Cuculic on the international markets that intrigue BWH

LOS ANGELES — When asked about what international regions excite him the most, BWH Hotel President and CEO Larry Cuculic mentioned a number of regions: Vietnam, the Kingdom of Saudi Arabia and CALA (Caribbean and Latin America), to name a few.

Cuculic spoke with Hotel Investment Today immediately after a panel last month at the Americas Lodging Investment Summit (ALIS) by Northstar in Los Angeles. During the panel, he said the company looks at international travel in several ways.

“We believe very strongly in outbound travel, of course. But on top of that… what we’re also seeing is what I call regional travel, or territorial travel, where governments are incentivizing travelers to stay and explore their own countries,” he said. “So, we will, of course, try to leverage international travel as much as possible. We’re a global brand. That’s what we’re asked to do. That’s what our hotels expect. But we also have to market very strongly to take advantage of the opportunities that are within those regions themselves.”

What we’re also seeing is what I call regional travel, or territorial travel, where governments are incentivizing travelers to stay and explore their own countries. So, we will, of course, try to leverage international travel as much as possible. We’re a global brand. That’s what we’re asked to do. That’s what our hotels expect. But we also have to market very strongly to take advantage of the opportunities that are within those regions themselves.

Larry Cuculic

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Cuculic mentioned China and India as great examples of this trend. He also mentioned the Germans’ love to travel to Spain and Portugal and the Scandinavians’ love of New York City.

“Everyone has their pockets of where they like to travel,” Cuculic said. “Our job as hoteliers is to determine, using, I’ll call it, common sense and logic, where that next hotel development is because it may seem counterintuitive.”

Vietnam was an example of that counter-intuitiveness. “We’ve signed several deals in Vietnam, and 10-15 years ago, I wouldn’t have said Vietnam, and it probably never would have rolled off my tongue where our next hotel developments [would be],” Cuculic said.

When talking with Hotel Investment Today, Cuculic also mentioned Lima, Peru and Kampala, Uganda as two other examples of places BWH would like to grow. But he said one market is the most intriguing.

“Saudi Arabia excites me the most…. The beauty of that is they want to build hotels across all chain scales,” he said. “You don’t want to say I just want to build premier hotels or boutique hotels. They recognize that they need all types of hotels for all types of travelers… If somebody is going to Mecca to pray, they likely are not looking for a luxury experience. They’re looking for a place to stay that’s clean and well-maintained… So, you’ll have WorldHotels in Saudi Arabia, just like you’ll have SureStays.”

The CALA region is another burgeoning with development opportunities, Cuculic said. “We are very fortunate we have regional offices. Mexico City is our development hub for Latin and South America and they find it to be an opportunity for us,” he said. “It doesn’t scare me at all. It’s an opportunity to develop where, in the past, we’ve not looked at it as what it can be.”

What owners are saying

The lack of new development and the increased cost of construction were frequent topics during ALIS, and Cuculic said that echoes what owners are saying about the current financial environment.

“They’re saying that interest rates haven’t come down far enough yet,” he said, mentioning that the lower interest rates of the recent past could have spoiled owners.

“The normalcy the last 10 to 15 years ago was 5% to 6% [interest rates], which is where it’s going to be now,” he said. “Now they have to understand that the problem is not just that [interest rate], but it’s the cost of construction because the 2x4 costs so much more than the deal doesn’t pencil out where it used to it… It’s not just interest rate; it’s the cost of construction and finding good general contractors that I think are putting the pressure on development.”

The new presidential administration in the U.S. was also a frequent topic at ALIS, and Cuculic said he shares the optimism of his CEO colleagues that the next four years could be friendlier for doing business.

“I’m very hopeful that this administration will put in place policies that recognize the challenges of our industry, with regard to labor, the cost of doing business, with regard to the need for inbound international travel,” he said. “Whatever policies they put in place, that they recognize that most of our hoteliers are small business operators… and make sure they consider that these operators need to have labor policies and [help with] inflation.”