SPECIAL REPORT : 2014 FORECAST
After an extensive renovation , Peru ’ s Libertador Hotels , Resorts & Spas recently debuted Palacio del Inka as a Starwood Luxury Collection hotel in Cusco .
Group , Rosemont , Illinois . Some of the experts attending the 2013 New York University International Hospitality Industry Investment Conference predicted a new wave of demand for hotels in mid-American destinations such as Tennessee and Kentucky , which are luring manufacturers and service industries . Bargain land prices and states with an appetite for new business should be fertile territory for mid-market and , in some cases , upscale brands with strong loyalty programs or differentiators .
Major urban gateways will tend to be more lukewarm given the profit potential of areas with more affordable real estate and labor . International demand makes markets like Miami and San Francisco attractive as well , adds Leland Pillsbury , managing principal , Thayer Lodging Group , Annapolis , Maryland .
While there aren ’ t too many bona fide no-go markets in this region , Washington , D . C ., remains a more cautious market in the aftermath of the sequester and the October government shutdown . Habeeb also adds that Chicago may soon be facing overdevelopment .
Some countries in South America are more of a “ wait and see ” target for brands and developers . Hyatt Hotels & Resorts sees Argentina , for example , as a destination with potential , but not one where it is ready to enter full-bore .
Mexico has become a bold-faced development target due to the availability of construction financing and funds from Mexican REITs ( known as Fibras ), according to Pat McCudden , senior vice president of real estate and development , Latin America and Caribbean , Hyatt Hotels Corp .
Peru , Colombia and Brazil are sizzling as well , and Patrick Freeman , president , Cisneros Real Estate , Miami , also likes the Dominican Republic , Venezuela and Uruguay , as those markets offer more opportunities for luxury development than the United States .
According to STR Global , six countries in Latin America have more than 1,000 rooms in the pipeline as of September 2013 . Brazil reported the most rooms in the total active pipeline with 23,118 rooms , followed by Colombia ( 3,603 rooms ), Panama ( 3,285 rooms ), Argentina ( 2,411 rooms ), Costa Rica ( 1,512 rooms ) and Chile ( 1,283 rooms ).
STAR SECTORS : U . S . secondary and tertiary markets will be seeing more economy and midscale development , according to Loewen . Some more developed markets in Latin America will also be home to more new-build , affordable hotels as demand grows outside gateways .
However , according to Freeman , the luxury market remains extremely appealing , particularly in the Caribbean . Cisneros Real Estate is developing a 6,000-acre ( 2,428-hectare ) site at the southern end of the Bay of Samaná in the Dominican Republic ( which Freeman calls the “ sleeping giant ” of luxury branded tourism ). The development will have a Four Seasons Resort as its centerpiece , as Freeman believes having a branded landmark hotel is key for the site .
OPPORTUNITIES AND PITFALLS : Many operators see huge opportunity in all segments catering to the Millennial traveler . The convention business shows signs of picking up as well , adds Monty Bennett , chairman and CEO , Ashford Hospitality Trust , Dallas .
The biggest trap , Loewen says , is not keeping up with the Joneses . “ Not investing is the worst mistake ,” he says .
ONE- “ RevPAR is really being
LINER driven by the attractive supply / demand dynamics we are currently seeing in the hotel industry on top of modest overall economic growth . We foresee demand jumping up next year as well . It may be the best year of the recovery thus far .”
– MONTY BENNETT , ASHFORD HOSPITALITY
24 HOTELS December 2013 www . hotelsmag . com