MEXICO CITY — Leisure travelers are paying high average daily rates throughout Mexico, and hoteliers say luxury properties in particular are commanding consistently high rates as occupancy continues to grow.
“Rates will stay high for a long time because we’re giving good service,” said Alberto Remirez, CEO of Hamak Hotels. “In the U.S., you pay high rates and there’s no one to help with luggage or deliver room service. So people are coming to Mexico. They pay a high rate but they go home happy. If we continue to give a good product that wraps in the experience people are looking for, you can keep up with the rate.”
Hamak Hotels operates seven luxury boutique hotels in Mexico and Colombia, with a pipeline of 25 hotels.
What Travelers Want
The experiential element of luxury hotels and resorts in Mexico has been a big driving force behind hoteliers’ abilities to demand high rates during the pandemic. The fact that so many of the country’s ultra-luxury properties are in beach locations has been another contributing factor.
“Mexican resorts before the pandemic got maybe $700 [rates in U.S. dollars], and nowadays many are $1,200 per night on up,” said Abraham Metta, director general of GIM Desarrollos, a Mexico-based developer of residential, mixed-use developments and luxury hotels. “And they were no less luxury when they were at $700 per night. People wanting to spend money, plus wanting more outdoor life and doing remote work, has made this segment one of the largest.”
Remirez and Metta spoke on a panel about luxury hotel trends at the Mexico Hotel & Tourism Investment Conference presented by HVS.
Wealthy travelers from the United States have continued to make Mexican resorts a top beach destination, and it didn’t slow down much during the pandemic, speakers said.
March average daily rate year to date for luxury-class hotels in Mexico was up 22% over the same period in 2021, and 48% higher compared to the same period in 2019, according to data from STR, CoStar’s data analytics firm.
With luxury rates holding strong and occupancy still below 2019 levels — though doubled year to date this year compared to the same period last year — luxury hoteliers in Mexico say there’s plenty of runway.
“We need to take into account that the number of millionaires and billionaires around the world has increased spectacularly. There are many more people discovering luxury now,” Metta said.
Francis Muûls, COO for Mexico-based asset management company RLH Properties, said Mexico’s geography benefits as a short-haul draw for many wealthy luxury travelers, who have been increasingly taking advantage of Mexico’s relatively young luxury resort offerings.
“A customer that comes to Riviera Maya will come every year with their family and spend 20,000 [Mexican pesos] per night,” he said. “We may think that’s a lot of money, but they pay and are happy about it because they feel they’ve gotten the service they deserve.”
Nicholas Martínez, vice president of development in Mexico, Central America and the Caribbean for Accor, reminded the audience that the luxury market in Mexico is further deepened by the idea that it can be tiered.
“Luxury is a wide concept and Mexico has incredible depth; we have luxury properties at $700, $1,400 and more [in U.S. dollars],” he said. “Not everything will be ultra luxury. There’s opportunity for many of us.”
Residential Component
Speakers stressed the value of adding residences to luxury hotel projects in Mexico, again largely driven by U.S. buyers.
Remirez said the many of Hamak Hotels’ pipeline of hotel developments will include residences because the developers all want them.
“People have realized that stress, work and COVID have all made us re-prioritize,” he said. “All hotel projects that have the possibility of residences — that have the land and so forth — should do them.”
Muûls said residences have been a part of the RLH Properties portfolio for years. The company’s Rosewood and Fairmont hotels in Mayakoba have residences, as do the One&Only and Rosewood properties the company asset-manages in Mandarina, Riviera Nayarit.
“This business is complimentary to the hotel,” he said. “And it creates a new category of rooms. At Christmas a family may come and want seven rooms, and we can offer them a house. It’s another alternative that sells well. There’s a lot of demand and people appreciate this type of product.”
Martínez said branded residences are part of nearly all Accor’s luxury products in Mexico because they can be “sold and turned around very quickly,” and there’s huge demand for the product.
“Remote work was accelerated in the pandemic. Millionaires with flexibility could have a Silicon Valley office and go to Los Cabos and keep working,” he said.