Can CALA teach US how to deal with instability?

CORAL GABLES, Florida — The Caribbean and Latin America (CALA) has a lot of experience with instability, which is proving instructive at a time when the U.S. economy, and potentially the hotel industry, are volatile, as well.

But that hasn’t ever stopped Gilda Perez Alvarado, CEO of Orient Express and group chief strategy officer for Accor, from having an optimistic view of the region.

“As the only Latin American on the panel, one thing that we’re used to in the CALA region is uncertainty,” she said on Tuesday during the Views from the Board panel at the ALIS CALA by Northstar events at Loews Coral Gables Hotel in Coral Gables, Florida. “We do have quite a bit of government changes and social economic situations happen on a regular basis. So, from a long-term perspective, we’re very bullish on the region.”

Perez Alvarado said CALA benefits from a lot of investments in infrastructure and many countries with pro-business attitudes.

“What we’re tracking very closely is more what’s happening to international travel going into the U.S.,” she said. “We have seen a little bit of a deceleration, but as it relates to American travelers, in particular, going into CALA, especially those dollar-denominated destinations -- it’s looking very robust.”

Perez Alvarado said the CALA region has a lot of different travel opportunities.

“There’s quite a bit to do: experiential travel, all-inclusive luxury, etc., and maybe some of that is a little bit more resilient to the short-term movement or challenges that we’re hearing right now,” she said. “But if there’s one thing about CALA, it’s that this region is super resilient.”

Perez Alvarado was joined in the session by Jolyon Bulley, CEO, Americas for IHG Hotels & Resorts; Larry Cuculic, president and CEO of BWH Hotels; Sloan Dean, CEO of Dallas-based Remington Hospitality; and Keith Pierce, executive vice president and president of franchise & development for Sonesta International Hotels. John Fareed, global chairman of New York City-based Horwath HTL, moderated the panel.

Pierce said there are plenty of positive signs for CALA right now, including a “frothy” deal volume. 

“The region is so diverse. What happens in Colombia is not what happens in Brazil is not what happens in the Caribbean, etc.,” he said. “Another way to look at it is deal volume…  The deal volume in the Dominican  Republic, Panama, Colombia, Peru, Chile, Brazil and Argentina is frothy and if the deal volume is frothy, then the anticipation is that the performance will come right back because of demand and supply. 

“There’s an undersupply and that’s proving out. Look at all of the major hotel companies over the course of the last decade… they have all penetrated [the region] and certainly in the all-inclusive space… That is an indication that CALA is going to continue to be robust.”

(From left:) Jollyon Bulley, Larry Cuculich, Sloan Dean, Gilda Perez-Alvarado and Keith Pierce.

CALA deal structure

Branded residential and mixed-use projects are important components of any luxury or lifestyle developments in the region, Bulley said.

“Over 50% of our luxury lifestyle developments in this region, and also in the U.S., have some form of branded residence as a combined component to it,” he said. “That helps with the capital stack and the access to development capital to get a hotel for almost nothing if the brand is strong enough.” 

Bulley noted a deal IHG made last in 2024 for the Kimpton Monterrey, which will be located in the new-build mixed-use Torre Rise and is set to be the tallest tower in Latin America.

“It’s retail, office, hotels and branded residences. That has proliferated all across our business and that helps drive availability and cash flow, not only to develop, but ongoing cash flow,” he said.

Cuculic said BWH looks at every deal as an opportunity to be aggressive with that developer to stabilize the asset as soon as possible.

“We can have aggressive deal structures. We’re a privately owned company, we don’t have shareholders, and our success is defined by the success of our hotels," Cuculic said. “To me, a contract that stabilizes the hotel as soon as possible is what drops to the bottom line. That makes the bank happy, as well as the owner of that hotel. So, deal structure, to us, is our way of making sure that the hotel knows we’re in it together.”

Dean, who recently announced he was leaving his position at Remington, was asked about AI and whether it’s already disrupting labor.

“It’s first disrupting hotel distribution and how customers book,” he said. “We’re in this stage where the consumer is now going to Chat GPT or other AI agents and giving it specifics and it spits out a hotel or an itinerary.”

So, does AI become a pay-to-play industry? Dean said he hopes not. 

“This is actually one of those step changes in the industry. It can level the playing field for hotel owners and hotel operators,” he said.

In his experience, Dean said AI is already “intermediating” some white-collar jobs, like paralegals, for contract review.

“We’re on the fringe of productivity gains in white-collar jobs… I grew up in revenue management. Eventually revenue management will be fully automated,” he said. “We’re a physical business so full automation for very physical jobs… is a bit behind.

“We’re definitely in this [space] where distribution is being intermediated very quickly, and white-collar jobs are being replaced. We’re going to have productivity gains that will help hotel profitability for the next several years.”