Hotel Management — February 2012
Change Language:
Development
new markets
Big brands bank on Latin America
The region emerges as a hot spot for midscale growth with Starwood, Marriott moving in
By Andrew Sheivachman
associate editor
While new hotel development has slowed to a trickle in the United States and Europe, Latin America continues to offer attractive terms and growing demand for developers to plan around.
“Brazil is clearly one of our priority markets on the global level,” said Ricardo Suarez, Starwood Hotels and Resorts’ VP of development for Latin America. “We’ve been present for 38 years in the market, so we know it quite well. We’re looking for opportunities to grow not just in response to the World Cup or Olympics, but because of all of the positive economic growth and development in the country.”
Starwood recently announced the development of the Sheraton Reserva do Paiva Hotel and Convention Center in northeast Brazil, slated to open March 2014. The 289-room hotel is part of a trend featuring new hotel developments in Latin America designed to appeal to the influx of international businessmen looking to hold meetings at full-service hotels.
“Last year we opened our first managed Aloft in Colombia and see a lot of opportunity in countries like Colombia and Panama,” said Suarez. “It is really a very good moment for Latin America because the economy is very healthy with lots of growth prospects. The fact that we’ve added more rooms in our upper-upscale segments shows that Brazil is a key component of our planning.”
For Starwood, introducing a wider variety of brands to the region is essential. “Typically for us in Latin America we have a lot of interregional and international travelers,” said Suarez. “With more than 50 percent of hotels at least 15 years old in the region, there’s clearly a big opportunity for internationally branded hotels that really set themselves apart from existing supply and focus on positioning themselves to make a big difference.”
Other brands are looking to increase their share of the midscale market to capitalize on the region’s growing pool of middle-class travelers. Marriott, for instance, has increased its presence in Peru to bring new brands to the developing country. The 150-room Courtyard by Marriott Lima will open in 2013, while the upscale 300-room JW Marriott Cusco is slated to open in 2012.
“When you look at our region and ask where the opportunity is to develop at scale, I would say Brazil and Mexico are appropriate because of the size, population and number of secondary cities,” said Laurent de Kousemaker, CDO of the Caribbean and Latin American region for Marriott International. “We’ve seen the economies of Latin America as being relatively resilient to the economic crises with stable growth and political environments. In general, there’s been more of a business-friendly environment in countries like Colombia, which is particularly interested in attracting foreign investment.”
Marriott is targeting Latin American countries where a variety of product can be developed simultaneously to grow the company’s platform in the region. The company currently has 34 hotels in its active Latin American pipeline, with 13 hotels slated for Mexico and just one for Brazil. “When we’re faced with a market that is more domestic and sensitive to price, that forces a natural growth of the midmarket product,” said de Kousemaker. “If you look at our representation in the region, we have Marriott-brand hotels all over and large hotels in the gateway cities. Now we’re shifting gears and looking at what other brands we should bring to secondary markets with a more efficient operating model.”
“Two years ago we signed a multiunit agreement to build 36 Fairfields throughout Mexico, so that’s one platform that’s now being executed upon,” said de Kousemaker. “We’re now looking to do a similar platform in Brazil. It could be more than 50 properties; the potential is very large and the fees for a Fairfield Inn are much lower than for a larger hotel. If we’re going to put in the same effort to design and build a hotel, we’re going to want to spend our time on appropriate concerns.”
Siegel gambles on Las Vegas property
Las Vegas–The Siegel Group, owner of four boutique hotels in Las Vegas, acquired a former Crowne Plaza hotel with the intention of reflagging it under a major brand. The six-story, 202-suite property was acquired for $4.2 million in an all-cash transaction, coming in at $26 per square foot.
“We acquired it pretty quickly,” said Steve Siegel, president and CEO of The Siegel Group. “We were in negotiations for several months until we came to an agreement on the property.”
The Siegel Group owns four other Las Vegas hotels including the Rumor Hotel and Artisan Hotel Boutique. The new acquisition, located next to The Hard Rock Hotel, will offer the ownership group an opportunity to open a property with meeting and convention space.
“The location is key being on Paradise Road,” said Siegel. “There’s only so many hotels on Paradise, and the bones of the property are appealing with a lot of common area space for meeting and convention areas, which would help out some of our other hotels.”
Siegel will look for a partner with a strong reservations system. “We’re talking to several brands, including Starwood, Hilton, to see what will work there,” said Siegel. “It may open as another boutique hotel to add to our collection; we’re not going to give up management but if we can get a good reservations system, that helps us funnel during the week.”
Big brands bank on Latin America
The region emerges as a hot spot for midscale growth with Starwood, Marriott moving in
By Andrew Sheivachman
associate editor
While new hotel development has slowed to a trickle in the United States and Europe, Latin America continues to offer attractive terms and growing demand for developers to plan around.
“Brazil is clearly one of our priority markets on the global level,” said Ricardo Suarez, Starwood Hotels and Resorts’ VP of development for Latin America. “We’ve been present for 38 years in the market, so we know it quite well. We’re looking for opportunities to grow not just in response to the World Cup or Olympics, but because of all of the positive economic growth and development in the country.”
Starwood recently announced the development of the Sheraton Reserva do Paiva Hotel and Convention Center in northeast Brazil, slated to open March 2014. The 289-room hotel is part of a trend featuring new hotel developments in Latin America designed to appeal to the influx of international businessmen looking to hold meetings at full-service hotels.
“Last year we opened our first managed Aloft in Colombia and see a lot of opportunity in countries like Colombia and Panama,” said Suarez. “It is really a very good moment for Latin America because the economy is very healthy with lots of growth prospects. The fact that we’ve added more rooms in our upper-upscale segments shows that Brazil is a key component of our planning.”
For Starwood, introducing a wider variety of brands to the region is essential. “Typically for us in Latin America we have a lot of interregional and international travelers,” said Suarez. “With more than 50 percent of hotels at least 15 years old in the region, there’s clearly a big opportunity for internationally branded hotels that really set themselves apart from existing supply and focus on positioning themselves to make a big difference.”
Other brands are looking to increase their share of the midscale market to capitalize on the region’s growing pool of middle-class travelers. Marriott, for instance, has increased its presence in Peru to bring new brands to the developing country. The 150-room Courtyard by Marriott Lima will open in 2013, while the upscale 300-room JW Marriott Cusco is slated to open in 2012.
“When you look at our region and ask where the opportunity is to develop at scale, I would say Brazil and Mexico are appropriate because of the size, population and number of secondary cities,” said Laurent de Kousemaker, CDO of the Caribbean and Latin American region for Marriott International. “We’ve seen the economies of Latin America as being relatively resilient to the economic crises with stable growth and political environments. In general, there’s been more of a business-friendly environment in countries like Colombia, which is particularly interested in attracting foreign investment.”
Marriott is targeting Latin American countries where a variety of product can be developed simultaneously to grow the company’s platform in the region. The company currently has 34 hotels in its active Latin American pipeline, with 13 hotels slated for Mexico and just one for Brazil. “When we’re faced with a market that is more domestic and sensitive to price, that forces a natural growth of the midmarket product,” said de Kousemaker. “If you look at our representation in the region, we have Marriott-brand hotels all over and large hotels in the gateway cities. Now we’re shifting gears and looking at what other brands we should bring to secondary markets with a more efficient operating model.”
“Two years ago we signed a multiunit agreement to build 36 Fairfields throughout Mexico, so that’s one platform that’s now being executed upon,” said de Kousemaker. “We’re now looking to do a similar platform in Brazil. It could be more than 50 properties; the potential is very large and the fees for a Fairfield Inn are much lower than for a larger hotel. If we’re going to put in the same effort to design and build a hotel, we’re going to want to spend our time on appropriate concerns.”
Siegel gambles on Las Vegas property
Las Vegas–The Siegel Group, owner of four boutique hotels in Las Vegas, acquired a former Crowne Plaza hotel with the intention of reflagging it under a major brand. The six-story, 202-suite property was acquired for $4.2 million in an all-cash transaction, coming in at $26 per square foot.
“We acquired it pretty quickly,” said Steve Siegel, president and CEO of The Siegel Group. “We were in negotiations for several months until we came to an agreement on the property.”
The Siegel Group owns four other Las Vegas hotels including the Rumor Hotel and Artisan Hotel Boutique. The new acquisition, located next to The Hard Rock Hotel, will offer the ownership group an opportunity to open a property with meeting and convention space.
“The location is key being on Paradise Road,” said Siegel. “There’s only so many hotels on Paradise, and the bones of the property are appealing with a lot of common area space for meeting and convention areas, which would help out some of our other hotels.”
Siegel will look for a partner with a strong reservations system. “We’re talking to several brands, including Starwood, Hilton, to see what will work there,” said Siegel. “It may open as another boutique hotel to add to our collection; we’re not going to give up management but if we can get a good reservations system, that helps us funnel during the week.”
Message