CORAL GABLES, Florida — Accor has a long history with Latin American countries, and the French hotel firm is expanding its focus to Mexico and the Caribbean.
In an interview at the Americas Lodging Investment Summit CALA, Accor’s Agnès Roquefort, global chief development officer luxury and lifestyle, and Edouard Schwob, senior vice president of development, luxury in the Americas and global for Raffles, Fairmont, and Orient Express, spoke about their company’s expansions and growth plans for the region.
Accor is by far the largest operator in South America, Schwob said. It has more than 400 hotels across the continent, with Brazil having the lion’s share. It’s also present in Columbia, with hotels in Cartagena and Bogota. It entered South America in the 1980s and started growing there before looking more broadly across the region.
“A lot of presence in Colombia and Brazil,” he said. “I would say those are the two main hubs for us in the region, and Mexico has been catching up.”
Mexico is a hotel market that has the U.S. behind it as a driving force, Schwob said. Accor needed to grow its presence in the U.S. to attract Americans’ attention in international markets. Accor's acquisition of the Raffles and Fairmont brands in 2015 as well as the Ennismore deal helped it establish a strong presence in the U.S. with luxury and lifestyle brands.
Since then, Accor has been able to grow from the north down, attracting more guests from the U.S. and Canada heading to the Caribbean and Latin America, and more specifically Mexico, he said.
Organic growth was another factor, and this one takes time to build up, Schwob said.
“We had a fair amount,” he said. “It was just little dots on the map but not like a big presence like some of our competitors, so it was good to be able to catch up on this,” he said.
As Accor looks to further grow its presence in the region, the company is taking a multi-pronged approach. New builds and greenfield projects will continue to be an important way forward, but the current macroeconomic situation makes hotel conversions a faster option for business development, Roquefort said.
Accor’s brand portfolio is adaptive, so more than 50% of its development comes through conversions, even in its lifestyle and luxury segments, she said.
“We have this share of conversion, which is much bigger than our American fellows, and we are very proud of that, to be able to convert faster existing hotels and to convert them into our brands,” Roquefort said.
Partnerships have also proven successful for Accor, Schwob said.
Demand outlook
There are many layers to the travel demand profile in the Caribbean and Latin America, Schwob said. For example, Mexico saw an immediate drop-off in inbound demand after anti-cartel operations earlier this year, and while it took some time to recover, Accor is seeing “perfectly healthy numbers” again, he added.
Counter to that, with fewer people traveling to the Middle East and specifically to Dubai because of the U.S. and Israel’s war with Iran, travelers are looking to vacation elsewhere, and destinations in the Caribbean and Latin America have proven a popular alternative, he said.
In South America, much of the travel demand is domestic, Schwob said. In Brazil, it’s mostly Brazilians traveling around the country, and it’s not heavily affected by what’s going on elsewhere in the world. Argentina sees similar traveler behavior.
“It’s just a lot more localized in a way and doesn’t suffer as much from the global macroenvironment, but it all depends on how long it’s going to last,” he said.
If the price of oil and construction materials stay high, that’s going to affect new hotel supply, which has its own set of effects, Schwob said. In the near-term, the cost of oil is increasing the cost of jet fuel, which leads to higher airfare or canceled flights.
“That’s always a bad thing for tourism, for obvious reasons,” he said. “If that continues, then there will be an impact. It’s not immediate now, but you don’t want this to last too long.”
Growth of luxury and all-inclusive resorts
The long-term trends of consumption in luxury hotel experiences and luxury travel continue to grow, Roquefort said. Investors, partners and hotel owners continue to be confident in the business, and they are looking for new deals to invest in, even with short-term volatility. Luxury revenue per available room continues to grow in a sustainable way.
Because of this steady demand, Accor is doing more and more with its ultra-luxury segments, she said. Raffles is a key hotel brand in the Americas for Accor to grow.
In April, Accor opened its Orient Express hotel in Venice, Roquefort said. It also officially kicked off its Orient Express sailing yacht that has 50-plus suites. Guests can also privatize the yacht to go where they want to, say from the Mediterranean to the Caribbean, depending on the season.
It’s not just about the luxury hotel experience but the full luxury travel experience, she said.
“It is one of our major focuses at Accor, to really position ourselves into the travel experiences beyond the hotel,” she said.
Accor’s approach to the all-inclusive space is providing premium luxury experiences, enabled by its management deal with Royal Holiday Group last year, Roquefort said. That added 17 properties to Accor’s portfolio in the region.
The goal is to offer a 360-degree all-inclusive experience, or “what we call an immersive experience with a true luxury service,” she said. That starts with good service at check-in and the guestrooms and continues with exceptional food and beverage as well. For example, the SLS Playa Mujeras in Cancun has several food-and-beverage offerings, and it’s not all commoditized buffets. Tnstead, there are fine dining options and other exclusive experiences.
Through its Rixos and SLS brands, Accor has built a dedicated all-inclusive platform that mixes its traditional brands with all-inclusive experiences that originated from Rixos in Turkey and the Middle East, she said.
“This is where we have taken a different angle with some partnerships as well as big tour operators that feed the hotel with some very specific clientele,” she said.
It creates an ecosystem, and Accor is able to branch into branded residential properties in similar way, Schwob said. It works in certain markets where people love the appeal of convenience in a trip but with the added layers of a lifestyle property and entertainment.
The all-inclusive space has been evolving as more brands move into the space, he said.
“That specific segment has been there for a very long time, but now it’s being rethought and better created for more exclusive experiences,” he said.