Executives from six international hotel brands shared why certain regions in Latin America are ripe for midscale brands, conversions and further penetration.
GUAYAQUIL, Ecuador—Branded hotels are growing in footprint and awareness across South America, and executives from six major brands spoke at the South America Hotel Investment Conference about their plans for expansion in the region, as well as the current pros and cons of developing.
With a long-term plan in place for growth in the region, plus the company’s growth through its recent acquisition of FRHI Holdings Limited, it’s all systems go for AccorHotels across Latin America and particularly in South America, said Philippe Trapp, EVP of operations, luxury and upscale, South America for AccorHotels.
The company’s long-term plan is to grow via franchising in the region.
“We’re already at 284 hotels, and we have 150 in the pipeline or under construction,” Trapp said. “Today, we are reaching a critical mass where we can go much stronger into (franchising), and we have a strong management portfolio, which is helping us grow much faster than usual.”
Brand diversification is a priority, Trapp said. While the company’s ibis and Mercure brands are “well established” in the region and appealing to the growing middle class of travelers, Trapp said new brand offerings are making an impact.
“With Raffles, we have more Asian DNA coming into the region. With Swissotel, we are combining the European DNA we have with a nice German touch—we have two open in Quito, Ecuador, and Lima, Peru, that are very good,” he said.
Trapp touted the strength of the company’s development partners as it grows brands in the region.
“There is no one-man show,” he said of hotel development in South America. “It has to be done with local and regional organizations and it has to be supported with a vision country by country.”
Carlson Rezidor Hotel Group
It’s been a year of growth for Carlson Rezidor Hotel Group in Latin America, especially since its 2015 move to repurchase its rights to master licensing in the region from Royal Hotels International, which held the rights for more than 20 years.
“Since then, things have been very different for us,” said Roland Mouly, VP of development, Latin America for Carlson Rezidor. “We allocated resources and people, solidified our relationship with partners in the region and took our strategy from just growing the Radisson brand to expanding into new segments with other brands in our portfolio.”
Highlights from the past year include the opening of the Radisson Blu Santiago La Dehesa in Chile, the Radisson Blu Sao Paulo and the Radisson Blu Belo Horizonte, Savassi, both in Brazil. Mouly said the company is investigating growing its Park Inn by Radisson brand in the region through conversions.
“In Latin America, (midscale) is a segment that’s in demand,” he said. “We are bringing Park Inn to Peru. Also our lifestyle Radisson Red brand, we have one about to open in a few months in Brazil and are looking at two opportunities in Peru.”
Mouly said Mexico and Colombia are particularly strong markets for Carlson. In countries like Brazil and Chile, where he said factors are having an impact on demand, conversions can be a good opportunity.
“Yes, new construction is still ideal because there’s a significant lack of good properties in certain segments,” he said. “But (conversions) are an opportunity for owners, as well, who are looking for assistance. We’ve done it, and it’s a model that we’ll continue in the immediate future for probably about half our growth.”
Hilton Worldwide Holdings
This year, Hilton Worldwide Holdings is on track to open its 100th hotel in Latin America, said Ted Middleton, SVP of development in Latin America for Hilton. Today the company has more than 95 hotels in the region and 55 in the pipeline, comprising more than 7,000 guestrooms.
“Latin America is a strong focus for our company, and we anticipate the growth will only continue,” he said. “In the past 12 months, we opened our first hotel in Bolivia, the Hampton Inn by Hilton Santa Cruz/Equipetrol. We opened our first hotel in Guatemala. We opened our first Hilton Garden Inns in country in Brazil, Peru and Uruguay.”
Middleton pointed out opportunities for all brands to grow in the region.
“You see expanding economies throughout Latin America, a rising middle class and increased travel into the region,” he said. “All those factors create additional demand for hotels, and international brands bring a consistency of product to the marketplace. We’re very bullish on the region.”
InterContinental Hotels Group
Craig Mueller, VP of development, the Americas, for InterContinental Hotels Group, said Latin America has always been a strong area of growth for the company. He said IHG has 40 hotels in its Latin America pipeline comprising 6,000 guestrooms, with openings forthcoming in Brazil, Colombia, Chile, Mexico and Ecuador.
“One of the biggest areas we’ve grown is in Colombia, where we’ve doubled our portfolio to 14 hotels,” he said, citing the country’s hotel development tax incentives. “The next biggest area is Peru for us, then Argentina, and also Brazil. We opened about seven hotels there in the past three years, though it’s been a bit of a different ride there recently.”
The company’s latest development is the signing of the first Holiday Inn Express hotels in Paraguay and Peru and the opening of its first of the brand in Colombia, with the Holiday Inn Express Barranquilla Buenavista.
Mueller also touted the strength of the company’s InterContinental brand in the region.
“We’ve become the largest luxury hotel brand here,” he said.
The InterContinental Cartagena de Indias opened in Colombia in 2015.
“We’re not in Rio (with InterContinental) anymore, but that, Lima and Bogota are other targets, to name a few,” he said.
He also agreed that conversion opportunities are opening up in the region.
Laurent de Kousemaeker, VP of hotel development in Latin America and the Caribbean for Marriott, shared some statistics on what the company’s recent acquisition of Starwood Hotels & Resorts Worldwide will mean in Latin America.
“In the Caribbean and Latin America, we went from 28,000 rooms to 49,000 rooms, which is a 75% increase across the region,” he said. “In South America, we went from 29 hotels to 74, growing 2.5 times what we had before. Starwood had been in South America for many years, and we’re benefiting from that—not just in distribution, but in talent, infrastructure, sales accounts and everything.”
The South American pipeline for Marriott now stands at 36 hotels and 6,000 rooms, he said. Nineteen of the new company’s brands will have a presence in the Caribbean and Latin America, and the Sheraton now has the largest footprint for the company in South America at 25 hotels.
De Kousemaeker called the region “dynamic, with economic challenges,” and he too cited the opportunities for conversions.
“Unlike the U.S., where you have seven to 10 years of growth then the cycle goes down, here there are always ups and downs,” he said. “Colombia has been a strong development market, and we’ll see what happens after the tax incentives expire. Peru is doing extremely well. Argentina, we’re waiting for that turnaround. Venezuela is unclear. And Brazil is going through lots of challenges.”
Wyndham Hotel Group
Wyndham Hotel Group opened more than 5,000 guestrooms in Latin America and the Caribbean in 2015, bringing the company’s total to 165 hotels in the region, said Paulo Pena, president and managing director for Latin America and the Caribbean at Wyndham Hotel Group. Twelve of the company’s 17 brands are represented in the region in 18 countries.
“This year we’ll enter two new countries—Paraguay and Chile—with Howard Johnson,” he said.
Last year represented several brand introductions to various countries, including the Wyndham brand to Brazil, and the Baymont Inns & Suites brand to Mexico and Puerto Rico. The company also executed its first management agreement in Barbados.
Pena reinforced the trend that a growing cohort of middle-class travelers in the region are looking for consistent hotel experiences. He cited Wyndham’s Tryp brand, which has 20 hotels in the region, as well as its Howard Johnson brand, which has a strong Latin American presence, as evidence.
“Midscale and budget travelers want a strong experience as well,” he said.