Roughly a year after Grupo Hotelero Prisma, the largest third-party hotel operator in Mexico, was acquired by Aimbridge Hospitality, a strategy to grow the portfolio in the resort and upscale hotel space is coming to fruition.
In an interview with HNN at the Hotel Opportunities Latin America conference, Leandro Castillo, president of what is now Aimbridge Prisma, said the deal has worked out well for his company.
In 2018, Grupo Prisma’s strategic planning efforts determined a need to expand from business hotels into operating upscale hotels and resorts. Potential deal partners wanted to know about the company’s experience in managing resorts and upscale hotels, and having none, Prisma decided to seek out other operators to work with, Castillo said.
Company executives met with Aimbridge Hospitality later that year and began discussing a deal that was delayed by the COVID-19 pandemic and ultimately signed in May 2021.
“We thought that will give us the leverage to go back to the market and say, ‘Hey, we are now Aimbridge Prisma, and we have now over 1,500 hotels, so we can be certain that this new adventure will help us be recognized and considered to manage resorts and upscale hotels,” Castillo said.
Prisma opened its first two JW Marriott properties — one in Monterrey, Mexico, last year and another in Guadalajara a month ago — as well as a Westin in Monterrey. The company has contracts for five resorts it will start managing over the next two months.
The integration of Prisma into Aimbridge included defining roles for the 2,500 Prisma employees joining Aimbridge's workforce of more than 40,000.
“We started a very formal process to identify who the key players were and to start knowing each other,” Castillo said. “I'll tell you that that today, it seems like we've been one company forever.”
Each person at Prisma’s office in Monterrey has a direct line with their equivalent at Aimbridge in Plano, Texas. Castillo is on Aimbridge’s advisory committee and reports directly to Aimbridge President and CEO Mike Deitemeyer.
Moving Forward
Castillo said Aimbridge Prisma’s goal is to at least double its earnings before interest, taxes, depreciation and amortization within five years, but he believes it will be achieved sooner.
Expanding the portfolio in Mexico, where the company's hotels are already exceeding pre-pandemic performance, requires careful alignment of property types with markets, he said.
Among Mexico’s destinations, Los Cabos, Riviera Nayarit and Playa del Carmen represent opportunities for growth, he said. Mexico City and Monterrey remain important markets, but the company is expanding to boutique and upscale hotels.
Aimbridge Prisma is also working with three independent properties, and Aimbridge’s distribution arm is filling in where a brand’s network otherwise would, he said.
“You have over 100 people in commercial in Europe, Canada, the United States, Mexico and some parts of the Caribbean, so that makes it easier to cross-sell with our own team,” he said. “It’s very efficient in terms of costs without discarding the brands. I think those three properties are doing well.”
Aimbridge in Caribbean, Latin America
Before joining Aimbridge 10 years ago, Rob Smith worked for 20 years in the Caribbean at hotels and resorts. Now Aimbridge’s executive vice president of operations for full-service hotels and resorts, Smith said the company has operated about 15 Caribbean resorts on 10 islands over the past 10 years.
Performance of Aimbridge's Caribbean portfolio has been stop-and-go, dependent on the government of each destination and the restrictions there, he said. Conditions and performance improved in the third and fourth quarters of 2021 as well as the first quarter of this year with the exception of January’s omicron variant surge.
“They’ve been performing really well,” Smith said. “We’re even seeing group [demand] come back. Our Grand Hyatt in Puerto Rico and Grand Reserve really had a record 2021, mostly because of strong group contribution.”
Overall economic conditions and recession worries are cause for some concern, but currently Aimbridge’s properties in the region are booked solid through the summer, Smith said. Group demand for the rest of this year and into the first quarter of 2023 looks strong as well.
“There's no indicators yet that our transient demand or some of the revived group demand is slowing down,” he said. “We're cautiously optimistic.”
Aimbridge has operated 10 to 12 all-inclusive resorts in the Caribbean, Smith said. It’s one of the few approved franchisees with Marriott International’s new all-inclusive portfolio and is in the process of developing an all-inclusive Autograph resort in Curacao.
All-inclusive resorts are a large segment of demand, and the goal isn’t to convert European plan guests, he said. It’s a new market to gain share in because they represent two separate guest segments.
Aimbridge’s acquisition of Grupo Prisma added 47 hotels in the greater Mexico region, and Prisma will be Aimbridge’s gateway into Central and South America while providing resources to operate resorts in the Caribbean, he said.
Mexico has turned out to be a more favorable country to operate in than previously expected because many owners in the country are focused on getting third-party management and want access to guests in North America, Smith said. After acquiring Prisma, Aimbridge learned that 80% to 90% of its business was Mexican nationals, opening up opportunities to grow demand from the U.S. and Canada.
Aimbridge now has prospects for 45 management agreements through Prisma, he said. Most are for full-service hotels, but there are also several resorts in the mix.
“Mexico is very similar to the Caribbean in that customer base, so we think that there's a lot of growth [potential] in Mexico through Prisma on the resorts,” Smith said.