This was recently featured in the September issue of Hotel Magazine:
Latin America: Land Of OPPORTUNITY
Mexico is ripe for more growth, and brands are increasingly bullish on the prospects of Central and South America. By Derek Gale, Senior Editor
With growth from Mexico on down to Argentina, developers and brands are finding plenty of room for expansion in Central and South America. “In Latin America, I would expect that we will have in excess of 80 hotels by late 2011,” says Ed Fuller, president & managing director of international lodging, Marriott International. “We find all of Central America of interest. Each market is defined by the destination, and as each market defines itself, we (will) put appropriate product in.”
On thing that has worked well for Marriott so far is putting its Courtyard product near tourism destinations for different customers, Fuller says.
Mid-scale product in general may be the ticket throughout the region, as it is “clearly the fastest growing and the most in demand,” says Alvaro Diago, area president for IHG in Latin America. “While the region still has many challenges, the evolution of the middle class continues, as does the parallel need for mid-scale products,” he says. “There is a shortage of these hotels in most secondary and tertiary cities in the region.”
Mexico Stays Strong
Mexico continues to be a leader in Latin America hotel development, as it has for many years, with more than 135 projects comprising more than 25,000 rooms in the pipeline as of the first quarter of this year, representing some 44% of the project total for the region (including the Caribbean and Central America) according to Portsmouth, New Hampshire-based Lodging Econometrics.
With Americans still favoring Mexico as a beach destination, business centers continuing to develop there, and a growing middle class spurring national tourism, the recipe is right for continued growth.
“Mexico is a large market, closely tied to the U.S., and a growing market economically,” Fuller says. “We see commercial growth throughout Mexico. Mexico is also the primary destination for foreign tourists within Latin America, and the domestic Mexican market accounts for nearly 40% of all our guests at our hotels (there).”
Marriott is set to nearly triple its Mexico presence over the next five years with 30 new hotels, including a multiunit development agreement for several Courtyard properties.
Others, like IHG with its Holiday Inn and Holiday Inn Express brands, are making a push into secondary and tertiary cities as well.
And in beach destinations, while business may be hurting slightly right now because of extreme supply growth in places like Cancun and Riviera Maya, the booming domestic market—thanks to the recent rise of low-cost air carriers—is helping to augment foreign tourism, which continues to grow as well, says Alex Zozaya, president of Newtown Square, Pennsylvania-based AMResorts.
“We believe the number of Americans going to Mexico is still in diapers compared to what we’re going to see in the next three to five years,” he says. “The number of Americans going to the region has increased every year for the past 10 years.”
AMResorts is banking on this continued demand, with 70% of its business coming from the United States and a plan to open new resort properties in the next few years in destinations like Huatulco in Oaxaca and Punta Mita and Nuevo Vallarta in the developing Riviera Nayarit area.
Where there’s a demand for hotel rooms, there usually is also a demand for second homes. Love this line: “We believe the number of Americans going to Mexico is still in diapers compared to what we’re going to see in the next three to five years”. Good news to hear the hotel industry bullish about Mexico!