PANAMA CITY, Panama — Laurent de Kousemaeker of Marriott, Patrick Mendes of Accor and Joel Eisemann from IHG spoke with moderator Peter Greenberg of CBS on Weathering the Storm at SAHIC 2020, held virtually Oct. 5 and 6. And later in the conference, David Tarr of Hyatt, Ted Middleton of Hilton and Frances Gonzalez of Radisson weighed in during a panel moderated by Stephanie Ricca of HotelNewsNow.
Joel Eisemann, chief development officer, the Americas, at InterContinental Hotels Group, said the recent rebound was driven by the leisure market, but he has taken personal steps to encourage business travel. “I turned my team loose, saying that they should travel if they were willing or able to travel, but they need to have someone at the other end [who is willing to have them visit].”
IHG’s strong growth momentum for both the InterContinental and Hotel Indigo brands continues around the globe, including Latin America and the Caribbean. There are currently 246 IHG-branded hotels (more than 40,000 rooms) in the Caribbean and Latin America with, 150 of the hotels in Mexico.
Accor has been cutting costs and has successfully implemented cleaning protocols at its hotels over the past several months, but its South American development pipeline is still in place, Patrick Mendes, CEO, South America for Accor, told the conference. “We had to postpone some openings and stop construction, but we did not lose any contracts,” he said. At last year’s conference, Mendes had told Greenberg that Accor planned to open 500 hotels in South America in 2020. At press time, there were 410 hotels open and 120 under construction in South America. “We lost six hotels, and some transformed into residential. We are seeing a good potential for conversions, and that will be our focus for the next two to three years,” he said.
Mendes said that Accor is working to attract two kinds of domestic travel in countries such as Brazil. In previous years, 10 million Brazilians travelled abroad, spending $16 billion per year. Now that those travellers can no longer travel abroad, Accor is promoting travel within the country. They don’t necessarily know anything about Amazonia, for example, he noted, adding that the situation is similar for these types of travellers in Chile and Argentina. The other group is the Brazilians who historically have provided more than 90 per cent of the country’s tourism, the ones who traditionally travelled locally. “It’s better for us to adapt to leisure situations, than waiting for Americans and Europeans to return,” he said.
For the first time in Latin America, you see governments realizing that tourism is a great industry. In many countries, tourism employs 12 to 14 per cent of the labour force, and many first jobs, said Mendes. “It’s ironic that the only time governments recognize tourism’s importance is when it’s gone,” added Greenberg, noting that the same thing happened following 9/11 and during the Iceland volcano in 2010.
Laurent De Kousemaeker, Marriott’s chief development officer, Caribbean and Latin America, mentioned China, which is now achieving a successful return to the same occupancy levels as last year. Indeed, his development partner colleague in Asia has signed 37 new deals. Performance in CALA (Caribbean and Latin America) is tougher because of the lack of international travellers to larger cities such as Mexico City and Bogota, he said. But in a recent survey done in August, “76 per cent of our resort clients indicated they are dreaming of a beach destination in the fall and 59 per cent are willing to take an international flight if travel restrictions are lifted.” Business travel is crucial to recovery, accounting for 20 per cent of the hospitality sector business worldwide, said de Kousemaeker.
De Kousemaeker said that Marriott has a pipeline of about 135 hotels, 83 of which are under construction, and while some owners are asking for extensions, they have not seen a lot of meaningful requests for cancellations. “When assets change hands, we may see more changes,” he said. “Right now we are adapting to customer concerns and rebuilding our company, deciding what areas to focus on.” Local to local business is one of those things.
De Kousemaeker added that when hotels recover, they will be stronger, since both owners and franchisees have been working aggressively to cut their system costs. Measures include reducing fixed costs by 50 per cent, reducing shared services costs, waiving FF&E reserves and deferring renovations. “We underwent strong reorganization of our company over the last number of months, starting with furloughs and then reorganizing — with many job eliminations, unfortunately.” On the other hand, funding has been increased for areas such as cybersecurity. “For our survival, we have become leaner and more efficient.”
De Kousemaeker predicted that elements of Marriott’s Commitment to Clean program will stay for several years, as will use of mobile keys for guests to bypass the check-in desk. Buffets have shifted and self-service buffets will likely come back. He also talked about the impact on home sharing — Marriott Homes, which has 10,000 homes and vacation properties is doing extremely well.
The need to travel is in our cultural DNA, said moderator Peter Greenberg. When he flew from Chicago to Los Cabos in Mexico recently, the flight was completely full. “It’s not when or if we are going to travel, but how,” he said, adding that the key to recovery is not a vaccine, but widespread, rapid biometric testing.
The moment of truth in the hospitality industry
On Day 2 of SAHIC, HotelNewsNow’s Stephanie Ricca moderated a panel that included David Tarr of Hyatt, Ted Middleton from Hilton and Frances Gonzalez from Radisson Hotel Group titled, The Moment of Truth in the Hospitality Industry.
Frances Gonzalez, vice-president, operations, Latin America for Radisson Hotel Group said that 59 per cent of their inventory closed during the pandemic, but the majority are open now. During the pandemic, Radisson made an informed decision not to cut operations and field support. “We were there for [our owners],” she said. Gonzalez said that Radisson has even signed deals during the pandemic. The Radisson Blu Aruba has been delayed because of supply issues. Radisson Blu Punta Cana, Dominican Republic, is on schedule to open during the second week of November. Radisson has been more corporate-oriented than leisure-oriented, but now Radisson Blu has two new properties opening in the Caribbean. They will have more resorts and leisure properties than in the past. Radisson recently renewed its master franchise relationship with Atlantica Hotels in Brazil, for the next 20 years. Atlantica is the largest privately-held hospitality company in Latin America. Radisson has more than 54 hotels (8,171 rooms) operating in the Caribbean and Latin America, and 12 hotels (1,603 rooms) under development for a total of 66 hotels (9,774 rooms).
David Tarr, senior vice-president, development, Americas for Hyatt, said that 30 per cent of the portfolio was still closed including eight full service and two select service hotels, but that they should be operating at full strength sometime soon. Hyatt has about 30 hotels in the Caribbean and Latin America. Rapid response, open lines of communication and relief for owners, helped Hyatt weather the pandemic. Hyatt has about a dozen projects underway — after pausing briefly for construction worker safety. Financing has been eliminated for any new hotels — those properties are essentially on hold until Hyatt gets financing. Tarr noted that there was some return of leisure travel during the summer months; people were just waiting to get out. Business travellers are concerned about more than health and safety; they’re looking at stability throughout the region. In terms of group and meeting business, the lag in business travel may well encourage people to get together for small meetings. “Are meeting and groups will come back when we flip a switch with a vaccine.”
Ted Middleton, senior vice-president, development, Latin America and the Caribbean for Hilton, said that 138 of 164 hotels were open, with 26 temporarily suspending operations. “Every week one or two additional properties open,” he said. During the pandemic, Hilton did everything they could to advocate for their owners’ interests — they relaxed certain brand standards, operating costs were reduced, and Hilton worked hard to drive revenue and market share. In spite of the pandemic, it was a surprisingly good year for signing new deals, with the focus on conversions. Fifty-two per cent of their deals are conversions. “Now more than ever, hotels need a brand with strong booking engines,” he said. Conversion will be a big opportunity for Hilton over the next several years, Middleton said. The all-inclusive space, traditionally dominated by Spanish companies, is another area of opportunity. Hilton is looking forward to rolling out its Tru brand in the Caribbean and Latin American region, along with Ibis and City Express hotels, which have lower development costs than Hampton Inns.
The next SAHIC Latin America and the Caribbean conference is scheduled for Sept. 27-28, 2021 in Panama City, Panama.