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Hotel Giants Bet on Latin America and Caribbean Despite Regional Uncertainties – Image Credit Unsplash
Stephanie Ricca of CoStar reports from the recent Americas Lodging Investment Summit CALA conference that despite the inherent uncertainties in Latin America and the Caribbean, global hotel brand leaders are optimistic about long-term growth opportunities in the region. They are banking on strong intra-regional travel and reliable local financing partners.
Hotel Brands’ Growth Strategy
Despite the region’s inherent uncertainties, hotel brand leaders are bullish on the long-term prospects in Latin America and the Caribbean. They are focusing on expansion in this region, considering variables such as government changes and socio-economic situations.
Gilda Perez-Alvarado, chief strategy officer and CEO of the Orient Express brand for Accor, noted that despite some deceleration of CALA-based travelers coming to the U.S., American travel to the CALA region, especially dollar-denominated nations, remains robust. Accor currently has 500 hotels and 75,000 rooms in the region, making up nearly 10% of its global portfolio.
Positive Trends and Deal Opportunities
Jolyon Bulley, CEO of the Americas for IHG Hotels & Resorts, highlighted the region’s “strong fundamentals,” such as rising middle-class populations and wealthier retirees willing to travel. Gustavo Viescas, president of the CALA region for Wyndham Hotels & Resorts, asserted that the ability of hoteliers in this part of the world to navigate downturns is a key strength. This is evidenced by Wyndham’s 268 regional hotels and 45,000 rooms.
Bruce Wardinski, chairman and CEO of Playa Hotels & Resorts, pointed out that every downside has an upside. For example, if Canadians travel to Mexico or the Caribbean instead of the U.S. during winter, it would be a significant plus for them.
Concerns and Anticipations
Despite expressing concerns about slowing deals, hotel executives remain largely optimistic. Keith Pierce, executive vice president and president of franchise and development for Sonesta, noted that deal volume in various Latin American countries is frothy, which could signal performance improvement.
However, Andrés Fajardo, CEO of GHL Hoteles, expressed caution, observing that the “willingness to invest is not there” at the moment, indicating a need for a wait-and-see approach.
Opportunities for Growth and Expansion
Despite the slowdown in transactions, many see this period as an opportunity for growth. This could come via conversions from other brands, and there’s also an opportunity for consolidation among management companies.
A crucial aspect of these expansions is the presence of solid, local development partners. As Perez-Alvarado noted, the largest hotel owners in Latin America are Latin Americans. Major hotel brands have been working with local entities to ensure deal success. This often requires creative deal structuring, including residential units or aggressive deal structures.
Bulley also pointed out that high-end hotel development with residential components drives cash flow across their business. IHG’s Kimpton Monterrey, scheduled to open in Mexico next year, will bring hotel rooms and residences to the city’s new-build Torre Rise mixed-use development, touted to be the tallest tower in Latin America upon completion.
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