A strong culture of hospitality in Mexico bodes well for the country’s hotel industry in the long term, but representatives of international brands said it’s important to find experienced local partners.
MEXICO CITY—Representatives from international hotel brands believe Mexico holds a unique culture of hospitality that makes it a great destination for growing their companies despite short-term political issues.
Speaking during the “View from the top: Hotel opportunities—Mexico and beyond” panel at the Mexico Hotel & Tourism Investment Conference, Tiffany Cooper, SVP of development for the Americas at Kimpton Hotels & Restaurants, said Mexico will be a top target for her company’s international growth following its acquisition by InterContinental Hotels Group.
“Our brand is built on heartfelt hospitality, and that resonates in Mexico because of the spirit of hospitality, its people, culture and architecture,” she said. “All of these are tenets of our brand ethos, and we see that resonating strongly.”
Erin Green, VP of development in the Americas for Mandarin Oriental Hotel Group, described Mexico as his company’s “top strategic priority for the western hemisphere.”
He noted that “secondary urban markets,” such as San Miguel de Allende, represent significant growth opportunities for companies due to a “strong cultural and culinary bent.”
“From an outsider perspective, (San Miguel de Allende) is a less obvious urban environment, that after you dig shows a strong economic base,” he said. “That helps fill rooms Monday through Thursday; and on weekends, the strong cultural and culinary attractions make it an appealing seven-day-a-week destination.”
Sagar Desai, global head of acquisitions and development for Viceroy Hotel Group, said his company already has a significant presence in Mexico, and believes there is room in destinations such as Cabo San Lucas and Riviera Maya for small boutique properties to supplement the large resorts.
“You don’t always have to be the big hotel,” he said. “There are opportunities now to not be the 850-key hotel, but you can be 150 keys or 50 keys not far away.”
Cooper said she’s excited about the potential in Mexico’s “burgeoning wine country” in Valle de Guadalupe, which she noted fits in with the F&B aspects of the Kimpton brand.
But Desai said logistics will make growth in that area difficult.
“The challenge is access,” he said. “The problem with wine country is getting back to the U.S. and how long it takes from home to your hotel room and back.”
The challenges for international companies include regulatory structures at the federal and state levels that require partnerships to navigate, said Christian Glauser Benz, VP of development for Latin America and the Caribbean at Dream Hotel Group.
“We’re fortunate to have strong partners who understand challenges in zoning, construction, lending and permitting,” he said.
Sid Narang, chief development officer at SBE, agreed. “The sponsorship is critical,” he said. “For us, these are boutique, lifestyle brands that are design- and experience-driven. We want to do them with the right partner who is well capitalized.”
He noted marketing represents a significant hurdle, as well. “Generally speaking, it’s more about trying to get the word out there for our brands,” he said. “Now, as we have traction in the market, groups understand.”
Desai said deals typically take longer to develop in Mexico than in other places. “They get done, which is great, but you have to have the expectation in mind to build in ample cushion so there’s not pressure from lenders,” he said. “There are always delays, so you have to be cognizant of that in your timeline.”
Is there room?
Panelists were asked if Mexico is “still capable of receiving more operators and brands,” and their answer was an unequivocal yes.
“I don’t think anyone would be sitting here if they said ‘no,’” Cooper said. “If you juxtapose it with the number of brands and properties in the U.S., there’s an enormous opportunity in Mexico, both in branding and on the operations side.”
Glauser Benz said it’s also important to consider what types of brands or new supply might be entering the market.
“There’s definitely an appetite here for lifestyle hotels,” he said. “In the last five years, we’ve seen a new generation of developers in their 30s who understand lifestyle hotels differently than their parents did in the ’80s or ’90s.”
Narang said that increasing awareness is also true on the consumer side of things, and Mexico can offer the types of experiences and destinations that are popular on social media. “Mexico is not short of providing experiences,” he said.