Leaders discuss regional opportunities in CALA

CORAL GABLES, Florida — Eileen Kett says part of her role at Club Med is to help explain to colleagues around the world the economic uncertainty in the U.S. and how it affects regions like the Caribbean and Latin America.

“I joke that I have the role of explainer in chief to my European and Asian colleagues, trying to help them understand what’s happening in this part of the world,” said Kett, senior vice president of development and general counsel for Paris-based Club Med. “So, if anybody has any suggestions on how to talk about what’s going on, I welcome them.”

What Kett said she is explaining most is long-term optimism about development opportunities in CALA.

I’ve heard some people say that getting deals approved is taking longer. We’re not seeing that... When you have the right project in front of the right people, deals are happening today.

Eileen Kett

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“From a development perspective, we just see this as an opportunity… When you’re doing a greenfield investment, it’s a three-to-five-year horizon, so periods of economic uncertainty really don’t impact that,” she said. “From our brand’s point of view, I’ve heard some people say that getting deals approved is taking longer. We’re not seeing that. We were in meetings last week with investor groups in New York, and they’re ready to sign deals. When you have the right project in front of the right people, deals are happening today.”

Kett said she also sees opportunities to expand airlift to the region and beyond.  

“I hope every minister of transportation and minister of tourism is knocking on the door of every airline saying ‘You have capacity that’s not being used,’” she said. “We have destinations that people want to go to. So, from our point of view, for resorts that we operate, but also for the destinations in which we are located, we see this period of economic uncertainty as an opportunistic moment. We’re maybe a little less dependent on U.S. travelers than some of our competitors… and we see this as an opportunity to bring more Europeans who may have been going to New York this summer or may have been going to the national parks [and instead] bring them to Canada, bring them to the Caribbean, bring them to Brazil or send them to Asia.”

Kett was part of a “Development Strategy: A Regional Perspective” panel at last month's ALIS CALA by Northstar event at the Loews Coral Gables Hotel in Florida. The panelists were Kett from Club Med; Paul Adan, regional senior vice president of development, MLAC (Mexico, Latin America and the Caribbean) for IHG Hotels & Resorts; Mauricio Elizondo, chief development officer for Mexico City-based Posadas; and Pablo Maturana, vice president of architecture, design and construction, CALA for Hilton. The author of this story moderated the panel.  

Branded residential drivers

A conference attendee asked the panel about branded residential in CALA, whether the main sales drivers are coming from the U.S. or regional buyers and whether using the properties as rentals was a primary reason. Adan said the answer was mixed.

“For luxury resorts, we’re seeing much more North American demand for the buyers, especially for the West Coast in Mexico and Costa Rica,” he said.  “Not everyone puts it back into a rental program, but at least they know it will remain [valuable].”

Adan added that he is seeing an interesting trend for some of IHG’s upscale premium brands in urban markets in CALA.

“You have a lot of Latin Americans living in the [U.S.] that may want to go back to San Salvador for a month at Christmas, or to Guatemala, or to Colombia or somewhere in Mexico,” he said. “They want to buy there. They want to stay there for that month and then put it into a rental program. So, that has opened the door to a huge market.”

Moving into the Dominican Republic

Elizondo said a key strategy for Posados was exporting its proven strategy in Mexico into a new market like the Dominican Republic.

“Going to the Dominican Republic was a high-level decision that we took about five years ago. By being in Mexico for the last 50 years, we [asked] ‘Where can we grow and have synergies on the commercial and operational platforms that we have already been using?’” he said. “We evaluated the whole Caribbean… and we [decided] on the Dominican Republic… and we’ve had great results.”

Elizondo said the company’s first hotel opened in the Dominican Republic about three years ago. Choosing a Spanish-speaking country helped with the workforce and helped the company in a number of ways.

“We’re using the same commercial platform that we use in the U.S. to bring Americans to Cancun, Puerto Vallarta or Los Cabos,” he said. “The airlift is great. So, basically, all the aspects that we wanted to achieve were falling into the D.R., and we’re about to open our second hotel this summer.”

Regional, segment opportunities

When asked about hot regions in CALA, Maturana mentioned some locations, but said it’s also about growing segment opportunities.

There is also a lot of focused-service coming into the Caribbean, which 10 years or maybe 15-20 years ago, it wasn’t something occurring.

Pablo Maturana

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“Across the region, you’re seeing a lot of pressure from the growing middle class, creating opportunities in the north of Brazil, Paraguay, etc. So, you have geographic opportunities, but also segment-wise, certain opportunities are coming up,” he said.

Maturana then discussed growing opportunities outside of the luxury or all-inclusive segments.

“There is also a lot of focused-service coming into the Caribbean, which 10 years or maybe 15-20 years ago, it wasn’t something occurring,” he said.

For example, Maturana mentioned Hilton bringing its midscale, conversion-friendly Spark brand to the region.

“We had the brand, but we never decided to bring it to the region until this year and part of that is because we see a new segment,” he said. “Don’t think just geographically, because segment opportunity exists throughout the region. It’s a region that is so diverse that it’s constantly creating opportunities, and it’s just a matter of looking for the new opportunity to cover the region.”