Hotel developers, brands take a shine to Latin America

Latin America, and particularly Central America, is quickly becoming the next hotbed of hotel growth—as hotel companies and developers look to flood the region with name brands.

Today we learned that Wyndham Hotel Group will plant its Wyndham Hotels and Resorts flag in Costa Rica, after signing of a franchise agreement for the Wyndham Papagayo Yu Resort in Guanacaste.

The 151-room property, to be owned by ASECCSS, is currently under development as is located in one of the more popular vacation destinations in Latin America. It is scheduled to open by the end of 2015. It will be a mixed-use resort affiliated with RCI, Wyndham's vacation exchange business. (Read more about time shares in Latin America, here.)

Wyndham Hotel Group has expanded its Wyndham Hotels and Resorts brand in key resort markets throughout Central America in recent years as part of its larger strategy to expand the flagship brand's presence throughout Latin America. Since 2012, two Wyndham-branded resorts in Panama have joined the portfolio and the first Wyndham resort in Nicaragua is scheduled to open in 2015. Elsewhere in Latin America, the first Wyndham hotels opened in Ecuador, Colombia and Peru last year.

"A key factor in our growth in Latin America and the Caribbean is further expanding the Wyndham brand's resort offerings in key leisure destinations," said Paulo Pena, president and managing director of Latin America for Wyndham Hotel Group.

As of June 30, 2014, Wyndham Hotel Group had 127 hotels open in Latin America and the Caribbean, 14 of which operate in four Central American countries under the Howard Johnson (one hotel), Ramada (two hotels), TRYP by Wyndham (four hotels) and Wyndham Hotels and Resorts (seven hotels) brand flags.

Others Getting In
But Wyndham, of course, isn't the only company taking a hard look at Central America. Hyatt Hotels Corp., for one. In April, it entered into a master development agreement with LATAM Hotel Corp. to develop 10 Hyatt Place hotels in Central America and Mexico. The first five hotels will be the Hyatt Place Managua in Nicaragua, Hyatt Place Guatemala City in Guatemala, Hyatt Place San Salvador in El Salvador, and Hyatt Place San Pedro Sula and Hyatt Place Tegucigalpa in Honduras.

"We are delighted to be working with LATAM Hotel Corp. as we continue increasing the representation of the Hyatt Place brand throughout Latin America," said Pat McCudden, SVP, real estate and development - Latin America and Caribbean for Hyatt Hotels & Resorts. "We believe Central America has strong economic growth potential, and we are excited to see these five hotels become the first Hyatt-branded hotels in their respective countries."

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Meanwhile, Starwood Hotels and Resorts Worldwide is also making a calculated charge in Latin America. Also in April, it announced plans to open 17 hotels in the Latin American region by 2016, which will increase its portfolio by 20 percent. The company currently has nearly 80 open in Latin America.

"With sustained GDP growth, a stable influx of foreign direct investment to high-growth markets, and a fast-rising middle class, Latin America continues to be a region filled with growth opportunities for our globally recognized and admired brands," Starwood CEO Frits van Paasschen said at the time.

Then there is La Quinta Holdings, owner, operator and franchisor of La Quinta Inns & Suites hotels, which recently announced it had signed franchise agreements for new hotels in Nicaragua and Guatemala, marking the company's first foray into those countries.

"Our entry into these two new Central American markets reflects the strength of La Quinta in Latin America and our ability to deliver on this growth objective," said Wayne Goldberg, president and CEO of La Quinta, in August. "We see tremendous opportunities for ongoing franchise growth internationally given our existing infrastructure and established brand history."

The company has signed franchise agreements for three new hotels to be constructed in Managua, Nicaragua, Guatemala City, Guatemala and Quetzaltenango, Guatemala. The hotels are slated to be under construction by early 2015.

Overall hotel supply in Latin America is on an upswing. The Latin American hotel industry will reportedly increase its room supply by 65 percent over the next 10 years to meet demands spurred by the region's economic growth.

 

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