PANAMA CITY — The COVID-19 pandemic has been a catalyst of widespread change for the hotel industry, and brand executives speaking at the recent SAHIC Latin America & The Caribbean conference said they expect some of those changes to be for the betterment of owners.
During the "Industry Players" panel, Jorge Apaez, chief operating officer of Mexico, Latin America and The Caribbean for IHG Hotels & Resorts, said hotels need to change to serve the needs of both guests and investors.
"We need flexibility not only on [property improvement plans], which depend on financial capacity, but a more detailed analysis of the evolution of brands," he said, via a live translation provided by the conference. "There needs to be a fair balance between customers' needs and a return on [owners'] investment."
Mauricio Elizondo, development director for Mexico-based brand Grupo Posadas, said it's the job of the brands to make sure they are moving in the same direction as their owners.
"We have to make sure our interests are aligned," he said via translation.
He said the industry is in a tricky place with the need for properties to be renovated while many owners have already spent reserves to survive during the depths of the pandemic.
Apaez noted existing owners won't have the luxury of waiting to renovate aging properties, as new hotel supply will soon be coming online in Latin America.
"We're seeing an enormous diversity [among investors]," he said. "We're seeing wealthy families, capital from other parts of the world, institutional investors. I don't want to generalize, but we're seeing this across leisure markets, even in secondary cities."
Both panelists expected high interest in leisure travel to remain long after the pandemic. That assumption is also held in financial circles, with Elizondo noting leisure resorts are much more likely to get financing for the time being.
"If you look at the banks in the hotel industry, they're more bullish putting money into ... leisure or beach [hotels]. For urban hotels, you'll see they're holding back on investment."
Both Apaez and Elizondo expect significant growth in the ultra-luxury segment across Latin America, noting the region offers an attractive mix of high rates for those properties with low operational costs.
"Being close to the U.S., we have the capacity to catch a lot of that demand," Elizondo said. "Recent world events have taught us that post-COVID, people want to go somewhere but they want to go and come back quickly. And you can reach many important hubs in Latin America fast, which is different than planning longer trips to Asia with factors you can't control."
Apaez said he expects the hotel industry in Latin America to "grow, grow, grow" in the next few years, but ultimately success hinges on factors such as airlift to major markets.
"The demand will allow it," he said. "As a region, we have the capacity to sell experiences, but everything depends on the capacity, the infrastructure and human resources."