Hilton sees LatAm as prime region for Homewood growth
 
Hilton sees LatAm as prime region for Homewood growth
01 MARCH 2018 9:22 AM

Hilton officials believe the opening of the Homewood Suites by Hilton Silao Airport marks the beginning of a large push for the extended-stay brand into Mexico and Latin America.

SILAO, Mexico—Hilton officials know there is pent up demand for extended-stay hotels in Latin America, so much demand in fact that some guests are treating brands with Hilton or Hampton Inn flags as extended stay.

Hilton sees this as a bright, flashing sign that the region is prime soil for growing its Homewood Suites by Hilton brand, executives said.

“We’re trying to narrow the scope of what we’re offering in each of the brands so people (in Latin America) have brand awareness,” Juan Corvinos, VP of development in Latin America and the Caribbean for Hilton, said.

He noted the goal of growing an extended-stay brand in the region isn’t to discourage guests from visiting Hilton’s existing brands in the region but to “give them the real product they can use for that stay.”

Adrian Kurre, global head of Homewood Suites and Home2 Suites by Hilton, said the brand will be critical for Hilton to carve out a spot as the extended-stay leader in Latin America.

“The main reason there’s a return on investment with Homewood is the extended-stay nature of it,” he said. “It is one of the most difficult things to do in the hotel business, which is finding extended-stay business.”

The brand saw a major milestone recently with the opening of the first property using the new Latin American prototype, the Homewood Suites by Hilton Silao Airport. That hotel is the second Homewood Suites property in Mexico. It is owned by Edco Turismo Bajío and managed by Hilton.

Corvinos said many more Homewood properties are poised to open soon. He added that the company first unveiled the new prototype in May 2016, and there has been significant developer interest since then. He believes that interest will only accelerate now that a property is open that potential owners can visit and observe.

The second property—scheduled to open by mid-year in Monterrey, Mexico—is dual-branded, featuring both Homewood Suites and Hampton Inn by Hilton flags.

Hilton officials said they are particularly hopeful about the potential of that dual-branded pair in Latin America.

In all, there are eight more properties currently in the pipeline, four of which are in Mexico. Corvinos said four more properties are expected to open by the end of 2019.

He said the types of travel seen in those countries make them especially ripe for extended-stay product.

“When you think about the type of travel to Chile (or) Argentina, no one goes down there for two days,” Corvinos said. “When you need to trek down there, you stay for at least five days.”

He noted that despite the high level of developer interest, openings might not be coming at a blistering pace compared to some U.S. brand launches. He said that comes down to regional differences.

“From a development standpoint, in Latin America everything takes a little longer than it does in the U.S.,” he said. “It’s not as mass producing as the U.S. But once you get traction—we figured it out with Hampton, we figured it out with Hilton Garden Inn—once it gets rolling, it’s going to get steam-rolling, and it’s really going to accelerate.”

Corvinos noted the company is seeing a number of its brands grow in Latin America, which will ultimately increase the power of the overall Hilton system in the region and globally.

“Homewood by itself won’t survive in Latin America,” Kurre said. “It needs Hiltons. It needs Hilton Garden Inns. It needs Hamptons. It needs the breadth of product, and critical mass of all of those products will help Honors members and the entire process.”

The company currently has 137 properties in Latin America with 80 more in the pipeline. Corvinos said the company has “over 65 ongoing conversations in Latin America” in relation to potential Homewood Suites projects.

He said Hilton overall approved 35 hotels for the region, eight of which will carry Homewood Suites flags.

Need to adapt
Kurre and Corvinos believe the brand is poised for success in Latin America, though it needed to be adapted to different regional tastes and needs.

“Different regions have different tastes and different things you need to acclimate to in order to do business,” Corvinos said.

Kurre agreed that no two regions can have identical approaches even within the same brand.

Changes to the Latin American prototype for Homewood include smaller room sizes on average and the inclusion of bars in all properties—not just those in urban areas like the brand has in the U.S.

“We identified that if you don’t have a bar down here, people would make a buying decision to not stay here, so we have pulled it in to this prototype,” Kurre said. “In North America, if you’re in a suburban location with 120 rooms and you put a bar in, you’re going to lose money.”

Corvinos said breakfast and food-and-beverage offerings will differ by country and demand.

That isn’t just to offer local cuisine, but to tailor to the needs of guests. Kurre noted the Silao, which sits in a heavily industrialized area, sees a great deal of hotel demand from Japan due to the area’s high concentration of automobile manufacturing. He said that means the property has to consider things like offering Japanese meals to make guests feel more at home.

Kurre noted that while making regional changes, it’s important to retain enough of the brand to make it “feel the same” and offer the same level of service and hospitality as U.S. Homewood properties. He said it’s going to be an ongoing process of assessing what changes need to be made.

“What we’ll do now is watch this, and we’ll say ‘what’s working and what’s not working?’” Kurre said. “Then we’ll refine the prototype to make sure going forward things that we put in are necessary and people are using them. If they’re not using them, and they’re not necessary, then we need to stop doing that.”

Developing local partnerships
Hilton officials said one of the keys for Homewood’s growth in Latin America is finding key partners in different regions who know the rules of developing there.

“We would welcome any investor from any part of the world to come and partner with us outside of the U.S., but we understand it’s not easy to do business outside of your country,” Corvinos said. “There are tax implications. There’s legal and structure implications. There’s a deep learning curve. … While at some point we might have thought it was easy for investors to cross over (between countries), it is not.”

Kurre agreed that finding owners and developers with knowledge of local laws and markets will be key for the brand’s growth. He pointed to the Silao property as an example of the differences.

“It’s different than any hotel we ever opened in North America,” he said. “And understanding how to drive that base business in to the hotel, that selling extended-stay business is different in Silao than selling extended-stay business in San Diego, is a never-ending difficult position. … It’s different. ”

Editor’s note: Hilton paid airfare and two nights’ accommodation at the Homewood Suites by Hilton Silao Airport, where interviews for this article were conducted. Hotel News Now retained complete editorial control, and Hilton had no influence on the coverage provided.

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