Brands operating in Mexico see plenty of white space for leisure-driven hotels.
Editor’s note: All quotes in this story were derived from presentations at the Mexico Hotel & Tourism Investment Conference that were conducted in Spanish and translated by event staffers in real time.
MEXICO CITY—Mexico leisure travel has room for growth, with several highly sought-after leisure destinations, experts said.
Germán Ongay, regional VP of franchise sales and development in Mexico for InterContinental Hotels Group, estimated the country has realized just a third of its potential thus far.
“Mexico is a country that has a lot of room in all segments from luxury to economy,” he said during the “Drilling down on supply and demand—leisure travel” session at HVS’ 2020 Mexico Hotel & Tourism Investment Conference. “There’s a lot of space. Mexico is probably at 35% of its potential, which means there’s 65% left to grow, and that leaves the door open to all kinds of hotels in different destinations.”
There’s room for all types
Panliests said that despite the prevalence of all-inclusive resorts in the market—and increased interest from major international brands—there is room for traditional, European-plan properties across the country, even in resort-dominated markets.
Alejandro Acevedo, regional VP of development in the Caribbean and Latin America for Marriott International, said his company, despite being the largest in the industry, still sees white space for development.
“There are areas we’re not even present, so there are opportunities across segments,” he said.
But all-inclusive is driving interest
Nicolás Valle, director of development and feasibility for Playa Hotels & Resorts, a player in the all-inclusive segment, said the spike in brand interest in all-inclusive properties is validation of the business model. He said that interest has opened up new opportunities for his company.
“We believe 100% in the power of the brands,” he said. “It has been a strategy of Playa’s to bring (brands) to the segment. Now there is penetration of brands like Hilton, Hyatt and Marriott.”
Rubén Becerra, VP of corporate affairs and business development for Karisma Hotels & Resorts, said opportunities have also opened up for brands that aren’t exclusive to the hotel space. Karisma operates all-inclusive resorts under Nickelodeon and Margaritaville flags, among others.
“We can push (a luxury experience) without pushing the big chains and going through a different pathway,” he said.
New product wins out
Panelists noted there are different products for different guests in Mexico, but newer products tend to win out.
“Of course hotels not up-to-date with their CapEx will start to suffer,” said Mario Carbone, managing director of development in Mexico and Central America for Hilton. “It’s important to evaluate, if a market is booming, if there’s potential to reposition (an asset). The return on investment may be worth reassessing the potential of a conversion.”
He said investors must carefully assess the capacity of a market when developing projects.
“You won’t see a return if you’re asking for (a $700 rate) in Mazatlán, but you could in Los Cabos,” Carbone said.