Latin America’s Luxury Hotel Boom: Lodging Econometrics’ Ford Breaks Pipeline Down

Glenn: Hey, everybody. It’s your hospitality. Friend Glenn here. I’m in a hotel room getting ready for a long travel day, but I couldn’t go and do that without having a conversation with our friend Bruce Ford about what’s going on in the pipeline in Latin America. But before that, I want to thank my friends over at Actabl. Actabl gives you the power to profit. Check out actabl.com and still planning budgets. Check out hoteldata.com that’s going to help you. All right. I don’t know much about Latin America. I do know I had good tacos last night, but we’re gonna we’re going to talk to Bruce and we’re going to figure this all out Bruce Ford great to see you, buddy.

 

Bruce: Good to see you, Glenn. Happy travel day. So you don’t know much about Latin America, Glenn, you’ve been to the Riviera. Maya I’ve been there with you.

 

Glenn: We did have fun in the Riviera Maya.

 

Glenn: But before we get started, we define what the Latin America region is for people.

 

Bruce: So it adds up. Mexico, Central America, South America and the Caribbean islands. So, yes, it does include Jamaica. Yes, it does include the Bermuda. Yes, it does include all the way down to Aruba. Which is really kind of the the southernmost island, if you will. In the Atlantic basin, but. Right. The point being is that it is a combination of a number of markets, but it has a lot of resort areas. And of course, those resort areas were part of the recovery in the hotel business during the pandemic. Those resort areas were very, very popular. Yeah, Mexico.

 

Glenn: They had rules and they could go and feel a little bit more free and comfortable.

 

Bruce: In those places that had the outside spaces. They did well during the pandemic, and the pipeline kind of releases that one thing that I just was going to touch on, Glenn, as it relates to the hurricane that occurred in Jamaica when you have a hurricane here in the mainland United States, we oftentimes have a bump in operating performance because hotels are a very safe place. And particularly when you talk about recovery efforts 60 miles around the core, you get a pretty good bump in occupancy.

 

Glenn: I will say, in fact, it’s.

 

Glenn: A pretty good bumping occupancy, Bruce, that that usually the following year when they’re comparing numbers, they call that out specifically.

 

Bruce: Yeah.

 

Glenn: Yeah.

 

Bruce: And I don’t think we’re going to see that in Jamaica, because I think a lot of the humanitarian efforts and is going to come in on boats, I assume that we’re going to have 90 cruise ships off the shores kind of thing. And that’s how that’s going to work, because it’s just a broad sweep of devastation and really totally unfortunate. I have so many friends that spent a lot of great family memories in Jamaica.

 

Glenn: Yes. And we’re recording this Everybody Knows on Thursday, October 30th. So we don’t know exactly what the response is going to be to help those people. But our hearts are, of course, going out to them. Bruce, Latin American pipeline hard to make that that transition over there. But I tried my best. What’s going on? What are your big observations?

 

Bruce: My big observation is, is that we have over 300 hotels that are under construction in the region. Many of those hotels that are under construction have begun in the past 12 months. Takes a little longer to build some of these resorts and these higher end hotels. You can see luxury is quite an impressive number. We don’t have many regions of the world that have that many luxury projects, but certainly in Latin America, which as I mentioned to you previous to the call, there’s really three countries that control about 65% of the projects in the pipeline here, and that’s Mexico, Brazil and the Dominican Republic. And in many cases, these market areas are seeing a great growth in luxury. Many global luxury brands are coming there for the first time or expanding their presence from 1 to 2 resorts, or perhaps looking both on the eastern and western shores of Mexico. So they’re looking at these opportunities very critically and trying to do these eco friendly resorts, in many cases a new platform to proceed with private residences in addition to hotel rooms.

 

Glenn: So is it a fair observation to make that the numbers are higher than, I guess, than the United States? Because the United States is already a mature luxury market where there’s still a lot more fertile ground for development in some of these other regions.

 

Bruce: Oh, 100%, yes. Where luxury is in the United States is where it’s going to be. This just adding a few here and there, more sprinkling new luxury. Whereas in the Riviera Maya it’s, you know, something where there are still 12 or 14 different luxury locations that people continue to develop down there and you get more communities to, you know, that has really grown up since you and I went there for the first time maybe 15 years ago. I went back just a couple years ago. And the amount of communities and hotels and residential within these oceanfront areas has really blossomed quite substantially.

 

Glenn: And I would think. Bruce, do you have any evidence in Mexico how that new railway that’s going you know, throughout the peninsula is going to help affect development and maybe create more upscale and upper upscale type properties beyond the 2027 window we’re looking at here.

 

Bruce: It’s very possible. I don’t think that’s really scheduled to open until 2030 or so, Glenn.

 

Glenn: Well, parts of it are already parts of it have opened in the real touristy corridor. So I don’t think that my I don’t think it’ll create select service development at this point, but maybe later on, like you’re saying. Yeah. Other areas.

 

Bruce: Well, getting ready to get ready is the kind of where we are now. And of course, as I was saying about Latin.

 

Speaker4: I think, Bruce, I’m sorry.

 

Glenn: I’m sorry again, but I think you perfected that that term when the Washington, D.C. metro was expanding out to Dulles. Yes.

 

Bruce: We’re getting ready to get ready.

 

Glenn: Yeah.

 

Bruce: And and now we’re still building hotels on that corridor. But I think here the hotels that began construction in the past 12 months will take some three years to build. So 2027 is going to be a nice increase from 26 and 25, which are slower opening years for new construction, but aggressively seeing renovations occur down in these market areas here. So the dynamic change in the markets, there’s just a few places specifically that that are offering a larger pipeline. So that page two, Glenn, that shows the Riviera Maya, if you will. It also shows Mexico City and it shows Dominican Republic and then in Georgetown, and there’s a lot of resorts going into that place as they really building a new port there, as I understand it. Which is one of the reasons that that shows up there. And if you can put a pushpin on the map and find that you get a gold star.

 

Glenn: What’s going on? What’s going on in Lima, Peru?

 

Bruce: Well, it’s it’s kind of a a remaking of that. There’s some manufacturing facilities that have grown up there as a result of some of the shifting manufacturing. So that that seems to be the driver there.

 

Glenn: And any insight on Santo Domingo, is it? I’m guessing out of nowhere, part business, part resort.

 

Bruce: It’s a lot more resort. And and some of that is backed up with upscale projects. You know, where you have the, the the five star or the four and a half star oceanfront resort, and then a mile up the hill, you have a courtyard?

 

Glenn: Yep. They don’t like that. Yeah. So what’s your big takeaway from the Latin American region, Bruce?

 

Bruce: The takeaway is it is an impressive full service market area. If you do full service hotels and if you’re working on full service hotels as a supplier or a service provider, you’re seeing a lot of opportunity in that region right now. If you’re a franchise company, you’re obviously seeking more opportunities there. Many cases Mexico is operated by the United States organization these days, which was kind of a change from the way it’s been before. Pushing more product from America, more westernized brands into Mexico, which has been a push that’s occurred for a while.

 

Glenn: And Bruce, I would I would say not only right on it, but I think some a lot of the major management companies, for example, are already on this this trend. So many I’ve seen have started their own Latin America Caribbean divisions over the last 4 or 5 years, as I guess they were smelling this expansion that’s taking place.

 

Bruce: Well, third party management is growing in the region. There’s no question about that. And that is a direct result of the types of properties that we’re seeing developed in the luxury and the full service area. Right. It just as an off hand comment, Glenn, we’re even seeing some luxury brands now offer franchising never happened, right. Most luxury brands insist on operating the properties that that carry their brands. But we’re seeing some of that loosen up a little bit.

 

Glenn: That’s interesting.

 

Bruce: Which is a little bit New information in this cycle, but refreshing because that means that third party management companies are taking another step in, in growth in the industry.

 

Glenn: That’s exciting. All right. What do you want us to go away? Bruce? I’m thinking a good a good plug for how to get more information.

 

Bruce: Yeah. So we’re going to be continuing to do this together. We’ll have a couple more podcasts over the next few weeks talking about each region of the world. We will be publishing a press release and then corresponding with Glenn. When I talk, we put context to the text. Glenn. Yes, we say so. Visit us at Lodging Econometrics. Com on LinkedIn you can find our company as well. And of course for Glenn, no vacancy News.com.

 

Glenn: Yeah, thanks. And I promise we are not going to put the con in context. We’re going to tell it like it is. So everybody, thanks so much for watching. Remember, you got one life to blaze on. See you later, everybody. Bye.