Caribbean, LatAm owners expect permanent demand shift
 
Caribbean, LatAm owners expect permanent demand shift
13 OCTOBER 2020 8:06 AM

Owners in the Caribbean and Latin America region said demand will permanently shift, and it’s important to maintain a realistic view of short-term priorities, such as cash preservation and marketing strategies.

GLOBAL REPORT—Hotel owners in the Caribbean and Latin America region recognize the need for caution when assessing the industry’s shift, as they keep an eye out for long-term opportunities that might arise coming out of the pandemic.

During the “Hotel owners speak out” session at the 2020 online South American Hotel Investment Conference, Fernando Poma Kriete, VP and managing director of El Salvador-based Real Hotels & Resorts, said the most important thing is to have a foot planted firmly on the ground and “not have any sort of optimistic view of what’s going on.”

“We’re preparing for the worst and I feel that travel will permanently shift,” he said. “Demand will probably permanently be altered.”

Kriete added he believes the industry can adjust to maintain profitability, whether or not demand goes back to 80% to 90%. He said he expects supply of new hotels will also dampen in the near future.

“I’m not saying that hotel companies will not convert more hotels, but I think new-builds will be lesser in the next couple of years until the demand and supply has an equilibrium again,” he said.

He said Real Hotels & Resorts’ top priority is taking care of its cash position by renegotiating bank loans. Another area of focus is reorganizing the company to ensure staff is multifunctional instead of having one specific role. He said he envisions staff as “service agents.”

“That way, whether it’s an upscale hotel or a midscale hotel, we’re going to have more of a family-type of service agent operation,” he said. “We feel that we can actually lower costs (by) about a third of what we had before through a lot of different means.”

Herman Bern Jr., president of Panama-based Bern Hotels & Resorts, said the individual corporate traveler will be absent for a while, “well beyond the pandemic.”

Kriete agreed it will be a slow ramp-up for that traveler segment, as many are postponing group travel. His company operates a JW Marriott in Costa Rica and most of the group travel it had on the books is postponed to at least 2021, he said.

Rooms product
Bern said his company has no immediate plans to reconfigure guestrooms to cater to longer-stay guests. However, he said owners with properties that were not performing well pre-pandemic might want to consider converting to residences.

“If you are not doing well, you have to look at your exit strategy,” he said. “The earlier you do it, the better.”

Kriete said his company’s priority is cash preservation, not renovations, but action that can be taken includes shifting marketing and targeting the younger market, which is more prone to traveling.

“There are certain shifts that target certain segments that we feel will ramp up quicker,” he said, adding he won’t plan any rooms refurbishments until he has a better idea of how this pandemic will play out.

F&B
With food-and-beverage venues, Bern said guests will be looking for space and distance, for a while at least. To accommodate that, he said his company wants to offer more options for outdoor dining, and to add plexiglass dividers and self-serve dining.

Kriete said F&B at his hotels have generated a lot of revenue from locals.

“A lot of people are just sick and tired of being stuck at home, and if we can give them a local outlet for the local market … we’ve opened a lot of restaurants and they have been … a lot of them at 100% capacity,” he said.

Which segment will return quicker?
Bern said Panama opened up to international travelers on 12 October, which is a big opportunity for his airport hotel. For his lower-end hotels, he said the opportunities depend on the marketing focus, whether its individual travelers or family leisure.

“It’s not so much whether you’re luxury or you’re not luxury but who your market was and who your market can be,” he said. “That’s going to define what opens first or what is most successful first. Who was your client to begin with and are they traveling?”

He said, from his perspective, airport hotels are performing better than resorts.

Kriete, however, said he believes his luxury hotels will recover even better because people are still hesitant to travel and are willing to pay more for the entire experience to be under one roof.

“A lot of them are tired, trapped at home, they want to get out and (have) some way to socialize,” he said. “They want certain outlets. They don’t want to have to (take) a taxi outside the hotel. They want a lot of options under the same roof and they want safety.”

Kriete said he’s noticed the pace of booking accelerate more at his upscale hotels than at his limited-service hotels.

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