CARTAGENA, Colombia — Business and group travel is picking up in Latin America, while leisure travel — especially to high-end resorts — continues to dominate the demand landscape, and developer interest is following those trends.
Luxury, lifestyle, resort and all-inclusive brands have been top priority for many of the world’s largest brand franchisors as they expand their Latin American footprints.
Hyatt Hotels Corporation's 2021 deal to acquire Apple Leisure Group has been a catalyst for expansion in these types of hotel brands, particularly in Mexico and the Caribbean, said Camilo Bolaños, Hyatt’s senior vice president of development for Latin America and the Caribbean.
During a panel at the recent SAHIC Latin America & The Caribbean Hotel & Tourism Investment Forum, Bolaños said Hyatt is taking its all-inclusive brands into higher-end luxury as well.
“We have increasingly been tweaking the model to increase sophistication and elevate experience to cater to the luxury guest,” Bolaños said, referring to the Secrets brand’s new Impressions sub-brand, which is a more exclusive, luxury resort-within-a-resort offering the company debuted last year at Secrets Impression Moxché in Mexico. Another iteration is opening soon in Isla Mujeres, Mexico.
Luxury and lifestyle are fueling IHG Hotels & Resorts' expansion in the region as well, said Paul Adan, regional senior vice president of development for Latin America and the Caribbean at IHG.
“Over the last several years, [we've used] the philosophies of acquiring and organically growing luxury and lifestyle around Six Senses, Regent, Vignette Collection and we’ve seen success with that around the world,” Adan said.
IHG signed the first Americas hotel in its Vignette Collection in Mexico last year, the El Gran Encomendero, which will be a new-build hotel in Valladolid. The company acquired the Six Senses brand in 2019, and has resorts, several with residences, planned in Belize, Costa Rica, Ecuador and Grenada.
Adan stressed that developer interest drives a lot of expansion at the end of the day, and in Latin America, that appetite is skewed to luxury and lifestyle brands that can include branded residences.
“We’re seeing a lot of luxury because we can do luxury resorts with branded residences that help finance development and put the deal together,” he said.
Luxury and lifestyle continue to be a focus for Marriott International in the region as well, said Bojan Kumer, Marriott's regional vice president of hotel development for the Caribbean and South America. While Mexico and the Dominican Republic are the company’s biggest focus areas in the region, Brazil has been “a big success in the last few years,” he said, particularly for luxury and lifestyle.
In 2022, Marriott converted an existing hotel into the JW Marriott Hotel São Paulo and has a Westin and a W hotel also under construction in São Paulo. Other recent conversions in the region include the Royalton Riviera Cancun into Marriott’s Autograph Collection, as part of Blue Diamond Resorts’ affiliation with Marriott Bonvoy; and the opening of Sanctuary Cap Cana, an all-inclusive resort in Dominican Republic, as the first luxury all-inclusive resort to join Marriott’s The Luxury Collection brand.
Select-Service, Business Hotel Expansion
Higher rates of domestic travel among a growing middle class, along with the return of business and group travel, also makes select-service hotels attractive to developers, speakers said.
Hilton in particular has been consistent throughout the past three years in “creating what we call the branded effect,” said Juan Corvinos, Hilton's senior vice president of development and A&C for Latin America and the Caribbean.
The company’s Tru by Hilton brand is gaining ground in Mexico and Brazil, Corvinos said, and the company continues to expand its stalwart Hampton brand throughout the region. Laying that base then allowed the company “to put luxury and all-inclusive into the market where they belong, and it’s been very stable,” he said.
Marriott’s 2022 acquisition of the Mexico-based City Express brand will add more than 17,000 rooms to Marriott’s select-service portfolio in the region.
Kumer said the company’s investors and consumers in the region had relayed to Marriott the need to fill this gap, and the company listened.
“We’re buying the brands, not the hotels, and the idea is to grow the franchises not only in Mexico, but Central America and most importantly to South America,” he said. “Brazil will most likely be our biggest growth market, followed by Argentina, Peru, Chile and Colombia.”
While luxury and all-inclusive growth in the region is “aggressive” for Hyatt, Bolaños said “the traditional brands” for business and groups such as Hyatt Regency and Grand Hyatt “are still our bread and butter at the end of the day.”
He said that even though the pandemic paused a lot of development, most projects didn’t truly stop, and Hyatt fielded interest from developers for select-service and extended-stay hotels also.
At the end of the day, Bolaños said projects in the region typically “are driven by owners with very specific vision of they want.”
“For us it’s about finding solutions for each individual owner, their project and how to best approach it in terms of branding and structuring a proposal,” he said.
Adan agreed that there is regional demand to develop brands below luxury classes — for IHG, this includes Holiday Inn and Holiday Inn Express — but at the end of the day, it’s about “doing projects that make sense,” he said.
“We all have a lot of brands and we all want to see them grow, but at the end of the day, what’s going to go in is what makes sense for investors,” he said. “We need to be responsible and guide investors on the parameters for projects that make sense.”