As
brands grow in the region, they are becoming less interested in managing all of
their properties, hospitality executives said during a CHRIS panel.
MIAMI — When asked about the mistakes brands
can make managing their hotel properties in the Caribbean, Daniel Campos said
the lack of a local structure can bring a lot of unpleasant surprises to the
equation.
“Sometimes
they would say, ‘Okay, we’ll give you a management agreement and just let us
know when the hotel is ready, and we’ll bring the people,’ but it’s not
that easy because finding the people is not that easy —especially the right
people,” said Campos, director general and partner of San Rafael de Escazú,
Costa Rica-based Caribe Hospitality, which currently has a portfolio of 12
properties in Costa Rica, Jamaica, Mexico, El Salvador and Barbados. “We have
experienced that in all of our hotels in the Caribbean and also in
Central America.”
Campos said
the key to success is attracting guests from abroad, but not having a local
structure in place can cause the original plan to quickly blow up due to higher
construction costs, insurance rates or other factors.
Campos
participated in a “Hotel Companies/Agreements—Brand Consolidation” panel at the
Caribbean Hotel & Resort Investment Summit (CHRIS) held at the Loews Coral
Gables Hotel in Florida. Other panelists were Jason Gold, senior vice president of business
development for Irving, Texas-based Highgate Hotels and Keith Oltchick, chief
development officer for Dallas-based Remington Hospitality.
Local
market knowledge
Gold said
that for Highgate, which manages 15 hotels in the Caribbean and Latin America,
having the right GM is the most important thing, especially with local market
knowledge.
The brands, I think, love to put everything into a box, but I think sometimes that also works against the identity of the property.
Jason Gold
“Trying to open up a
hotel and bringing someone in from the [U.S.], and trying to hire and build
connections and build a community with a [local] team… that takes time,” Gold
said. “Those are precious months that you can’t waste, especially when you’re
coming off the development and maybe already over budget.”
Gold said
that understanding local labor laws can be complicated, especially when
determining who the hotel associates work for — the manager or the owner. “Just little
things like that, it’s obviously different from how it is in the [U.S.] and
varies by different countries and varies widely from country to country,” he
said.
Gold said
he’s also seen brands get into trouble when trying to put properties or
destinations into too broad of a bucket. “The brands,
I think, love to put everything into a box, but I think sometimes that also
works against the identity of the property,” he said.
Entering
the Caribbean
Remington
Hospitality is a newer player in the Caribbean and just took its first property
in 2023. Oltchick said it was obvious that just trying to replicate the
third-party manager’s method of doing things in the U.S. wouldn’t work. “We spent a lot of
time trying to understand the cultures and how that environment is different
from what we experienced in the States,” he said.
Oltchick mentioned
something as simple as realizing that scheduling an 8 a.m. meeting wasn’t the
best idea for Remington’s first hotel in Costa Rica. “When we did
take over a property in Costa Rica, instead of going down there and doing an
orientation and explaining to them the Remington culture, we actually did an
orientation where we had them teach us their culture for the first couple of
days of the transition,” Oltchick said. “We went down there knowing this was a
new market and that we would have to look at things differently.”
Oltchick added that as Remington expands into more management in the region, the company will
continue to use that approach. “That’s
helped us in a couple of different places… knowing full well that we don’t know
everything,” he said. “Every one of these markets is unique to us, so we’re
trying to be cognizant of that.”
Third-party opportunities
Oltchick
said Remington is seeing many different opportunities in the region with soft
brands or select-service properties that have never existed in those markets
before. “The brands
aren’t necessarily either capable or interested of managing that product type,
at least in most of the markets that we’re looking in. So, that’s where the
opportunities for us exist,” he said.
There’s predominantly a very heavy American, Canadian, European-type traveler that comes into the market now, and American third-party operators know how to sell to that customer and know how to manage to that expectation a little bit differently.
Keith Oltchick
He also said
that as more U.S.-based investors and developers enter the region, they are
more comfortable using a third-party manager for their other properties. “If you look at some
of the [third-party] managers now, they’re bigger than the brands. They have
more resources than the brands. So, it’s a different ballgame today than it was
before,” Oltchick said. “There’s predominantly a very heavy American, Canadian, European-type
traveler that comes into the market now, and American third-party operators
know how to sell to that customer and know how to manage to that expectation a
little bit differently. The dynamic has changed.”
Gold said
that as brands seek continued growth and expansion, the concept of managing a
Caribbean property becomes less important. “If the brands can get
their point on the map, I think they’re relatively indifferent as to who
operates that hotel, as long as it’s someone that’s going to be able to deliver
and meet the expectations of the owner and what the customer wants, and they can
collect their fees without having to work as hard,” he said. “It also opens up
more avenues as well… So, it just brings more resources to market than maybe the
brand could achieve when trying to do all that on their own.”
Campos said
during COVID, the structures the brands had set up to manage those hotels often
disappeared. That’s made it more difficult for hotels to get back to where they
were pre-pandemic, but he also sees different potential opportunities for
managing those hotels in the future. “I see that
the brands are more interested now in the franchises rather than the
management, which is the way that we have grown in the past,” he said. “That’s
why there is an opportunity for the region because [third-party managers] can
bring their structure and those types of things.”