Mexico City-based Grupo Frel, which has been developing real estate for 60 years, has lots of white space for growth, according to Vicente Naves, the company’s director general.
MEXICO CITY—2018 marks 20 years in hotel ownership and development for Grupo Frel, and the 60-year-old real estate company’s top executive believes there’s still room for significant growth.
Speaking with Hotel News Now during the recent Mexico Hotel & Tourism Investment Conference, Vicente Naves, director general for Grupo Frel, said his company’s expertise in mixed-use development will open up opportunities for new hotel development around Mexico.
“I would say we’re a diverse developer, and so far, we’ve done well with that diversification,” he said. “We do offices, retail, shopping malls, hotels and residential. And now we’re into mixed-use projects where we combine two or three or four.”
Naves said the hallmarks of a Grupo Frel development include being high-quality and highly tailored around customer needs and market opportunities.
“We put a lot of effort, time and attention to design a very good product,” he said. “To achieve that during execution is very important for us. That’s something that distinguishes Grupo Frel.”
Naves said the company’s pipeline of real estate projects is still primarily residential. He noted residential development makes up roughly 60% of the pipeline, while the remaining 40% is a combination of offices, retail space and hotels.
As a business that works across real estate classes, Grupo Frel sees both the differences and the similarities between those classes, Naves said.
“Everything starts with understanding who the customer is, and that’s applicable for all real estate classes,” he said. “But certainly, the dynamics, the products and the service involved in the hotel industry is different from other real estate products.”
He noted that there is more long-term thinking in hotel development, compared with things like housing.
Naves said his company is generally a long-term holder in hotel properties, and that has been the case since its first hotel development: a Le Meridien in Cancún that Grupo Frel owned for 10 years.
“We put a lot of effort, attention and focus on developing something really good, and that translates into profitability,” he said.
Naves also noted that the company is still willing to trade assets outside of a specific hold period if the right opportunity arises.
Grupo Frel is targeting a combination of large, urban city centers and resort destinations for growth. Future development markets include Mexico City, Los Cabos, Acapulco and Cancún.
The company currently has two operating hotels: the 497-room Secrets The Vine Cancún and the 169-room Breathless Resort & Spa Cabo San Lucas. Both of those are all-inclusive resorts under AMResorts brands, but Naves said there are various projects in the works that could involve different brand families.
He said his company is working on a large shopping mall development in Los Cabos that will include an “upscale business hotel” that will fly Marriott International’s AC Hotels flag.
He said his company has talked to various other brands, including Hyatt Hotels Corporation and Viceroy Hotel Group, about future developments.
Naves said he is generally optimistic about the opportunities to grow across Mexico, which he added is a large, diverse country with various tourist attractions and demand drivers.
“Mexico has 11,000 kilometers of beachfront, great weather and favorable costs,” he said.
Going forward, Naves said his company will remain focused on domestic growth opportunities, as he sees a considerable amount of white space for development within Mexico’s borders.
But the company does have investments in real estate, primarily hotels, in the U.S. through a private real estate fund call Ethika Investments.
“We already have 17 assets, and most of those are hotels,” Naves said. “We buy properties opportunistically, and in most cases renovated hotels (or properties that) changed flag and operators. We’re doing well so far and are in some of the major markets in the States with those assets.”