South American Hotel Trends You Should Know

South American Hotel Trends You Should Know

How Airbnb is affecting South America hotels and which hotel brands are investing in the region By: Mark Chesnut
<p>Arturo Rosa, president and founder of South American Hotel &amp; Tourism Investment Conference (SAHIC) // © 2015 SAHIC</p><p>Feature image (above):...

Arturo Rosa, president and founder of South American Hotel & Tourism Investment Conference (SAHIC) // © 2015 SAHIC

Feature image (above): Patricia Boo, senior business development manager for Latin America at STR Global, shared insights about South America hospitality and travel. // © 2015 SAHIC

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South American Hotel & Tourism Investment Conference

Hoteliers are bullish on opportunities for growth in South America. That’s the main takeaway from the more than 300 hoteliers, developers, investors and government officials who gathered in Lima, Peru, in September for the annual South American Hotel & Tourism Investment Conference (SAHIC).

This optimism comes in spite of economic and market challenges in some areas, noted Arturo Rosa, president and founder of SAHIC. 

“We are in a moment where there is a slowdown of the economy in the region and in the world,” he said. “But the region is not like in the past, where a slowdown appeared and the region went into crisis. There is a slowdown now, but it’s not a crisis.”

When it comes to attracting new investors and hotel development in South America, “the Andean region is still the most attractive,” Rosa said, noting that Peru, Colombia, Ecuador and Bolivia are catching the eye of those who pump money into new hotels. 

The fact that there is still a large percentage of hotels in South America that are not internationally branded means there are lots of opportunities, according to Jorge Giannattasio, senior vice president and chief of Latin America operations for Starwood Hotels & Resorts. 

“With this in mind, we launched our newest brand, Tribute Portfolio,” Giannattasio said.

Tribute Portfolio will allow independent hotels to access Starwood’s network of sales as well as its Starwood Preferred Guest members, without losing their independence. 

“We’re in a year of very important growth,” said Paulo Pena, president and managing director for Latin America and the Caribbean at Wyndham Hotel Group. “We’ll have more than 40 total openings in Latin America in 2015, which is a record.”

Pena noted that Wyndham is targeting Brazil, Mexico, Colombia and Peru as main regions for expansion.  

Other hotel executives weighed in on how Latin America figures in their overall business strategy.

“Latin America is a very important focus for us,” said David Berg, CEO of Carlson Hospitality Group.

Berg added that his company is especially enthusiastic about new openings in Peru, Chile, Mexico and Colombia. 

Ted Middleton, senior vice president of development for the Americas at Hilton Worldwide, said his company will expand its presence in the region by about 60 percent by 2017, with some 75 percent of the new properties flying the Hilton Garden Inn and Hampton by Hilton brands. In addition, Hilton’s Homewood Suites brand will build 30 to 40 properties throughout the Caribbean, Central and South American region.

AccorHotels is also in growth mode in South America, according to Patrick Mendes, CEO for the region. 

“The plan is very clear: Tripling the number of hotels is our goal,” he said.

The budget-oriented Ibis brand is AccorHotels’ fastest-growing in the region, although new lifestyle brands such as Mama Shelter will debut in the region as well. As part of the much-discussed plan to add independent, non-affiliated hotels to its booking platform — which will raise the total number of hotels available from 4,000 to 10,000 — the company aims to introduce 500 non-affiliated hotels to its bookable inventory after launching the new platform in Latin America in February 2016. 

Cuba and Other Trends
The island nation of Cuba may not be in South America, but its presence this year — a first at SAHIC — attracted a lot of attention. Rosa took to the stage with Cuban tourism and hotel representatives to announce plans for the launch of the Cuba Hotel & Tourism Investment Educational Summit (CHIES), which will take place in Havana in June 2016.  

“This edition of SAHIC is the first time that most of the U.S. brands are in front of the key Cuban people,” Rosa said. “It’s a historic time for both parts.” 

Cuba may be hot, thanks to thawing relations between the U.S. and Cuban governments, but Cuba was not the only trend noted at the conference. Rosa and Patricia Boo, senior business development manager for Latin America at STR Global, shared key information highlighting other trends in South America hospitality and travel. 

Among the findings of “SAHIC 2015 Global and Regional Hospitality Industry Overview,” which measures year-to-date change through July 2015:

- Brazil is down more than 5 percent in occupancy and more than 10 percent in average daily room rates (ADR).

- Argentina is up less than 5 percent in occupancy, but up nearly 15 percent in ADR. 

- Countries with the lowest ADR for the period in South America were Brazil, Colombia and Ecuador, while Chile and Peru were most expensive. 

- Peru is leading in terms of ADR in the Andean region, with a nearly 20 percent increase in Cusco, while Lima reported an increase of more than 10 percent. 

While the situation in Brazil isn’t cheery for investors and hoteliers at the moment, it can be good news for travelers (and those who sell travel), since attractive prices are easier to find than in recent years, according to Rosa. He also noted the economic downturn will likely help stimulate international visits. 

“Prices will be cheaper in U.S. dollars, and in terms of the hotel business, international arrivals will grow,” Rosa said.

Rosa is optimistic about hotel investment opportunities in Argentina, which has had its own economic problems as well. 

“There will soon be a new period with a new president on board,” he said. “There is much speculation that this could be a new process for growth. If Argentina begins to recover, it will in some ways take the place of Brazil in attracting investment — not only in luxury, but also in select service and full service.”

Battling Airbnb?
At least twice during panel discussions and presentations at SAHIC, the topic of Airbnb arose. Hoteliers are, for the most part, less than thrilled about the company, which by some definitions is now considered the largest hospitality entity in the world. But hotel executives at the conference stressed the advantages that hoteliers have over Airbnb. 

“We see it as a niche, and we don’t see it as competition,” Hilton’s Middleton said, noting that hotels offer added features including loyalty programs and overall security that Airbnb cannot. 

Still, executives acknowledged some positive effects of the home rental company’s rise. 

“Airbnb is a promoter of tourism, so it’s good for all of us,” Giannattasio said. 

Berg said that Airbnb has “helped us to up our game.” 

Giannattasio noted that Airbnb’s sharing economy concept “doesn’t have the same level of maturity [in Latin America] as in Europe and the U.S.” 

“We are seeing large hotel companies like ours … enhancing the overall guest experience,” Giannattasio said. “That is where we are very different [from Airbnb].”

He added that offering branded products helps people know what to expect when they travel.

“Like it or not, the sharing economy is here,” Berg said. “But the secret sauce of any hotel experience is what we can bring to the guest.”