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Trust moves the hotel sector

Latin America has had a noticeable increase in the number of hotels and rooms in recent years, this is especially due to the good economic health of the region and that more and more people are interested in visiting the countries of the area.

By Santiago Jaramillo Hincapié

Latin America is experiencing a special dynamism in terms of hotel investment, both in the opening of new hotels and in the adaptation and tuning of existing offer. Many international chains and some more with local capital, advance millionaire investments in this matter.

Tangible examples are the cases of Bogotá and Lima, which have recently been epicenters of numerous investments, and what is more interesting, they have projected openings of enormous value for the near future. However, these are not the only cities, the projects and constructions are spread over most cities and countries in the region.

- Publicidad -

JLL (Jones Lang LaSalle IP, Inc) recently published a report in which it evidences the heavy investment in these two cities. In the case of Bogotá, it speaks of the opening of about 900 rooms, represented in Hotel Wyndham Bogotá, 261 rooms (Salitre / Airport); Movich Buró 26 Hotel, 250 rooms (Salitre/ Airport); Bacatá EXE 95, 106 rooms (Calle 93 – 100); Urban Royal, 100 rooms (Salitre/ Airport); BH Usaquén, 88 rooms (North Zone); and TRYP Usaquén, 80 rooms (North Zone).

The report also highlights the future opening of nearly 1,100 more rooms represented in the projects advanced by Four Points by Sheraton, 140 rooms (Calle 93 – 100); Autograph Collection, 61 rooms (North Zone); W Hotel, 168 rooms (North Zone); AR Parque 93, 65 rooms (Calle 93 – 100); Holiday Inn Express, 100 rooms (Chile); Courtyard by Marriott, 146 rooms (Salitre/ Airport); Hampton by Hilton, 100 rooms (Usaquén); and Grand Hyatt, 297 rooms (Salitre/ Airport).

Similar situation lives Lima that projects the opening of about 500 rooms represented in three main investments: Courtyard by Marriott Miraflores, 154 rooms; TRYP by Wyndham Lima Miraflores, 140 rooms; and Holiday Inn Lima Airport Hotel, 179 rooms.

This panorama is only a sample of the good moment that is lived in the Latin American region in terms of new hotel offer.

New and well-known competitors

In the investment deck are the projects advanced by hotel chains with great trajectory and international recognition, Hilton, Sheraton, Marriott, Holiday Inn, Grand Hyatt, among some of them, and new players such as Grupo Terranum and Equity International (EI), which bet on it with important acquisitions and constructions in order to meet the growing demand of the region.

Precisely, the Terranum Group seeks to keep a large slice of the hotel market in Latin America. Hence, one of its most recent actions aimed at this task has been the purchase of the hotel chain Decameron Hotels & Resorts.

- Publicidad -

After two years of negotiations, the Terranum Group and the private investor and developer of real estate companies, Equity International (EI), recently closed an important business that makes the former the new owner of one of the most important hotel chains in Latin America.

In this way, Terranum becomes one of the largest hotel platforms in Latin America and one of the competitors to consider.

One of the great goals of the business group will be to enter the Chilean market with force, where Decameron does not have a presence, but thanks to the negotiation it acquired some properties for which it plans the development of several hotel complexes. "This transaction marks a milestone in the regional market, ratifies the strength of the Terranum Group, as well as the acceleration of the expansion plan of its Terranum Hotels business unit," said Natalia Huezo, communications manager of the Terranum Group, whose purpose is to strengthen the operation and focus on the growth of existing assets.

The purchase of the Decameron allows the Terranum Group to become the owner of 27 owned, leased and managed hotels in Colombia (13), Mexico (3), Jamaica (2), Peru (3), Panama (3), Ecuador (2) and El Salvador (1), totaling 7,561 hotel keys. This important acquisition is in addition to the Aloft Bogotá Airport and W Bogotá hotels that Terranum has in Colombia; added to the Aloft San José, Residence Inn Escazú and Courtyard Alajuela in Costa Rica; and Courtyard San Salvador in El Salvador, complemented by its expansion map in Latin America, where it now has about 8,600 rooms.

The group also stressed that this operation will allow it to merge into a single company, the trajectory of the renowned "All Inclusive" business model of Decameron, with the strength of Terranum Hotels, as well as integrate two teams with extensive and specialized experience in the sector.

Meanwhile, the traditional and extensive trajectory in the sector represented in Hilton Worldwide, announced its plans to open more than 40 hotels and resorts in Latin America by the end of 2016, which will mean a growth of 60% in the company's portfolio in the region in the next two years, as revealed by Tom Potter, Senior Vice President, Hilton Worldwide, Caribbean, Mexico and Latin America.

- Publicidad -

As of the second quarter of 2014, Hilton Worldwide has nearly 12,000 rooms in 62 hotels and resorts providing guest accommodations throughout Latin America.

These figures include the recent openings of hotels such as Hilton Panama, with 347 rooms, and Hampton by Hilton Cali in Colombia, with 105 rooms. The company's development plans are growing steadily. More than 6,000 rooms and more than 40 projects already confirmed are anticipated, in addition to hotel openings such as the Hilton Barra, Rio de Janeiro, with 298 rooms, and DoubleTree by Hilton Santiago - Vitacura, with 226 rooms, in Chile.

"Hilton Worldwide continues to go through a period of significant global expansion, as one of the largest and fastest growing companies in the hospitality industry. Latin America plays a dominant role in this development and we are committed to maintaining this trend in the region," said Potter, who also added that "thanks to its stable and growing economies, Latin America has excellent opportunities. In addition, we have the necessary equipment to continue bringing the right brands to target markets with significant growth potential."

Hilton Worldwide's list of projects under development includes 43 hotels, including: Hampton Hotels in Colombia, Mexico and Panama; Hilton Garden Inn in Argentina, Brazil, Chile, Colombia, Costa Rica, Mexico, Peru and Uruguay; Hilton Hotels & Resorts in Argentina, Brazil, Panama and Mexico; DoubleTree by Hilton in Chile and Mexico; and Conrad Hotels & Resorts in Colombia.

Similarly, Craig S. Smith, Marriott's president for the Caribbean and Latin America, recently revealed in statements delivered to local media in Colombia that they currently have about 70 hotels in Latin America, 40 under construction, and the goal is to double that figure in the next four years.

He also stressed that for his chain one of the countries in which there are more facilities to enter with his brand is Mexico, since it is a nation that has a lot of dealings and business with the United States. However, he also highlighted Colombia, Peru, Ecuador and Chile as countries with great facilities to do business. Contrary to what is presented in Brazil, where he said many obstacles are put in the way of the opening of a new hotel.

"When we arrive in each country, we look for partners who know the country, who know how to do the paperwork and who are interested in growing with us. It is very important to grow first in the most important cities and then go to the others, little by little," revealed Marriott's representative for the Caribbean and Latin America in his statements.

Tourism, another growth factor

According to recent data from the World Travel and Tourism Council, tourism will be one of the most flourishing sectors in Latin America over the next decade. The figures of this organism show that growth will have an average of 4.4% per year until 2024.

These statements are based on two points: the increase of the middle class in most Latin American countries – a consequence of a notable gain in purchasing power – and the elimination of visas for intraregional tourism.

The outlook is encouraging, however the sector also has significant challenges, the most important: carrying out the necessary investments to accommodate tourism infrastructures to the increase in demand, a situation that will undoubtedly increase investment in this area in the region.

The World Tourism Organization (UNWTO), for its part, states that international tourism increased by 4.6% during the first half of 2014. In South and Central America the figure climbed to 6%, while in the Caribbean it rose by 5%, in all cases, above the average. According to UNWTO estimates, a quarter of tourists arriving in Latin American countries come from the same region.

Lyda Durango
Author: Lyda Durango
Marketing Services

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