Atlantica Hotels International is poised for expansion across Brazil by implementing a disciplined approach for growth through acquisitions and strategic partnerships.

Eduardo Giestas, CEO of the São Paulo, Brazil-based multi-brand management company founded in 1998, said the COVID-19 pandemic has presented opportunities for his company despite the loss of international demand, challenges around vaccine rollout and recovering from other economic-related hurdles.

Through various opportunities, he hopes to grow the company to 35,000 rooms across 180 managed and franchised hotel and residential units by 2025. Atlantica’s portfolio today stands at more than 130 hotels amounting to 23,000 rooms across 60 cities in Brazil.

“We have a very disciplined, long-range planning process,” he said, noting his team and its investors work on a five-year project perspective.

Once the pandemic hit, he said the prospects for strategic alliances have only increased.

More than 20 years in business, Giestas said the company has built a reputation of being focused on prolonging relationships with investors and hotel owners.

Atlantica started its portfolio in primary markets with Choice Hotels International-branded properties, then formed exclusive alliances with Radisson Hotel Group, Hilton and Wyndham Hotels & Resorts, as well as a deal with Starwood Hotels & Resorts Worldwide to manage the Four Points by Sheraton brand in the region. Additionally, his company has a few proprietary brands including Go Inn, which is geared toward the budget segment, and eSuites for the luxury segment.

He said there’s still opportunity in primary markets like São Paulo and Rio de Janeiro, but his team is expanding that focus to include secondary markets.

“For the secondary markets, we are growing through proprietary brands … and we’re also growing much more through franchise agreements than with management agreements,” he said. “We also created a strategy to grow faster in these secondary markets by creating a soft brand.”

Giestas said the Brazilian market has high potential within the next five years. Though it seems like Brazil is suffering from oversupply in number of rooms, he said that’s not the case.

“If you look at Brazil, which is a huge market, and use as an indicator the number of rooms per inhabitants, Brazil has a much lower rate than Argentina, Colombia, Mexico, Peru,” he said. “We still look at Brazil as a ground field for many new developments when it comes to hotels.”

Brazil today has around 500,000 rooms. Out of those, he said about 60% are still independent hotels. As a result, his company sees a strong opportunity for conversions.

“Those hotels don’t have access to distribution. They don’t have access to quality standards. … So we look at those, especially in the secondary markets,” he said.

Through Atlantica’s soft-brand strategy, an owner who signs with Atlantica can keep its proprietary brand with very little adjustment and investment needed.

Looking at the other 40% of rooms that do belong to branded companies, he said it’s a fragmented market. Because of that, there’s potential for growth through acquisitions or strategic partnerships.

His company is also eyeing what’s going on outside of Brazil when it comes to alternative formats of hospitality, such as Airbnb. Giestas’ team in December partnered with Mitre Realty, allowing owners who have apartments with Mitre to hire Atlantica to manage their units.

Giestas said his team built their 2021 budget around both best-case and worst-case scenarios for navigating the ongoing COVID-19 pandemic and how well the spread of the disease will be managed this year.

He said the reality today is there’s still restrictions on travel, the vaccine rollout has been messy in Brazil and the second wave has hurt his region’s industry, especially in the first quarter of this year. However, he feels optimistic travel will rebound as vaccination efforts gain traction by mid-year.

He predicts revenue per available room will reach pre-pandemic levels near the end of this year for all markets except São Paulo.

São Paulo and Rio de Janeiro are challenging markets because they depend on international corporate tourism as well as large events for leisure demand, which there’s very little to none of now.

“They are suffering much more and taking longer to start the recovery process,” he said, adding that São Paulo accounts for 35% of his company’s total demand.

What’s happened as a result is the leisure segment in Brazil’s secondary markets are recovering quicker.

“Brazilians could not travel abroad because of the restrictions, so a lot of people exchanged their trip to Disney to go to a beach city in Brazil by car. It directed some of the demand for international travel in Brazil for domestic travel,” he said.

While his company is focused on growing room count, Giestas said his team is also working to improve the efficiencies of its hotels to increase gross operating profits.

Much of this will be through investing in its technology and marketing platforms, such as dynamic pricing software, customer relationship management tools and loyalty programs. He anticipates a timeline of the next 16 to18 months for implementing some of these tools.

He said during the pandemic there’s been a bigger push towards ecommerce and views that as an opportunity to in increase its direct selling efforts by improving that channel.

“We want to expand the participation of our online channel in the total sales to reduce distribution costs. It’s a very important project this year” he said.

As his company continues to grow its scale, it’s also developing a shared services center to provide cost efficiencies to the hotels that work under Atlantica’s management platform.