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Bulgari, Marriott ink tie
February 13, 2001: 11:15 a.m. ET

Head of Italian luxury goods firm says new hotel venture will boost profits
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LONDON (CNN) - Bulgari's chief told CNN on Tuesday the Italian luxury goods firm's new joint venture with Marriott International hotels would enhance earnings.

Chief Executive Francesco Trapani also said Bulgari was not looking to merge with a larger company, but would be interested in growth-boosting acquisitions.

Bulgari and Marriott (MAR: Research, Estimates) said over the next seven years they will invest equal parts for a total of about $140 million in debt and equity into the luxury hotels business to be called Bulgari Hotels & Resorts.

The companies plan to develop up to seven hotels initially and are considering locations in London, Rome, Paris, New York, Miami, Southern California and island resort destinations.

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"We want to enhance the Bulgari brand on the one side and on the other side increase shareholders' value," Trapani told CNN.

"It's going to be a profitable operation," he said.

But investors were less than impressed, sending Bulgari shares down 4.9 percent to graphic11.34 in Milan afternoon trade. Marriott shares were up 0.4 percent at $44.71 in early New York trade.

The real estate of the venture will be worth about $800 million in five years, Reuters reported. The properties generally will be leased from partners and not owned by the joint venture.

Trapani said the company was in no hurry to go on a shopping spree or merge with another firm.

"We are ready to buy something only if we find something with potential, for growth and at a reasonable price."

"I think we can continue to be independent and I think we have demonstrated in the past few years we are large enough to not only grow, but prosper in this market," he added.

Asked about the impact of slower economic growth in the U.S. and a possible recession in Japan, Trapani said,

"It's difficult to answer. At present, we don't see clear signs of slowing down. We had a wonderful 2000, Christmas in the U.S. was a bit slow, but in the U.S. generally, it is particularly strong for us. We are growing at double digit rates. For the moment things are going very well."

He denied recent reports that the company was planning to make a capital increase, saying Bulgari had enough cash.

Bulgari, which makes jewellery, watches and perfumes, said last month that preliminary results showed net sales increased 40 percent to graphic680 million ($632 million) in 2000.

--from staff and wire reports graphic