTELS: ENHANCING ECONOMIC GROWTH IN EMERGING MARKETS
While IFC’s support helped ensure
the continued success of a midsize
hotel chain in Mexico and the
Caribbean, IFC’s investments in the
Dominican Republic with Occidental
and others also highlight our
approach in supporting the overall
development of a country’s tourism
industry. Here tourism has been
a key part of an overall strategy
to reduce poverty for over two
decades. Benefits to the country
have included a reduction in the
overall unemployment rate, an
increase in foreign exchange and
tax revenues, and strong linkages
with the rest of the economy. In
addition to Occidental, IFC invested
in Melia Bavaro, one of the first
properties developed in the Punta
Cana area.IFC has also made other
investments to support tourism
development in the country,
including a power project in Punta
Cana, airport concessions, a cruise
port, and a toll road connecting a
key airport to pristine beaches on
the Samaná peninsula.
FLAMENCO
BAVARO HOTEL,
PUNTA CANA,
DOMINICAN REPUBLIC

7. IFC Investments in Business Hotels:
Key Infrastructure for Growth
IFC supports city center and airport hotel
developments because of their positive impact
on business infrastructure. International standard
hotels are a prerequisite for accommodating
potential investors and are thus an essential
element of economic growth in any developing
country. A number of IFC’s investments have
provided support to the first hotels in emerging
business destinations, including the Polana Hotel
in Maputo, Mozambique; the Metropole in Hanoi,
Vietnam; and the Grand Hotel in Skopje, FYR
Macedonia. Similarly, IFC’s support for mixed-use
facilities, which can include hotels, conference
centers, commercial, residential, and retail
components, often plays a key role in developing
the business infrastructure in cities and towns in
IFC’s member countries.
Marriott Courtyard – Meeting Affordable
Mid-tier Business Needs
Caribe Hospitality, a locally owned hotel company
focusing on Central America and the Caribbean,
is developing mid-tier business hotels under the
Marriott Courtyard and Residence Inn brand
names.
While most major cities in the region are well
stocked with four-to five-star hotels, Caribe
Hospitality’s business model addresses a shortage
of mid-tier hotel rooms, especially for business
people, a growing segment of travelers across
Central America and the Caribbean. The company
is seizing opportunities in this undersupplied
market by developing smaller (100-150 room)
business hotels that, once completed, are
managed by Marriott.
Caribe Hospitality contributes to business
infrastructure in Central America and the
Caribbean by building affordable hotels in
cities where there is an acute need for such
accommodation. The company follow Marriott’s
international best practices to develop and
operate its properties. Relying on local contractors
and suppliers, while creating jobs, Caribe
Hospitality’s hotels establish strong links with
the local economies. The company is also a
good example of a Central American sponsor
expanding in the larger region by investing in the
Caribbean’s island economies.
Caribe Hospitality built its first Marriott Courtyard
in Costa Rica in 2001, followed by hotels in
Trinidad and Tobago, Dominican Republic, and
El Salvador. IFC partly financed the development
of the Trinidad and Tobago property in 2004, with
a $3.8 million loan. In 2007, IFC committed a new
$28 million debt and equity corporate financing
package to Caribe Hospitality to build up to six
new hotels.
IFC Role/Additionality:
• Equity financing for new investments is in short
supply for Central American sponsors
• Provision of debt with tailored grace and
repayment periods for each planned property to
suit differing market conditions
• IFC’s 2007 investment is structured as a facility
covering several hotel properties
• Provision of valuable technical advice to improve
the project’s long-term viability, as well as
address downside risks
KABUL SERENA, AFGHANISTAN
MARRIOTT COURTYARD, TRINIDAD

8. Panari: Meeting Business and
Tourist Demand in Kenya
Safaris are not the only reason visitors travel to
Kenya. Today, business people and safari-bound
travelers alike are meeting at the Panari Center
in Nairobi. Panari Center Limited (“Panari”) is
a Kenyan company operating a multipurpose
complex, with a 137-room hotel, shopping
mall, ice-skating rink, two movie theatres, and
a conference center. Panari, Nairobi’s first hotel
investment in more than a decade, benefits from
a convenient location near the city’s industrial
area and Nairobi International Airport, the most
important regional hub in East Africa.
IFC Role/Additionality
• $7.3 million in long-term loans to support the
start-up phase and implementation of life and
fire safety upgrades.
• Advice to enhance their corporate governance
practices and internal controls
• Support for implementation of an HIV/AIDS
prevention program.
Park Hyatt Baku:
A Mixed-Use Development
IFC provided a $17.5 million loan to support the
expansion of hotel and office facilities in Baku,
Azerbaijan, with the construction of a five-star
Park Hyatt Hotel and an office tower complex.
The expansion addresses growing demand from
the business community for hotel rooms, long-
term accommodation, and office space in the
country’s capital.
IFC Role/Additionality
• Long-term financing to attract the business
community to help diversify Azerbaijan
• Improvements in life and fire safety design
The Settha Palace, Laos: Updating a
Unique Historic Property
A small, historic hotel in Laos remains true to its
1930s-era French colonial architecture, but with
decidedly up-to-date amenities. In the 1990s, the
Settha Palace hotel had fallen into disrepair after
years of neglect. After a family-owned company
bought the hotel in 1997, extensive renovation
and refurbishment restored it to its original glory,
attracting increased visitors as Laos opens up to
international travel. Today, this gem of a hotel is
consistently rated among the top-quality hotels
in the country: “The Settha is perhaps the most
charming of its colonial brethren,” raves Forbes
Global Magazine.
IFC Role/Additionality:
• $1.5 million loan for renovation of the 29-
room hotel in Vientiane in 1997, the first IFC
investment in the country
• Refurbishment included use of local materials
and suppliers
HOTELS: ENHANCING ECONOMIC GROWTH IN EMERGING MARKETS
PARK HYATT BAKU, AZERBAIJAN
SETTHA PALACE, LAOS

9. SUPPORTING TOURISM
DESTINATIONS
In some less developed
countries, there are few
business opportunities
apart from the tourist
trade.
IFC’s investments in resorts and tourist
hotels encourage increased arrivals and
spending in local economies, while often
raising quality standards. Hotel and
resort investments can also encourage
improvements in infrastructure and public
services.
At the same time, IFC targets investments
that contribute to environmental and
social sustainability, including the
protection and preservation of local
heritage. Our projects have helped
restore historically significant buildings
and improved access to environmentally
sensitive areas.
Amankora Resorts, Bhutan: Guest Lodges
Launch International Tourism
Bhutan appeals to world travelers seeking exotic
locations and unique habitats. However, limited
hospitality infrastructure has prevented the country
from taking advantage of its natural beauty to
attract the tourist trade. Amankora Resorts helped
address this need in 2003, beginning construction
of the first of six guest lodges in rural areas,
eventually resulting in the creation of 300 jobs.
These developments have also stimulated an arts
community, as local craftspeople, artisans, and
performers benefit from tourist spending. Once all
six lodges are complete, guests will enjoy trekking
tours across Bhutan that include stays at each
lodge. Located in the valleys of Bumthang, Gangte,
Paro, Punakha, Thimpu and Trongsa, each lodge
features a distinct geography, habitat, and climate.
Treks begin with blessings from local monks for
safe journeys. Lodges are built in an ecofriendly
manner, and the tours are designed to minimize
the impact on the environment.
IFC Role/Additionality:
• $10 million investment – IFC’s first in Bhutan
• IFC’s environmental standards encourage
construction of individual sewage treatment
plants in hotels as appropriate
AMANKORA RESORT, BHUTAN

10. OUR APPROACH
IFC supports hotel projects
and companies that are
commercially viable, have
a positive development
impact, and fit with the
country’s needs and
tourism priorities.
IFC seeks to partner with strong, stable firms that
have a good understanding of local and regional
markets and that seek our support to invest in
emerging markets.
We seek firms with good track record and
strong commitment to transparent corporate
governance, social responsibility, and
environmental sustainability.
Our partnerships in the hotel
sector include:
• High-quality local, regional, and global hotel
companies: owner-operated firms or regional
chains and franchises of global management
companies that are interested in new
construction, refurbishment, and acquisition
investments, or in strengthening their
balance sheet
• Clients seeking corporate-level, multiproject
financing: those bringing domestic, regional,
or global diversity of properties, by type and
location
• Single asset investments in locations that
lack quality hotels or that investors consider
a higher risk
• Selective equity investments where there is
potential upside and a viable exit
• Mixed-use developments, including retail,
office buildings, or residential components,
in addition to hotels
HOTELS: ENHANCING ECONOMIC GROWTH IN EMERGING MARKETS

11. IFC’S ADVISORY SERVICES AT WORK: PROTECTING
PRECIOUS CULTURAL AND NATURAL ASSETS
IFC brings added value beyond the financing we
offer. Our experts help hotel clients in diverse ways,
ranging from exploring new approaches to preserving
endangered natural wonders and historically significant
architectural sites, to increasing the economic impact of
tourism, to improving energy and water conservation.
CORAL REEF RECOVERY IN THE MALDIVES:
The increase in ocean temperatures as a
result of El Niño have decimated coral reefs
that attracted thousands of international
tourists to this scenic island chain in the
Indian Ocean. In 1998 IFC’s advisory team
investigated and provided state-of-the-art
techniques for accelerating recovery and
protection of the fragile coral reefs. IFC’s
hotel clients in the Maldives, Taj MPL and
Villa Hotels, supported the work as well.
IMPROVING ENERGY AND WATER
EFFICIENCY:
IFC advises clients on ways to reduce
energy and water costs and become more
sustainable. We can use reimbursable
grants to defray the costs of an energy
and water audit, engaging internationally
recognized consultants to do such work.
In instances where these operational costs
are well above industry benchmarks,
the audit may identify significant
opportunities for cost savings. For
example, an energy audit for SMPH, a
hotel company active in Mali and Burkina
Faso, identified cost savings of 25 percent,
equivalent to 10 percent of the firm’s
annual profits.
TAJ EXOTICA, SOUTH MALE ATOLL, MALDIVES
SMPH, MALI

12. ® 2007 INTERNATIONAL FINANCE CORPORATION
2121 Pennsylvania Avenue, N.W.
Washington, D.C. 20433 U.S.A.
Telephone: 202 473-1000
Facsimile: 202 974-4384
Internet: www.ifc.org
Printed on material that meets international
environmental standards and is from sustainably
managed commercial forests.
HOTELS: ENHANCING ECONOMIC GROWTH IN EMERGING MARKETS
World 1%
Africa 37%
Southern
Europe and
Central Asia
10%
Middle East
11%
Latin America and
Caribbean
19%
East
Asia
12%
South Asia 5%
Eastern Europe 5%
IFC’S Hotel Investments
No. of Projects
IFC’S Hotel Investments
US$ million
World
10%
Africa
12%
Eastern
Europe
7%
Latin America
and
Caribbean
24%
Middle East
14%
South Asia 5%
East
Asia
17%
Southern Europe
and Central Asia
11%
For further information, please contact:
Henrik Elschner Pedersen 1-202-458-7807, or hpedersen@ifc.org
Lukas Casey 1-202-458-9418, or lcasey@ifc.org
Carolyn Cain 1-202-473-8843, or ccain@ifc.org
IFC’S HOTEL INVESTMENTS
As of June 30, 2007, IFC has invested over
$2 billion in more than 220 projects
across all developing regions: