CORAL GABLES, Florida — With a restructured development team in place, IHG Hotels & Resorts is dialed in on seeking new owners to partner with across Latin America. To do so, the team is leaning on the track record it holds with existing owners.
Paul Adan joined IHG’s Americas development team in June 2022 amid the restructuring as regional senior vice president, development, Latin America & Caribbean. Since then, the Mexico, Latin America and Caribbean team has hit the ground running with more than 150 development deals it is actively pursuing, compared to 20 just a year ago, he said during an interview with Hotel News Now at the recent Caribbean Hotel & Resort Investment Summit.
IHG currently has an active pipeline of 75 signed and under-construction hotel deals in Mexico, Latin America and the Caribbean, Adan said.
Owners right now, he said, are hungry for luxury hotels and resorts, as well as branded residences and mixed-use developments. IHG’s development team has specialized members for each property type.
“Owners are reacting well to our family of brands. The newer ones that we’ve brought in [during] the last seven years [include] Regent, Six Senses, Kimpton, Voco, Vignette; we’ve repositioned Indigo, and we’ve created Avid as well. We are getting a lot of interest from owners [and they’re] reacting well to our new development team being much more active in the region,” he said. “We want to grow all through Latin America, continue growing in Mexico, throughout all of the Caribbean, both in urban properties and resorts in all the segments where we can now play.”
In specific to branded residences, he said that “as long as the hotel component itself makes economic sense and the branded residence by itself makes economic sense, when you put those two together, one plus one is not two, it’s five.”
Adan said following the addition of Regent, Six Senses, Kimpton, Voco and Vignette to its family of 18 brands, IHG “is the second largest group hotel chain that plays in the luxury and lifestyle segment.”
Six Senses, he said, was one brand that didn’t get developed as much in the Americas. Now there’s deals for Six Senses properties in Mexico via conversions.
In terms of financing deals in the region, Adan said it’s as complicated as it’s always been.
“It’s impossible to generalize Latin America. It tends to get put into one bucket, but the reality of it is [that] between Mexico and Argentina, it’s worlds away. [Financing] has always been complicated, but for the good deals, you do get financed,” he said.
Recent political moves across the region have led financial markets to feel like a roller coaster, he said. As a result, some investors in countries such as Chile and Colombia are in a wait-and-see mode.
“Once [new elections] are solved, people will invest again. There’s a lot of money in those countries. There’s pension funds. There’s financing — more expensive than in the U.S. — but for the right deal, there is [financing available],” he said.
Brazil, however, is among the Latin American countries where it’s more challenging to get financing for a hotel, he said.
Adan said his team is active in approaching new owners by getting out in various markets, saying “we’re here, we’re a stronger team now.” IHG is spending just as much time on existing owners as well.
In Latin America, it’s all about relationships, he said.
“For me, the client is not the guest at the hotel. The one I need to keep happy is our owners. They’re the ones that will bring the business to me and the development team,” he said. “I dedicate a tremendous amount of time nurturing that relationship with owners. My philosophy [with owners] is don’t tell me what’s working, tell me what doesn’t work. It’s not only about hearing them and talking to them, it’s about putting it into action. That is resulting in many existing owners repeating business with us. When an existing owner signs a new hotel with us, I know we’re doing something right.”
As far as attracting new owners, Adan said he tells his development team one simple thing: “losing a deal hurts me.”
His goal is for his team to be in front of every owner, be involved in every request for proposal and give it their best shot.
By 2024, Adan wants to have a pipeline of 300 development deals across Latin America. He feels most opportunities will come through conversions, which can be easier to finance as opposed to a new project. Voco, Vignette, Kimpton, Indigo and Crowne Plaza properties are suitable for conversions, he said.
He said about a third of the deals his team is looking at across Latin America now are for conversions because the region has a large supply of independent hotels.
“These conversion/collection brands we have now, it’s very easy for an owner that has an existing hotel to become part of [our] system. They have all the benefits of being with IHG, without needing to change the entire hotel. We make it easier to be more flexible for them,” he said. “Not everything is convertible, but everything that is, we’re knocking on those doors.”
What excites his development team, he said, is when an owner “brings the energy and forces us into new concepts and much more creativity. That’s what our guests are going to want.”
In addition to investor appetite for luxury hotels, there’s also room to play in the midscale and economy space across Mexico, Latin America and the Caribbean.
Avid, for example, can be developed in primary, secondary and tertiary cities, near airports or in city centers, he said.
“It’s low cost to build, low operating costs [and] very efficient, so good returns for investors. What we’re looking at for that brand is developers of multi units — five, 10, 15 of those hotels throughout one country or the region,” he added.
Atwell Suites is suitable for longer stays, especially for consumers who are taking advantage of flexible work-from-home policies and want to live out of Mexico City or Costa Rica, he said.
IHG is also growing the presence of its other all-suites, long-stay friendly brands such as Staybridge Suites and Candlewood Suites across Mexico and the Caribbean.
At the moment, there’s very few extended-stay hotels in Central and South America. The ones that are there have been tremendously successful, he said, and IHG hopes to bring extended-stay brands to those locations.
Growth Through the All-Inclusive Resort Market
IHG formed its exclusive and strategic alliance with Mallorca, Spain-based Iberostar Hotels & Resorts in 2022. Iberostar has a portfolio of 70 hotels, including all-inclusive resorts, concentrated in the Caribbean and Central America, as well as other parts of the world.
In total, IHG has more than 40 of Iberostar’s hotels integrated into its system today. More than 20 of those are located in the Americas.
“The integration process is still taking place … and that has given us a big push into the resort world and into all-inclusive. Of course, we’ll want to continue growing the Iberostar brand,” Adan said.
In addition to bringing Iberostar’s resorts and all-inclusive properties into IHG’s system, IHG also signed an all-inclusive for the Kimpton Riviera Maya and is looking at two additional Kimpton all-inclusives with the same ownership group.
Owners are also expressing interest to develop all-inclusives through IHG’s Voco, Vignette and InterContinental Hotels & Resorts brands.
“It’s the one assignment we have left, really becoming bigger in resorts. We do have over 120 million rewards members that are looking for redemption opportunities. We really need to grow in that segment to give our guests the redemption opportunities they want,” he said.