CORAL GABLES, Florida — Hotel brand leaders are all-in on expansion in Latin America and the Caribbean, where they're accustomed to taking a long-term view.
"One thing we're used to in CALA is uncertainty," said Gilda Perez-Alvarado, chief strategy officer and CEO of the Orient Express brand for Accor. "We have government changes and socioeconomic situations happening on a regular basis, but we're very bullish on the region long term."
She and other brand executives speaking at the recent Americas Lodging Investment Summit CALA conference said they are monitoring American inbound and outbound travel to and from the CALA region, but they're not too worried.
She said Accor has seen some deceleration of CALA-based travelers coming to the U.S., but "for American travelers going into CALA, especially into dollar-denominated nations, it's looking very robust."
Accor has 500 hotels and 75,000 rooms in the region, representing nearly 10% of its global portfolio. Last month the company announced it's working on a deal to acquire 17 management agreements from Royal Holiday Group. As part of the deal, Accor would manage six all-inclusive resorts in Mexico, and 11 city hotels and resorts in Mexico, Argentina, Puerto Rico and more.
Jolyon Bulley, CEO of the Americas for IHG Hotels & Resorts, pointed to "strong fundamentals" in the region such as rising middle class populations and "healthier and wealthier" retirees willing to travel. Those positives outweigh short-term volatility in the long run, he said.
Gustavo Viescas, president of the CALA region for Wyndham Hotels & Resorts, reminded the audience that "there's not just one answer for the entire region" when it comes to how the Caribbean and Latin America will feel any impact from tariffs and travel demand decreasing.
While Mexico and the Caribbean may have stronger relationships with the U.S. because of proximity, hoteliers in this part of the world "know how to navigate downturns," he said.
Wyndham has 268 hotels in the region and 45,000 rooms.
But for every "con" there's also a "pro," said Bruce Wardinski, chairman and CEO of Playa Hotels & Resorts. Hyatt announced in February it would acquire Playa for $2.6 billion.
"If Canadians aren't going to travel to the U.S. in the winter and go to Mexico or the Caribbean, that will be a big plus for them," he said.
Hesitancy to travel among Americans as overall costs rise for consumers could be a hiccup, however, Wardinski said, but the region has some time to let that scenario play out.
"Hopefully some of that lost demand will be made up by Europeans, but it's a mixed bag that will play out," he said. "It's good that the high season in the region is behind us and we can build up for the next high season when things might be more clear."
Yes, hotel brand executives said they are worried that deals are slowing down, but even that isn't overly worrying.
"Deal volume in the Dominican Republic, Panama, Colombia, Peru, Chile, Brazil and Argentina is frothy, and if deal volume is frothy, the anticipation is performance will follow," said Keith Pierce, executive vice president and president of franchise and development for Sonesta.
Andrés Fajardo, CEO of GHL Hoteles, which manages 61 hotels in nine Latin American countries for its own brands and other global brands, acknowledged that the region is accustomed to volatility and uncertainty. But he added that "the willingness to invest is not there" at the moment, so he's in wait-and-see mode when it comes to deal volume picking up.
Still, Fajardo said that despite a transactions slowdown, "as operators, we think these times could be an opportunity for growth."
That is coming via conversions from other brands, and he said there's also opportunity for consolidation among management companies.
On the plus side, Pierce said the major hotel brand companies expanding in the CALA region have all already found solid, local development partners.
That's critical, Perez-Alvarado said.
"The largest owners in Latin America are Latin Americans," she said. "We're starting to see bigger funds from the U.S. going into the region, but it's mostly local."
Family offices and local private equity are all big players in the Caribbean and Latin America, and brands work with these groups to ensure a hotel deal will pencil. That often means including residential units or being creative about deal structuring.
"We look for every opportunity to stabilize that hotel," said Larry Cuculic, president and CEO of BWH Hotels. "We can have aggressive deal structures — that's our way for the hotel [owner] to know we're in it together."
Bulley said high-end hotel development with residential components are "proliferating across our business at the moment and driving cash flow."
IHG's Kimpton Monterrey, scheduled to open in Mexico next year, will bring hotel rooms and residences to the city's new-build Torre Rise mixed-use development, which is said to be the tallest tower in Latin America upon completion.
