In February, Hilton’s Homewood Suites extended-stay brand launched its new prototype for Latin American hotels with the new-build Homewood Suites Silao in the Mexican state of Guanajuato. Now that guests and investors can explore the new prototype in depth, the team expects Homewood Suites development to pick up speed throughout Latin America.
The brand’s pipeline in the region already is growing, according to Juan Corvinos, Hilton’s VP of development for Latin America and the Caribbean. “Before the end of next year, we will have four more [Homewood Suites] open,” he said. “It usually has a cycle of two years from launch-of-prototype to the first one started starting to open, but once those hotels open and you can show the physical, completed product, the pipeline accelerates.” Hilton has more than 65 ongoing conversations in Latin America and the Caribbean for Homewood Suites, Corvinos added. “Last year, we approved 35 hotels. Eight of those were Homewood Suites.”
“As the Homewood brand manager, I want them to build 65 Homewoods,” said Adrian Kurre, global head of Homewood Suites and Home2 Suites by Hilton. “But Homewood by itself won't survive in Latin America. It needs Hiltons, it needs Hilton Garden Inns, it needs Hamptons—it needs the breadth of product, and a critical mass of all those products will help with...the entire process.”
As of February, Hilton had 137 hotels open in Latin America and more than 80 hotels in development. “In 2010, we had 55 hotels,” Corvinos said. “We're not stopping there. Every other week, the development team is out there looking for new opportunities for any of the brands that we have in Latin America.” Silao, for example, also has a Garden Inn and a Hampton, while Queretaro—a 90-minute drive away—has a DoubleTree hotel.
“Every market has different movements and different segments,” Corvinos said. The need for Homewood became apparent when the team found that guests were using Hamptons and Garden Inns for extended stays. “The programming of those hotels did not play well to those guests,” he said. “You are now seeing more Hampton by Hilton and Homewood Suites combos because there is a need for different hotels.” Not many guests seek out an extended-stay hotel for one night, Corvinos said, so having combination products in a single structure can be helpful. “What we're trying to do with our Latin America strategy is give customers a choice,” he said.
Due to the time it takes to travel from the U.S. to South America—particularly countries like Argentina and Chile—North American travelers will specifically be looking for extended-stay opportunities because the distance makes a short visit impractical. “When you make the trek down there, you need to think about distance,” Corvinos said. “It's a market that is premium and ripe for a Homewood Suites or extended-stay [property].”
Three years ago, Hilton signed a management agreement with Inversiones Robledo (a joint venture between Proinversión and TVP Management) to bring the Homewood Suites brand to Santo Domingo in the Dominican Republic. When the property opens (currently expected between November and next February), its location will be a significant achievement for the brand. “Across the street from it, I can throw a stone from my window and I'm going to hit the JW Marriott,” Corvinos said. “I can throw a stone across the street in the other direction and I'm going to hit the new InterContinental. So we are going to be an extended-stay product in the same street competing against two luxury properties.”
Hilton already has an Embassy Suites hotel in Santo Domingo that is performing “above and beyond everyone's expectations,” and is currently No. 2 in the market, Corvinos said. “We need overflow and we don't have another property.”
“The main reason why there's a return on investment with Homewood is the extended-stay nature of it,” Kurre said. “If you're just selling two-night transient business, you're like every other hotel. That's not the purpose for this brand, so [when you’re] staying within that swim lane and targeting extended-stay business, the returns flow through to the owners, and when the returns flow through the owners, then they build more hotels.”
At an owners’ orientation, Kurre said, he asked the assembled parties why they wanted to build hotels. “It's a pretty simple answer, but everybody's afraid to give the answer. You build a hotel because you want to make money. That's the reason to build a hotel," he said. "I don't know why we're afraid to say that. We're afraid to say that we want to make money off this deal. The real reason you build a hotel is to make money, and so everything that we're doing with this brand is saying, ‘What can we, as the brand, do to try to drive the top-line revenues and then challenge the general managers to make sure as much of that revenue flows down to the bottom line so the owner makes money?’”
When owners of Hilton hotels make money, he said, they’re more likely to choose another Hilton brand for their next project. In 2017, Corvinos added, more than 65 percent of Hilton’s new deals came from existing owners.
Developing hotels in Latin America takes a little longer than it does in the U.S., Corvinos, acknowledged, noting that the region is not as “mass-producing” as the U.S. is. “We figured it out with Hampton, we figured it out with the Garden Inn—it takes a little while, but once it gets rolling, it's really going to accelerate.”
The brand’s ultimate measure for success in the region, Corvinos said, will be between 50 and 100 Homewood Suites operating successfully across Latin America in the next few decades. “That's how we will measure success, when it is peppered all throughout the continent and there is a critical awareness and customer awareness of what our brand represents in all the countries.”