PANAMA CITY — American investors are flocking to luxury hotels in Latin America, according to executives speaking at the SAHIC Latin America & The Caribbean conference.
Nicolas Martinez, Accor's vice president for development in Mexico, Central America and the Caribbean, said there's been a lot of "hype" for the luxury lifestyle segment, with many projects being at least partially funded by including a branded residence component.
"It's improved the economics for the better, and it helps with cash flow," he said, speaking during the "The Evolution of Luxury Perception" panel.
He said interest in those projects is varied, with capital coming not only from the U.S. but also Mexican and European investors. But panelists said there has been significant interest from American investors.
"There's been a lot of interest and investment coming from the U.S., both through the Mexican traditional [real estate investment trusts] and private equity that is funded by U.S. money," Martinez said. "The beauty of [Latin American] markets is you have very similar rates, very similar [revenue per available room] as the ones you get in the best destinations in the U.S., but the labor base cost is so low that the markets are spectacular."
He described that combination of high rates and low costs as a "no-brainer" for any hotel investor.
Martinez said the increasingly established nature of the hospitality industry in Latin America has made it easier for U.S. and European investors to move money into the markets.
"It's becoming more and more sophisticated, and [investors] now have an exit strategy," he said. "That was the main issue 20 years ago because it was mostly family owned."
Liora Haymann, managing director for architecture and design firm OBM International, said the investment outlook in the region has changed significantly in the past decade.
"What we see is funds coming in from robust sources," she said. "What we saw 10 years ago was funds were mostly regional or local. Now they're coming in from all over the place. On one project in Latin America, you'll have the developer from the U.S. with [the investment] coming from the Middle East. It's exciting."
She noted that while the investor base for luxury hotels is shifting, the overall approach to building the assets is mostly the same.
"I'd say there's been no radical changes [in design], but more of an evolution," Haymann said.
She said the key element for a successful luxury hotel is still the guest experience, and her firm puts a focus on "telling the story through design" and creating "wow moments" upon arrival at a property.
During the pandemic, there was an added focus on moving food-and-beverage outlets and even some accommodations outdoors, and that's likely to stick around long term, she said.
Leo Ghitis, CEO and co-founder of Nayara Resorts, agreed that guest expectations haven't changed in the luxury segment.
"Guests that come to Nayara are typically looking for an ultra-luxury experience, sustainability, lots of space, nature, wellness and privacy," he said.
He said his company's properties used to be viewed as more of a niche product in the region.
"Now, we're mainstream," Ghitis said.
Lisandro Leon Liguori, co-founder and co-CEO of management firm AMEK Group, said interest in sophisticated third-party management is also growing in the region.
"Owners and developers have reacted very positively to our approach," he said.
Martinez said for his Accor, that growing interest in luxury hotels has benefited both traditional brands such as Raffles and lifestyle brands such as SLS, which opened a hotel in Cancun in early 2021.
"We already try to make a good fit for the size of the nation and in the market," he said of Accor's development approach.